Despite turnover being slightly down and profits flat, JSE-listed Italtile has rewarded shareholders with a significant uplift in dividends, with a notable 26% jump in the special dividend, helping lift the total dividend by 17% year-on-year, underpinned by strong cash reserves and cash generation.

For the financial year ended June 30, the company’s system-wide turnover fell by 2% to R11.3-billion, compared with R11.5-billion the previous year.

Trading profit remained steady at R2.1-billion, while operating costs were reduced by 3%, demonstrating management’s focus on efficiency. Earnings a share rose 3% to R1.26 and headline earnings a share increased 2% to R1.25.

The company’s retail footprint also grew, with 210 stores across South Africa and East Africa, up from 208 a year earlier. Retail performance improved slightly, with sales volumes up 1.3%, while the average basket size fell marginally as price-conscious customers sought value.

The webstore continued its strong performance, increasing traffic and sales owing to enhanced digital content and personalised online service.

International operations in East Africa performed well, benefiting from stronger regional economies and product enhancements, while the Southern African market saw some margin pressure owing to aggressive pricing by competitors in Botswana.

Meanwhile, the Ceramic division faced challenges, with a 5% drop in tile volumes and declining average selling prices. Management responded by cutting costs, improving efficiencies and optimising factory operations to protect margins.

Italtile said its integrated supply chain proved a key advantage, with local procurement accounting for 86% of purchases.

Efforts to improve logistics and warehouse operations yielded cost savings and faster stock availability. The company’s focus on efficiency extended to inventory management, with holdings reduced by 3% to R1.23-million, even as new stores were opened.

Italtile CEO Lance Foxcroft highlighted the importance of the company’s people and customer focus, saying the company’s skilled teams and commitment to an exceptional customer experience helped maintain market share despite challenging conditions.

Looking ahead, Italtile expects growth and margins to remain under pressure but plans to capitalise on its strong brands, optimise operations and invest in product development.

The company also intends to consider divestment of noncore assets, while focusing on its core manufacturing and retail businesses.

With strong cash reserves of R2.2-billion, low debt and prudent capital management, Italtile is well positioned to continue rewarding shareholders while investing in its brands and operations for sustainable growth.

The company, meanwhile, highlights that the dumping of product in South Africa, along with import tariffs imposed by neighbouring countries, negatively impacts on the trading environment.

“Management will continue to engage the authorities to gain the government’s support for a level domestic playing field,” Italtile states.