Natuzzi planning first North American furniture plant

Expects to open facility within 15 months

Joan Gunin -- Furniture Today, October 22, 2008

SANTERAMO IN COLLE, Italy - Natuzzi's board has approved a three-year business plan to increase sales and profitability that includes opening the company's first production facility in North America.

"We expect to open a facility in North America within 15 months," said Cary Benson, president of Natuzzi Americas, the High Point-based arm of the Italian upholstery manufacturing giant. He would not specify whether the plant would be in the United States.

The business strategies for 2009-2011 will be presented to the financial community in November. Senior management will visit clients and investors in the United States and Britain to explain the plan beforehand.

In a statement, Natuzzi officials said they see the challenging business environment, particularly the global financial market crisis and low consumer confidence, as an opportunity to improve results.

The company said its balance sheet is sound, with minimal exposure to the banking system, which should allow it to self-finance the operational and investment projects defined in the plan.

The new strategy aims at achieving sales of 1 billion euros in 2011, with earnings before interest and taxes targeted to be about 15% of net sales. In the first half of this year, the company reported sales of 341.6 million euros ($523.4 million) and a net loss of 25.9 million euros ($39.7 million).

Natuzzi leaders said the plan calls for:

+ Increasing sales in Europe.

+ Penetrating the emerging markets of Brazil, Russia and India, where the company now has no significant business.

+ Supporting growth in Asia and continuing its recovery in North America.

+ Focusing its brand strategy worldwide with Natuzzi and Italsofa in order to attract the premium high-end as well as the younger consumer segments.

+ Strengthening advertising and marketing to support the brands.

+ Drastically reducing production costs by leveraging existing plants to serve the regions where they are located, establishing a shorter route to market with better customer service and improved supply chain efficiencies.

+ Launching a lean manufacturing program for all facilities.

+ Strict control of general and administrative expenses.

+ Expanding the retail network with a goal of almost doubling the number of stores and shops-in-shop worldwide.

"We strongly believe in our three-year business plan," said newly appointed CEO Aldo Uva. "We think that in challenging market conditions, new opportunities may arise for market leaders such as us. We are looking to achieve break-even by 2009, growth acceleration in 2010, and consolidation for new expansion in 2011."

Pasquale Natuzzi, chairman and majority shareholder, said the plan "defines the intervention areas to recover efficiency and relaunch its business."