Cheaply produced tile and adhesive products are flooding regional markets, heightening competition pressure for Italtile, whose trading profit for the year to June fell 10.4% to R1.8 billion.
But the group still managed to reward shareholders for the year to June 30, with an albeit lower special dividend of 25 cents a share, versus the 98 cents a share special dividend declared last year. An ordinary dividend per share of 45 cents would also be paid out, versus 50c in 2025, which brough the total dividend to 70 cents, much lower than 148 cents a share paid out last year.
CEO Brandon Wood, said in an interview on Monday that ceramic tile products cheaply produced by Chinese factories in neighbouring countries such as Zambia, Zimbabwe, and Tanzania were hurting volumes for the company’s local and regional export markets.
“Those Chinese producers have targeted South Africa as the biggest market in Southern Africa. We have had a large amount of product into the country at a very low cost, definitely being dumped in most instances,” he said.
Wood added that this was exerting “a lot of pressure on our manufacturing business for ceramic,” with volumes now under pressure. Volumes for the ceramics segment fell 1.1% for the period.
Combined revenues from CTM, Italtile Retail, and TopT lifted by 0.4% to R7.7bn for the year, with the average selling price inflation higher at 1.8% compared to 0.2% previously.
Retail margins firmed 0.5%, attributable to “stronger retail execution, including improved purchasing and range construction for imported products, exchange rate benefits, and successful price laddering execution” across the product range.
Italtile’s webstores also performed well, with increased traffic and sales, underpinned by improved, innovative digital content and a personalised sales experience, said the company.
Furthermore, despite the positive effects of the African Free Trade Agreement, regional countries were also shielding local manufacturers backed by Chinese products with duties and tariffs for imported ceramic products. This was making it difficult for Italtile “to compete effectively” from a pricing perspective.
Wood said that Italtile welcomes the provisional anti-dumping duties on ceramic and porcelain wall and floor tiles, introduced by ITAC in July 2026.
"The duties should bring relief once imported stock already in the country has worked through the market. The risk of circumvention remains a factor to monitor closely. We will continue to engage with the authorities to find a lasting solution to the dumping challenge," he said.
The challenges being faced by the ceramic segment dragged down Italtile’s overall financial performance for the period amid subdued demand and rising input costs. Like-for-like costs for the period grew by a minimal 1.2% to R2bn.
Consequently, basic headline earnings (HEPS) decreased by 9.4% toR1.13 as capital expenditure for the year grew from R234m to R443m. Italtile targeted investments into enhancing the retail property portfolio and factory upgrade projects to strengthen production capacity for the tile manufacturing business.
Wood highlighted that Italtile had continued to generate strong cash flow despite spending R201m in share buybacks and R1.8bn in dividend payments.
Wood revealed that despite a tough operating environment, the retail businesses had performed resiliently.
After operating turnover fell for the period under review, Italtile is now focusing on improving capacity, although it is not planning any new significant investments.
“Profitability improves once we get ceramic industries utilisation up; that may mean looking at the shape of the business. We are going to focus really hard to just improve what's under our control,” said Wood.
Shares in Italtile slumped nearly 3% to R9.22 in afternoon trade on the JSE after the release of the full-year financials.