South Africa's tile makers spent years asking the state to do something about cheap imports. In July they got it. Italtile's results for the year to June show how long a win on paper takes to reach the till.
Dumping means selling into a market below what the product costs at home, and the fix is a duty at the border that closes the gap. The International Trade Administration Commission put provisional anti-dumping duties on imported ceramic and porcelain wall and floor tiles in July. Italtile called the tax encouraging. It also said the relief would not arrive straight away, because a large part of the cheap stock is already inside the country and has not been sold yet.
The part a duty cannot reach
Brandon Wood took over as chief executive on 1 July, and he is not counting on the duties. He told News24 there is probably two to three months of dumped stock still to work through the market before Italtile sees anything change. He also expects people to try it on: the group already knows of companies using the wrong tariff codes to get tiles into the country.
"The reality is, regulations are one thing; enforcement is a completely different thing altogether," Wood told News24. He described the duties as a move to level the field a bit, and said growth has to come from taking market share back, not from the border.
The arm that makes the tiles
Across the group, turnover barely moved, up 0.6% to R11.3 billion. Trading profit fell 10.4%, to R1.8 billion. Core earnings landed at 113.4 cents a share, a 9.4% drop, and inside the range Italtile had guided two weeks earlier. The shares still came off almost 3% on the day.
The payout says the company is short of growth rather than short of money. The ordinary dividend was cut to 45 cents a share. A special dividend of 25 cents goes on top of it, about a quarter of what shareholders were handed last year. Net cash fell 21%, to R1.7 billion. Italtile's own breakdown shows where it went: capital projects, a round of share buybacks, and R1.8 billion paid straight out to shareholders. That is money handed over, not money lost.
Italtile expects the next twelve months to stay hard and it named why: the Middle East conflict pushing fuel and transport costs up, consumer confidence going down with them, and buyers sitting on their hands ahead of the local government election. The duties are in place. What they turn out to be worth depends on whether anyone at the border is checking
