Natuzzi S.p.A Reports Financial Information for Second Quarter

November 20, 2025  by HFBusiness Staff in Business Strategy, Industry   

Pasquale Natuzzi, Chairman and Chief Executive Officer ad interim of the Group, commented: “The operating environment remains challenging, influenced by the geopolitical instability, a weak U.S. real estate market, a strengthening euro, and still high interest rates. These factors have affected consumer confidence and slowed demand of semi-durable goods. Furthermore, trade tensions arising from U.S. trade tariffs have heightened uncertainty, with dealers and their buyers prioritizing inventory reduction over placing new orders. As a result, consolidated sales for the first half of the year fell short of our expectations, making it more difficult to absorb fixed costs and protect margins.

We fully recognize that the Group is currently navigating a highly challenging environment and Company-specific factors. These circumstances have weighed on our operating performance and slowed the execution of our turnaround strategy, which have adversely affected our cash-generation capacity.

In response to that, management is developing a comprehensive restructuring plan, aimed at restoring efficiency and profitability across the Group, and that marks a clear break from the past.

The restructuring plan guidelines envisages:

- a significant reduction in fixed costs;

- a more flexible production capacity;

- the divesting of certain non-strategic Italian assets;

- the outsourcing of low value-added activities; and

- a review of the Company’s capital structure and potential capital strengthening measures.

In the short term, we remain firmly committed to maintaining a rigorous focus on cash flow monitoring, exerting strict controls on discretionary spending, and ensuring disciplined management of working capital to safeguard our liquidity.

Although the execution of our commercial strategy is affected by current uncertainties, its core pillars remain unchanged. Investments made in product innovation, design, marketing and customer experience are delivering encouraging results, and the Trade & Contract division represents a short-term growth opportunity.

Following the Natuzzi Harmony Residence project already unveiled last year in Dubai, we have recently signed a second contract for a new building in Dubai comprising 85 apartments. We have also initiated another similar project in Jerusalem: a 90-apartment tower entirely designed by Natuzzi. In addition, our Trade business continues to play an expanding role in supporting the retail channel, allowing us to deepen and broaden our relationships with architects.

Our distribution strategy remains unchanged. We continue to improve the quality of our network (with particular reference to China), through the closure of non-performing stores, the opening of locations in line with Natuzzi’s strategic brand positioning, as well as a comprehensive refit plan for several Natuzzi stores and galleries worldwide to enhance consumer experience and reinforce brand’s visibility.

The launch of new collections—some of which have received overall 14 international awards over the past 12 months—the targeted marketing and promotional plans, the “Natuzzi Congress”, showcasing our novelties and commercial opportunities to dealers and architects from around the world, and our participation in major industry events such as the Milan Design Week, High Point Market, Mumbai Design Week, Dubai Design Week and Riyadh Design Week make us cautiously confident in a gradual recovery in business activity. Encouraging signs in order flow have been observed recently in certain markets, including Italy and Emerging Markets, particularly Africa and the Middle East, where new opportunities from retail and trade business are emerging.

We have made progress in reorganizing our commercial operations. We recently appointed David Workman as Chief Commercial Officer, Wholesale, to lead Natuzzi’s North American operations. In addition, we have completed the organization in the U.K. with a new Marketing Manager and a Merchandising Manager supported by a dedicated customer care team. In Italy the new leadership team is delivering encouraging results and can serve as a best-practice model for other key markets.

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The Company, with the full support of its majority shareholder, is advancing the search for a new Chief Executive Officer to succeed Mr. Pasquale Natuzzi, who currently holds the position of ‘CEO ad interim’. The Board of Directors has initiated a selection process aimed at identifying and appointing an experienced executive with specific expertise in business turnaround and capable of driving the strategic priorities set forth in the Company’s restructuring plan. These priorities focus primarily on rightsizing industrial operations in Italy, reducing fixed costs at the Group level, and supporting commercial activities.

During the current transition phase, the Company’s day-to-day operations will continue as usual under the current leadership team, including Mr. Natuzzi, who will also maintain his role as Chief Commercial Officer.

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2025 - SECOND QUARTER – HIGHLIGHTS

Total net sales amounted to €78.3 million, down 7.2% from €84.4 million in 2Q 2024.

Gross margin at 34.0% of revenue, compared to 38.1% in 2Q 2024, primarily due to the decrease in sales and the planned production shift of Natuzzi Editions for the North American market from China to Italy.

2Q 2025 operating loss of (€2.7) million, compared to an operating loss of (€0.4) million in 2Q 2024.

Net finance costs were (€3.2) million, compared to net finance costs of (€2.0) million in 2Q 2024, primarily due to unfavorable currency movements.

During 2Q 2025, we invested €4.3 million, primarily to upgrade the Group’s Italian factories.

As of June 30, 2025, we held €22.8 million in cash, from €20.3 million as of December 31, 2024. Cash availability includes €9.9 million of proceeds from the disposal of two non-strategic assets, namely the sale of a plot of land in Romania, in addition to the sale of the building in High Point which was completed in March.

Approval by the BOD of the guidelines of a restructuring plan mainly focusing on the Italian industrial hub and a significant reduction in fixed costs at Group level. Negotiations with the Italian institutions to address labor market challenges and help ensure long-term sustainability are progressing. Status of ‘National strategic interest company’ being granted by the Italian government. Adequate strengthening of capital structure being considered.

Majority shareholder provide interim credit line of up to €15.0 million to support the Company’s cash requirements and the transformation process that may be converted into capital in connection with future capital strengthening transactions.

With the full support of the majority shareholder, the Company has launched the search for a CEO to drive the ongoing restructuring process and relaunch of the Group.

Store traffic and written orders remain below expectations, due to a persisting and generalized weakness in consumer confidence in addition to trade duties by the U.S. administration. This may continue to adversely affect our results of operations for the remainder of the year.

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GROSS MARGIN

In 2Q 2025, Gross margin was 34.0%, which compares to 38.1% in 2Q 2024, mainly impacted by the decrease in revenue as well as the planned reallocation of Natuzzi Editions production for the North American market from China to Italy.

The management has been implementing price list adjustments to counterbalance the negative effect from U.S. trade duties on the Italian production and hence protect margins.

In addition, lower sales from higher-margin Natuzzi Italia and from directly operated stores contributed to the margin pressure in the quarter.

During 2Q 2025, industrial labor cost totaled (€19.4) million, or (24.8%) of revenue, compared to (€18.0) million, or (21.3%) of revenue in 2Q 2024. This increase was almost entirely due to the production of Natuzzi Editions for North America manufactured in Italy, as noted above, and despite the €2.0 million labor costs decrease in China.

OPERATING EXPENSES

During 2Q 2025, operating expenses, which include selling expenses, administrative expenses, other operating income/expenses, and the impairment of trade receivables, totaled (€29.3) million, or (37.5%) on revenue, compared to (€32.6) million, or (38.6%) on revenue in 2Q 2024.

Selling expenses also include impairment losses for non-financial assets related to our retail operations in the U.S., for a total of (€0.7) million.

Selling and Administrative expenses overall represented (41.9%) of revenue in 2Q 2025, compared to (40.0%) in 2Q 2024, due to a less efficient absorption of fixed costs from lower revenue.

“Other income” was €3.8 million compared to €1.3 million in 2Q 2024 as a result of the €2.8 million capital gain accounted for in connection with the sale of a plot of land in Romania.