NATUZZI S P A(NTZ)Q1 2026 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Natuzzi S.p.A. First Quarter 2026 Financial Results. Interested people can also join this conference call live by telephone by dialing the following number 1 (201) 493-6703 and enter the passcode 39252103# in addition to the link already provided to join via video. (Operator Instructions) Joining us on today's call are, as usual, Pasquale Natuzzi, Executive Chairman and Chief Executive Officer; Pasquale Jr. Natuzzi, Chief Commercial Officer and Chief Product Division Officer; Carlo Silvestri, Chief Financial Officer; and then Piero Direnzo, Investor Relations. As a reminder, today's call is being recorded. I would now like to turn the conference over to Piero. Please go ahead.

Thank you, Darryl, and good day to everyone. Thank you for joining Natuzzi's conference call for the 2026 first quarter financial results. After a brief introduction, we will give room for the Q&A session. Before proceeding, we would like to advise our listeners that our discussion today could contain certain statements that constitute forward-looking statements under United States securities laws. Obviously, actual results might differ materially from those in the forward-looking statements because of risks and uncertainties that can affect our results of operations and financial condition. Please refer to our most recent annual report on Form 20-F filed with the SEC for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. And now I would like to turn the call over to the company's Chief Executive Officer. Please, Mr. Natuzzi.

Thank you, Piero. Good morning, everyone, and thank you for joining us today. The results for this quarter '26 are clearly disappointing and reflect the combination of external and internal factors that had a significant impact on the group performance. On the external side, we continue to operate in a complex market environment, marked by geopolitical instability, a slowdown in sales in the United States and a housing market at historically low levels, and persistently weak consumer sentiment. In addition, the transfer of Natuzzi Editions production for the United States market from China to Italy negatively affected the margin profile of this production line. Therefore, this result confirms the need to take decisive action on certain structural elements of the group. In particular, our industrial footprint in Italy is currently oversized compared with the present sales volume and cost level that are no longer sustainable. For this reason, since the beginning of July, we have started executing a restructuring plan aimed at significantly reducing our fixed costs and improving overall efficiency. The plan is based on a number of very concrete operational levers. First, we have initiated the transfer of Natuzzi Editions production for the United States market from Italy to Romania. This initiative is designed to improve the industrial margin of this product line and consequently reduce the losses associated with this production. Second, we have rationalized our industrial operation in Italy, reducing the number of operating plants from five to two plants. This is a necessary step to eliminate fixed costs that are no longer aligned with the current size of the business and to create the conditions for economies of scale. Finally, we have already received expressions of interest from 120 Natuzzi employees to participate in a voluntary exit program. We are fully aware of the complexity of this phase and of the impact that the decisions currently underway have on our organization. At the same time, we believe that acting now with discipline and urgency is essential to strengthen the group's economic sustainability, protect the competitiveness of the Natuzzi brand and lay the foundation for a progressive recovery in margin. That's the situation as of today. If there are any questions, I will be very pleased to answer any questions. Thank you very much for listening.

(Operator Instructions)

So, Darryl, if you don't mind, I can give some more color about the actions that we are taking, to have more clarity on that while we wait for questions and to help understanding better how we are facing all the issues. As Mr. Natuzzi has rightly underlined, we are taking several actions. But I would also like to give you our expectations from these actions. For example, regarding the relocation from Italy to Romania of Natuzzi Editions production for the U.S. market—if the question comes up, to anticipate it—the total volume of business is in the ballpark of EUR 30 million to EUR 40 million, and according to our preliminary analysis, the relocation should give us approximately a 25% improvement in industrial margin on that portion of the business. This action will impact the results in the second part of the year and the figures I mentioned before refer to the full-year impact. Regarding the 120 employees who have expressed interest in the voluntary program, their participation must be confirmed; if they participate, they will no longer be on our payroll from January 2027 and the cash outflows related to these exit costs will be in 2027. A portion of our workforce cost today is already offset through social safety net measures and wage support programs. Therefore, the actual savings achieved will depend on the level and extent of the social support mechanisms available next year. This is important. But the main point of this initiative is that it is our first step toward a more structurally efficient cost base and will not only have an immediate financial impact but will improve operational flexibility, enhance productivity and better align our workforce with current and future needs. On the same topic, the plan contemplates the disposal of idle and noncore assets; in connection with an offer for another plant, there is also potential for rehiring up to 40 people. The objective remains the disposal of noncore assets, but the process has been designed with a strong focus on protecting employees. This is also something that the company is reevaluating. On the cost base, I would also like to remind you that we have downsized the top managerial structure. So far, some executives have exited in the U.S. and Italy, which will bring savings to our cost structure. On a side note, I would like to underline that the company is actively engaging with stakeholders as part of this process. I would like maybe Pasquale Jr. to add more on the commercial side so we can present the full picture of what's happening and then leave the floor to questions. Thanks.

I have had some issues hearing you sometimes. I hope you can hear me loud and clear. Do you hear me right?

Totally, perfect.

So good morning, gentlemen, ladies. Thank you for attending this call and giving me the chance to introduce myself. I'd like to take a few minutes to update you on our commercial transformation since we've launched the initiatives over the past few months and the initiatives that are shaping Natuzzi's future growth. I joined as Chief Commercial Officer shortly before Milan Design Week in April 2026, where we introduced one of our most important strategic initiatives, which is the Natuzzi Studio. Natuzzi Studio is a new retail concept designed to capture the growing opportunities within the trade, projects and specification business. It is clearly more than a traditional store. It was conceived as an urban design hub where architects, interior designers, developers, and clients can collaborate with our teams on residential and commercial projects. The dimensions of these stores will allow us to be more capillary and closer to these design destinations, so they will be more city-centric. This evolution is fully aligned with our premium luxury and design-oriented positioning. From the very beginning, the organization experienced a renewed sense of energy and urgency. The response to the Natuzzi Studio during Design Week exceeded our expectations and several dealers already expressed interest in opening this new format. Speaking of retail expansion and retail formats, the expansion continues at a very healthy pace. During the first half of 2026, we opened 26 new stores following the 49 opened during 2025. These investments confirm our commitment to strengthening our global retail network as well as the recognition from investors and dealers who see great value in the Natuzzi brand. In addition to more modern and better production formats, we continue to optimize the distribution footprint by closing or relocating locations that no longer reflect the premium luxury positioning of the Natuzzi brand. At the same time, retail itself is changing. Across most markets, store traffic continues to decline at a double-digit rate, making it increasingly clear that relying solely on walk-in customers is no longer enough. For this reason, we are transforming our retail model from a traffic-driven business into a clienteling outreach-driven organization. Our store managers and sales consultants are becoming design consultants and business developers, capable of generating opportunities not only inside the four walls of a store, but throughout their local markets by building relationships with architects, designers, developers and, of course, end consumers. This transformation also extends to our headquarters, where we are evolving our commercial operation from a model primarily focused on organic order intake into one supported by targeted commercial initiatives and demand generation programs. Over the past weeks, we have introduced daily cross-functional meetings focused on commercial priorities, cash generation, and operational execution. Commercial operations and finance are now working as one integrated team with shared objectives on orders, revenue, deliveries and cash flow. This new way of working has significantly increased alignment, speed of execution and accountability across the organization. We have also launched several initiatives to reduce raw material and finished goods inventories through targeted commercial programs with selected key accounts. The feedback has been encouraging, with customers recognizing not only the commercial initiative, but also the improved coordination, responsiveness and service level we are delivering. In the United States, our retail organization is placing strong emphasis on commercial urgency while accelerating clienteling initiatives to generate B2B and B2C opportunities beyond traditional store traffic. In China, we recently completed another successful roadshow alongside the opening of our flagship store in Beijing, where Mr. Maestrolangalanga came as an ambassador and supporter of the opening as well as an ambassador for Italy and China. It was followed by a series of events with the local design community, confirming that Natuzzi among architects and high-end consumers in China is becoming more and more a point of reference and an icon in the industry. In the U.K., we're about to launch a major store refresh program across both Natuzzi Italia and Natuzzi Editions, which will upgrade visual merchandising and store display and also strengthen commercial momentum and store traffic conversion. Our contract business continues to build a strong international pipeline through relationships with developers, hospitality operators, architects, and specifiers. While geopolitical tension in the Middle East and India—two markets where we invested significantly over the last years—has delayed the closing and revenue recognition of some projects, these opportunities remain largely intact. At the same time, other regions are generating new opportunities that I believe will help diversify and strengthen our global pipeline. So although the market environment remains challenging, the first months of transformation have confirmed that stronger commercial discipline, closer cross-functional integration, and a sharper market focus are creating the foundation of sustainable and profitable growth. We remain confident that these initiatives will strengthen Natuzzi's competitive positioning and support long-term value creation for our shareholders. Thank you, and I'm available for your questions if you have some.

(Operator Instructions)

This is Kirby Newburger. So PJ mentioned something about opening new stores. Where does the financing for the new stores come from?

I was merely referring to FOS, the so-called franchise stores, which are stores opened by partners. These franchise partners are confirming through their investment that the Natuzzi brand has great value and strategic alignment with their investment. So these are financed by third parties who are heavily investing in the expansion of our store network.

(Operator Instructions)

Of course, if there are any other questions in the coming days, we will be available to answer any questions that may arise.

Thank you so much. I do appreciate all your time today. This does now conclude today's Natuzzi conference. As Mr. Silvestri said, if you do have any follow-up questions, please feel free to reach out offline and they will be able to answer any questions that you may have. We definitely appreciate your time today, and you now may disconnect.

Thank you.

Thank you very much.

Thank you. Bye-bye. Thank you. Bye. Bye.