Natuzzi S.P.A Announces Restructuring Plan to Reduce Expenses

Furniture World Magazine

Natuzzi S.p.A, a leader in leather upholstery and Italy’s largest furniture manufacturer, announced that its Board of Directors held an extraordinary session to examine the first quarter 2005 preliminary figures and the new restructuring plan prepared by the management. Unfavorable currency conditions and the persistent pricing pressure affecting the US market in particular, as well as the modest economic growth still characterizing the European area, continued to affect the demand for Natuzzi’s products. Preliminary sales figures for the first quarter of 2005 show that net upholstery sales decreased 14.0 percent to 145.7 million euros versus the same period of 2004. Natuzzi expects sales of Natuzzi branded upholstered furniture to decrease 18.4 percent and sales of Italsofa, the promotional brand, to remain substantially flat. In terms of seats sold, Natuzzi expects a 13.1 percent decrease, with the Natuzzi brand selling 21.0 percent units less than first quarter 2004 and sales of Italsofa units increasing 1.8 percent. In light of the above and in consideration of the decreasing order flow for Natuzzi branded products and the ongoing efforts of the Company to become more efficient and competitive, the Board approved a new restructuring plan. The plan includes a temporary work force reduction (cassa integrazione) of 1,320 positions, by the end of 2005, in all departments across the Company, with a focus on reducing manufacturing costs in Italy, increasing overall efficiencies and improving productivity. More information will be available in the first quarter 2005 earnings release scheduled on May 31, 2005. Pasquale Natuzzi, CEO and Chairman of the Board, commented, “After having carefully analyzed the current situation and the unstable market outlook, we have decided to take further initiatives to control costs. Natuzzi is a solid company, but we have to act rapidly in order to be more competitive, recover profitability and regain market share especially in the medium-high end of the market where we are investing in the Natuzzi brand.”