Major South African company under serious pressure

Italtile is under severe pressure as demand from South Africa’s strained consumers cannot meet the company’s supply, leading to depressed earnings growth.

Founded in 1969, Italtile is a South African manufacturer, franchisor and retailer of tiles, bathroomware and other home-finishing products.

The company’s retail brands are CTM, Italtile Retail and TopT, represented through a network of over 200 stores, including seven online webstores.

In a trading statement for the year ended 30 June 2025, the company said intense competition, over-capacity and subdued demand exerted pressure on tile manufacturers.

While Italtile had a strong start to the year, boosted by positive sentiment and higher consumer spending due to two-pot withdrawals, this did not continue into the year’s second half.

The company expects its earnings per share for the 2025 financial year to grow by a modest 0.1% to 6.4%, while headline earnings are set to grow by between 0.1% and 5.2%.

Italtile explained that, during this period, South Africa’s economy remained muted with almost no GDP growth.

This resulted in depressed consumer confidence and low spending in the building and construction sector. 

“Consumers remain price-conscious and constrained by tight budgets while searching for trusted quality and good value,” the company said.

These depressed conditions saw Italtile’s retail division grow by a meagre 2% compared to the 2024 financial year. Like-for-like sales in this division increased by only 1%, with average selling price inflation of 0.2%.

In addition, trading conditions in the company’s Ceramic market also continued to deteriorate, mainly due to the excess manufacturing capacity in the industry. 

This resulted in a 5% overall manufacturing division sales decline despite Ezee Tile’s 4% growth in sales. Combined average manufacturing selling price deflation was 1.6% for the period.

Italtile’s import businesses, International Tap Distributors, Cedar Point and Distribution Centre, collectively reported a decrease in sales value of 3%, with average selling price deflation of 0.9%.

“The group’s consolidated gross margin remained flat in line with our efforts to support affordability for customers and compete for market share in the context of subdued demand and increased competition,” the company said.

“The trading environment is expected to remain challenging in the short to medium term as intense competition persists, due to the imbalance between excess supply and weak demand.” 

“We expect continued headwinds to subdue growth, margins and profitability in the year ahead.” 

However, the company said a rigid focus on the controllable aspects of its business will position Italtile to capitalise on opportunities when the trading environment improves.

Italtile’s full results for the 2025 financial year are expected to be released on 25 August 2025.