Italtile, a leading Gauteng-based retailer and manufacturer of bathroom and home products controlled by South African businessman Giovanni Ravazzotti, is reviewing exiting its Australian operations as weakening ceramic market conditions weigh on earnings, with revenue of $548 million in H1 2026.

The potential exit comes after 22 years of operations in Australia and follows continued pressure in the ceramics market, attributed mainly to excess manufacturing capacity in Southern Africa.

Italtile reviews Australian operations amid earnings pressure

The South African home-finishing group, which is in advanced discussions with a prospective buyer for its Australian operations, reported a 1.22% decline in half-year revenue to R8.77 billion ($547.72 million), from R8.88 billion ($554.62 million) in the prior corresponding period. Half-year profit fell 11.02% to R1.39 billion ($86.76 million), down from R1.54 billion ($96.31 million), as ceramic sales declined 1.1% and margins remained under pressure from rising costs.

In its recently released annual financial results for the year ended June 2026, the group said it is “reviewing its continued presence in Australia” and is in advanced discussions with a prospective buyer, with due diligence currently underway. Italtile’s Australian presence is centred on the Centaurus tile factory, its only manufacturing facility outside South Africa.

The factory began operations in 2004 and was expanded in 2007, doubling its production capacity. The group acquired a 20% stake in Ceramic Industries in 2012 before completing a full buyout in 2017. Ceramic Industries operates five tile factories, a bathroomware factory and an acrylic bath factory in South Africa, alongside the Centaurus facility in Australia.

The potential disposal forms part of Italtile’s broader review of its asset base as the group seeks to improve returns and strengthen resilience amid subdued consumer demand, rising input costs and intense competition. Its integrated supply-chain import businesses also recorded weaker performance, with revenue declining 6.4% during the financial year.

Italtile’s turnover rises as trading profit falls 10%

Despite challenging trading conditions, Italtile’s system-wide turnover increased 0.6% to R11.3 billion ($705.51 million) from R11.26 billion ($703.08 million) in the prior year. Retail store system-wide revenue increased 0.4% to R7.7 billion ($480.79 million), while average selling price inflation stood at 1.8%. Retail margins improved by 0.5% as stronger execution helped offset some cost pressures.

However, subdued demand, higher input costs and strong competition weighed on the group’s overall profitability. Trading profit declined 10.4% to R1.85 billion ($115.48 million) from R2.06 billion ($128.59 million) a year earlier. The group’s net cash position also weakened, falling 21% to R1.7 billion ($106.12 million) from R2.2 billion ($137.35 million).

Italtile said its strong cash generation continued to support investments and shareholder distributions. During the year, the group invested R443 million ($27.66 million) in capital expenditure, completed R201 million ($12.55 million) in share buybacks and paid R1.8 billion ($112.38 million) in dividends.

Giovanni Ravazzotti’s Italtile changes leadership

The potential Australian exit comes as Italtile undergoes a leadership transition following the departure of longtime chief executive Lance Foxcroft.

Lance Foxcroft, who took over in January 2022 after the retirement of Jan Potgieter, also stepped down as CEO of Italtile and Ceramic Industries at the end of June 2026 due to family circumstances, with Brandon Wood assuming the group CEO role on July 1.

Wood, who has extensive experience across Italtile’s operations, is expected to provide continuity as the group navigates weaker consumer demand, cost pressures and its review of non-core assets.

Ravazzotti founded Italtile in 1969 and has built the company into one of South Africa’s largest tile, bathroomware and home-finishing businesses. The group’s vertically integrated model spans manufacturing, retail, imports and property.

Italtile declares ordinary and special dividends

Despite the decline in earnings, Italtile maintained its commitment to returning cash to shareholders, supported by its strong balance sheet and cash reserves.

The board declared a final ordinary dividend of R0.21 per share, bringing the total ordinary dividend for the financial year to R0.45 per share, down from R0.5 in 2025. Italtile also declared a special cash dividend of 25 cents per share, compared with 98 cents a year earlier.

The group said its cash reserves were above operational requirements, allowing it to make the additional distribution while maintaining a prudent capital structure.

Italtile expects subdued conditions to weigh on growth

Italtile, listed on the Johannesburg Stock Exchange and comprising well-known brands such as Italtile Retail, CTM, TopT, and U-Light, serves as a bellwether for assessing consumer expenditure health in South Africa. Giovanni Ravazzotti, who founded the company in 1969 and holds a nearly 35% stake, remains one of the country’s wealthiest individuals.

Looking ahead, Italtile expects South Africa’s subdued economic outlook, the ongoing Middle East conflict and caution ahead of the next local government election to constrain consumer confidence, growth and profitability.

The group, however, expects provisional anti-dumping duties on ceramic and porcelain wall and floor tiles to provide support once existing overstocked positions have been reduced. Italtile said it will continue focusing on productivity, waste reduction, cost control and stronger operational execution while reviewing assets that do not meet its risk, return and growth requirements.

The group said its strong brands, vertically integrated supply chain, technology investments, capable workforce and solid balance sheet leave it well positioned to benefit when trading conditions improve.