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Natuzzi's 4Q sales up 14.7% in dollars

By Furniture Today Staff -- Furniture Today, March 31, 2003

Santeramo en colle, Italy — Upholstery producer Natuzzi's sales of $202.7 million in the fourth quarter were up 14.7% in dollars, although the gain in euros was just 2.6% because of the strengthening European currency.

Seats sold increased 5.4% in the quarter.

Net income came to $18.4 million, up 10.8% in dollars but down 1.1% in euros.

Pasquale Natuzzi, chairman and chief executive officer, said the slight decline in euros "was primarily due to an increase in selling expenses, especially advertising, and a higher tax rate.

"However, for the full year 2002, net income substantially increased as a consequence of lower raw material costs and foreign exchange gains. For the first half of the year, we exceeded expectations but saw slowing in the second half while we continued to meet expectations," he said.

Net earnings of $86.5 million for the full year were up 27.8% in dollars and 20.9% in euros.

Sales for the year came to $761.5 million — up 8.2% in dollars and up 2.4% in euros. Seats sold increased 5.3%.

Fourth-quarter upholstery sales in the Americas came to $85 million. Because of the weakening dollar, the Americas sales were down 6.3% in euros.

In Europe, fourth-quarter upholstery sales rose 9.9% to $89.1 million due mainly to the opening of new Divani & Divani and Natuzzi stores. In the rest of the world, upholstery sales increased 3.4% to $9.2 million.

Leather upholstery sales were unchanged in fourth-quarter 2002, while fabric-upholstered (microfiber) sales rose 13.6%. Fabric accounted for about 16% of total sales.

Fourth-quarter 2002 net sales of Natuzzi-branded furniture were down 5.5% from a year earlier while sales of the promotional Italsofa brand were up 51.8%. Italsofa accounted for about 18% of total branded sales.

"The difficult worldwide economic conditions, the uncertainty related to the current conflict in Middle East and the growing competition of the low-cost labor countries in the low-end of the upholstery market," Natuzzi said, "are weighing on the furniture industry and the performance of our company. Orders are down in the single digits compared to the extraordinary performance of the same period of last year.

"We remain focused on strengthening the Natuzzi brand through dedicated advertising campaigns and the opening of approximately 150 galleries and 40 Natuzzi and Divani & Divani by Natuzzi stores during 2003. In addition we are continuing our support of Italsofa, our promotional line, which is gaining a rapid success in the low-end upholstery market."

Natuzzi
Earnings per share are fully diluted.
Quarter ended 12/31	2002	2001	Change
(a) Includes net foreign exchange gains of $300,000 in the 2002 quarter and $8.8 million in the 2002 year. (b) Includes a $5.6 million net foreign exchange loss.
Sales	$202,700,000	$176,700,000	14.7%
Operating income	19,900,000	17,800,000	11.8%
Net income	(a)18,400,000	16,600,000	10.8%
Earnings per share	0.34	0.30	10.5%
Year ended 12/31	2002	2001	Change
Sales	$761,500,000	$703,700,000	8.2%
>Operating income	96,300,000	87,500,000	10.1%
Net income	(a)86,500,000	(b)67,700,000	27.8%
Earnings per share	1.58	1.23	28.6%

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Natuzzi sales up 12.4%

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