Natuzzi: Fourth Quarter and Full Year 2014 Financial Results

Improving Trend Confirmed

• Total Net Sales up 12.6% over Fourth Quarter 2013
• Other SG&A as Percentage of Net Sales Down by 3.8 P.P. against Fourth Quarter 2013
• Quarterly Operating Loss Fell by 7.6%
• Quarterly Net Loss Almost Halved (-48.1%)
• Positive Net Financial Position at €2.8 Million (from +€0.2 Million as of September 30, 2014), after €11 Million of Extraordinary Cash-out Following the Lay-off of 429 Italian Workers in 2014 Fourth Quarter
• Trend Confirmed in the First Months of 2015

The Board of Directors of Natuzzi S.p.A. (NYSE:NTZ) ("Natuzzi" or the "Company") has approved its consolidated financial results for the fourth quarter and full year 2014.

After the meeting of the Board of Directors, the Chief Executive Officer, Pasquale Natuzzi, commented: "Our fourth quarter 2014 results confirm the improving trend in the Group's main indicators.

Total net sales during the quarter were equal to €138.6 million, up 12.6% from fourth quarter 2013.

The corrective measures introduced in the second half of 2014 as a means to recover efficiency in our industrial plants have allowed the Group to gradually improve quarterly industrial margins.

We have also been successful in lowering our fixed (other) SG&A expenses, which fell to 17.7% of net sales in the fourth quarter 2014 from 21.5% of net sales in the fourth quarter 2013.

As a result of higher net sales and the cost-cutting measures described above, quarterly operating results (-€8.7 million) recorded a 7.6% improvement over fourth quarter 2013.

This improvement in our overall financial results is even more significant if we consider the progression of the above-mentioned items over the last four quarters, as set forth in the following table:

							1Q2014			2Q2014			3Q2014			4Q2014
				Total net sales*			-11.2%			-1.2%			+8.2%			+12.6%
				COGS**			-71.5%			-74.2%			-72.1%			-71.2%
				Other SG&A**			-21.8%			-20.9%			-18.2%			-17.7%
				EBIT**			-9.6%			-9.7%			-7.0%			-6.3%
				* quarterly percentage change in net sales over same quarter in 2013
				** percentage of net sales

In 2014, turnover increased by 2.7% (to €461.4 million), yet EBITDA was equal to -€22.7 million from -€15.8 million. These results were mainly the consequence of two main factors:

1.		inefficiencies experienced during the first part of last year within our Chinese plant following the introduction of radical changes to our manufacturing process. While these changes have led to steadily improving production trends through the first months of 2015, they contributed to an additional €5.2 million in cost of sales in 2014. This was due to the adoption of what we believe were certain one-off extraordinary measures that were necessary in order to meet agreed delivery times and not compromise our customer service.
2.		low productivity in our Italian plants, due to the staffing of workers on a rotational basis as required by the October 2013 agreement. In March 2015, we entered into a new agreement, which has allowed us to stabilize our workforce, and that should result in improvements in productivity.

In the meantime, we have been carrying on with the innovation program as envisaged by the Group's transformation plan:

i)		the re-engineering of our best-selling models, was completed by the year end;
ii)		we have reduced the number of models by 25% and the number of coverings by 38%;
iii)		as for innovations in industrial processes, we have developed and tested in our experimental plant located in Matera a new integrated production cycle and production planning software. First tests results are very encouraging.

In 2014 sales activity was characterized by a positive development in late spring, as a result of the overall review of our product collections and their presentations in the main world fairs (Milan, Guangzhou, High Point).

2014 overall order intake was up +6.8% (€436.5 million in 2014 vs €408.8 million in 2013), thanks to the renewed product collection. It is quite important to notice that we have been able to consistently improve our average sell-in price.

From a geographical standpoint, whilst the North American market showed positive sales growth, European sales continued to slowdown. Asia Pacific presented mixed results with positive and consistent growth in China, also due to the opening of 49 new stores.

In 2014 we acquired a significant number of European key customers.

Following the recent trend in currency dynamics, and thanks to the Group's industrial presence in Romania, Natuzzi can take further advantage within the European market versus Asian exporters.

We expect the improving trend in our industrial operations that has started during the second part of 2014 to continue into 2015."

The Company will host a conference call on Monday March 30, 2015 at 10:00 a.m. U.S. Eastern Time (4.00 p.m. Italian time, or 3.00 p.m. UK time) to discuss financial results.

The dial-in phone numbers for the live conference call are 1-888-437-9445 (toll-free) for persons calling from the U.S. or Canada, and 1-719-325-2315 for those calling from other countries.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements set forth in this press release constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve risks and uncertainties that could cause Natuzzi's actual results to differ materially from those stated or implied by such forward-looking statements. More information about the potential factors that could affect the Company's business and financial results is included in Natuzzi's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 20-F for the year ended December 31, 2013. Natuzzi undertakes no obligation to update any of the forward-looking statements after the date of this press release.

About Natuzzi S.p.A.

Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs, manufactures and sells a broad collection of couches, armchairs, home furniture and home accessories. With consolidated revenues of €461.4 million in 2014, Natuzzi is Italy's largest furniture house and the player with the greatest global reach in its sector, with eight manufacturing plants, twelve commercial offices and more than 1,100 points of sale worldwide. Ethics and social responsibility, innovation, industrial know-how and integrated management of its value chain represent the points of strength that have made the Natuzzi Group a market leader and established Natuzzi as the most recognized furniture brand in the world among consumers of luxury goods. Natuzzi S.p.A. has been listed on the New York Stock Exchange since May 1993. The Company is ISO 9001 and 14001 certified.

Natuzzi S.p.A. and Subsidiaries
Unaudited Consolidated Profit Loss for the fourth quarter 2014 2013 on the basis of Italian GAAP
(expressed in millions Euro, except per share amounts)
			Three months ended on				Change			Percentage of Sales
			31-Dec-14		31-Dec-13					31-Dec-14		31-Dec-13
Upholstery net sales			120.9		108.6		11.3%			87.2%		88.2%
Other sales			17.8		14.6		22.0%			12.8%		11.8%
Total Net Sales			138.6		123.2		12.6%			100.0%		100.0%
Cost of Sales			(98.7)		(85.0)		16.1%			-71.2%		-69.0%
of which: Depreciation, Amortization			(2.3)		(2.7)		-16.0%			-1.6%		-2.2%
Industrial Margin			40.0		38.2		4.7%			28.8%		31.0%
Selling Expenses			(24.2)		(21.1)		14.4%			-17.4%		-17.2%
Transportation			(14.5)		(12.2)		19.0%			-10.5%		-9.9%
Commissions			(2.4)		(2.4)		1.6%			-1.8%		-2.0%
Advertising			(7.2)		(6.5)		10.5%			-5.2%		-5.3%
Other Selling and G&A			(24.5)		(26.5)		-7.4%			-17.7%		-21.5%
of which: Depreciation, Amortization			(1.3)		(1.6)		-16.0%			-1.0%		-1.3%
EBITDA			(5.1)		(5.2)		-0.7%			-3.7%		-4.2%
EBIT			(8.7)		(9.4)		-7.6%			-6.3%		-7.6%
Interest Income/(Costs), Net			(0.9)		(0.2)
Foreign Exchange, Net			(2.0)		(1.1)
Other Income/(Cost), Net			(3.2)		(18.2)
Earning before Income Taxes			(14.8)		(29.0)					-10.7%		-23.5%
Current taxes			(0.6)		(0.7)					-0.4%		-0.6%
Net Result			(15.4)		(29.7)					-11.1%		-24.1%
Minority interest			(0.0)		(0.0)
Net Group Result			(15.4)		(29.7)					-11.1%		-24.1%
Net Group Result per Share			(0.28)		(0.54)
Key Figures in U.S. dollars			Three months ended on				Change			Percentage of Sales
(millions)			31-Dec-14		31-Dec-13					31-Dec-14		31-Dec-13
Total Net Sales			173.1		153.8		12.6%			100.0%		100.0%
Industrial Margin			49.9		47.7		4.7%			28.8%		31.0%
EBIT			(10.9)		(11.8)					-6.3%		-7.6%
Net Group Result			(19.2)		(37.1)					-11.1%		-24.1%
Net Group Result per Share			(0.35)		(0.68)
Average exchange rate (U.S.$ per 1€)			1.2488

		UPHOLSTERY NET SALES BREAKDOWN
		GEOGRAPHIC BREAKDOWN
		NET SALES (in €, million)											NET SALES (in seats sold)
		Three months ended on											Three months ended on
AREA		31-Dec-14				31-Dec-13				delta			31-Dec-14				31-Dec-13				delta
Americas		54.6		45.2%		39.4		36.3%		38.5%			266,182		54.9%		200,557		45.1%		32.7%
Natuzzi		27.3		22.6%		25.2		23.2%		8.6%			101,079		20.8%		107,196		24.1%		-5.7%
Private label		27.2		22.5%		14.2		13.1%		91.5%			165,103		34.0%		93,361		21.0%		76.8%
EMEA		50.1		41.5%		54.4		50.1%		-7.8%			170,312		35.1%		196,273		44.2%		-13.2%
Natuzzi		34.1		28.3%		42.9		39.5%		-20.4%			87,873		18.1%		125,531		28.2%		-30.0%
Private label		16.0		13.2%		11.5		10.6%		39.5%			82,439		17.0%		70,743		15.9%		16.5%
Asia-Pacific		16.1		13.4%		14.8		13.7%		8.9%			48,585		10.0%		47,655		10.7%		2.0%
Natuzzi		12.8		10.6%		13.9		12.8%		-7.6%			25,471		5.3%		40,767		9.2%		-37.5%
Private label		3.3		2.7%		0.9		0.9%		252.8%			23,114		4.8%		6,888		1.5%		235.6%
TOTAL		120.9		100.0%		108.6		100.0%		11.3%			485,079		100.0%		444,485		100.0%		9.1%
		BREAKDOWN BY BRAND
		NET SALES (in €, million)											NET SALES (in seats sold)
		Three months ended on											Three months ended on
BRAND		31-Dec-14				31-Dec-13				delta			31-Dec-14				31-Dec-13				delta
Natuzzi		74.3		61.5%		82.0		75.5%		-9.4%			214,423		44.2%		273,494		61.5%		-21.6%
Private label		46.6		38.5%		26.6		24.5%		74.9%			270,656		55.8%		170,991		38.5%		58.3%
TOTAL		120.9		100.0%		108.6		100.0%		11.3%			485,079		100.0%		444,485		100.0%		9.1%
The "Natuzzi" brand includes the Group's three lines of product: Natuzzi Italia, Natuzzi Editions and Natuzi Re-Vive

Natuzzi S.p.A. and Subsidiaries
Unaudited Consolidated Profit Loss for 2014 2013 on the basis of Italian GAAP
(expressed in millions Euro, except per share amounts)
			Twelve months ended on				Change			Percentage of Sales
			31-Dec-14		31-Dec-13					31-Dec-14		31-Dec-13
Upholstery net sales			409.1		402.8		1.6%			88.7%		89.7%
Other sales			52.3		46.3		13.0%			11.3%		10.3%
Total Net Sales			461.4		449.1		2.7%			100.0%		100.0%
Consumption (*)			(218.0)		(209.3)		4.1%			-47.2%		-46.6%
Labor			(85.0)		(79.1)		7.4%			-18.4%		-17.6%
Industrial Costs			(30.2)		(28.9)		4.6%			-6.6%		-6.4%
of which: Depreciation, Amortization			(9.7)		(10.3)		-5.9%			-2.1%		-2.3%
Cost of Sales			(333.2)		(317.3)		5.0%			-72.2%		-70.7%
Industrial Margin			128.2		131.8		-2.7%			27.8%		29.3%
Selling Expenses			(75.3)		(70.8)		6.4%			-16.3%		-15.8%
Transportation			(48.3)		(45.6)		5.8%			-10.5%		-10.2%
Commissions			(9.1)		(9.0)		1.2%			-2.0%		-2.0%
Advertising			(17.9)		(16.2)		11.1%			-3.9%		-3.6%
Other Selling and G&A			(89.9)		(93.4)		-3.7%			-19.5%		-20.8%
of which: Depreciation, Amortization			(4.6)		(6.3)		-27.3%			-1.0%		-1.4%
EBITDA			(22.7)		(15.8)					-4.9%		-3.5%
EBIT			(37.0)		(32.3)					-8.0%		-7.2%
Interest Income/(Costs), Net			(1.9)		(0.5)
Foreign Exchange, Net			(2.4)		(2.8)
Other Income/(Cost), Net			(6.3)		(28.6)
Earning before Income Taxes			(47.5)		(64.2)					-10.3%		-14.3%
Current taxes			(1.8)		(4.1)					-0.4%		-0.9%
Net Result			(49.3)		(68.4)					-10.7%		-15.2%
Minority interest			(0.0)		(0.2)
Net Group Result			(49.4)		(68.6)					-10.7%		-15.3%
Net Group Result per Share			(0.90)		(1.25)
Key Figures in U.S. dollars			Twelve months ended on				Change			Percentage of Sales
(millions)			31-Dec-14		31-Dec-13					31-Dec-14		31-Dec-13
Total Net Sales			613.0		596.6		2.7%			100.0%		100.0%
Industrial Margin			170.3		175.1		-2.7%			27.8%		29.3%
EBIT			(49.1)		(42.9)					-8.0%		-7.2%
Net Group Result			(65.6)		(91.1)					-10.7%		-15.3%
Net Group Result per Share			(1.20)		(1.66)
Average exchange rate (U.S.$ per 1€)			1.3285
(*) Purchases plus beginning stock minus final stock and leather processing

		UPHOLSTERY NET SALES BREAKDOWN
		GEOGRAPHIC BREAKDOWN
		NET SALES (in €, million)											NET SALES (in seats sold)
		Twelve months ended on											Twelve months ended on
AREA		31-Dec-14				31-Dec-13				delta			31-Dec-14				31-Dec-13				delta
Americas		171.0		41.8%		162.5		40.3%		5.2%			842,263		50.7%		809,310		48.0%		4.1%
Natuzzi		96.5		23.6%		101.0		25.1%		-4.4%			374,787		22.5%		425,502		25.2%		-11.9%
Private label		74.5		18.2%		61.5		15.3%		21.1%			467,476		28.1%		383,808		22.8%		21.8%
EMEA		184.8		45.2%		189.7		47.1%		-2.6%			644,681		38.8%		703,368		41.7%		-8.3%
Natuzzi		142.1		34.7%		145.4		36.1%		-2.3%			396,327		23.8%		430,367		25.5%		-7.9%
Private label		42.6		10.4%		44.3		11.0%		-3.7%			248,354		14.9%		273,001		16.2%		-9.0%
Asia-Pacific		53.3		13.0%		50.6		12.6%		5.3%			175,351		10.5%		173,669		10.3%		1.0%
Natuzzi		48.4		11.8%		46.4		11.5%		4.2%			139,966		8.4%		143,548		8.5%		-2.5%
Private label		5.0		1.2%		4.2		1.1%		17.9%			35,385		2.1%		30,121		1.8%		17.5%
TOTAL		409.1		100.0%		402.8		100.0%		1.6%			1,662,295		100.0%		1,686,347		100.0%		-1.4%
		BREAKDOWN BY BRAND
		NET SALES (in €, million)											NET SALES (in seats sold)
		Twelve months ended on											Twelve months ended on
BRAND		31-Dec-14				31-Dec-13				delta			31-Dec-14				31-Dec-13				delta
Natuzzi		287.0		70.1%		292.8		72.7%		-2.0%			911,080		54.8%		999,417		59.3%		-8.8%
Private label		122.1		29.9%		110.0		27.3%		11.0%			751,215		45.2%		686,930		40.7%		9.4%
TOTAL		409.1		100.0%		402.8		100.0%		1.6%			1,662,295		100.0%		1,686,347		100.0%		-1.4%
The "Natuzzi" brand includes the Group's three lines of product: Natuzzi Italia, Natuzzi Editions and Natuzi Re-Vive

Natuzzi S.p.A. and Subsidiaries
Unaudited Consolidated Balance Sheets on the basis of Italian GAAP
(Expressed in millions of Euro)
ASSETS					31-Dec-14			31-Dec-13
Current assets:
Cash and cash equivalents					32.8			61.0
Marketable debt securities					0.0			0.0
Trade receivables, net					99.4			78.9
Other receivables					19.4			48.5
Inventories					90.2			79.0
Unrealized foreign exchange gains					0.3			0.6
Prepaid expenses and accrued income					1.3			1.9
Deferred income taxes					0.5			0.3
Total current assets					243.9			270.2
Non-current assets:
Net property, plant and equipment					130.8			143.6
Other assets					5.3			8.1
Total non-current assets					136.1			151.7
TOTAL ASSETS					380.0			421.9
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings					20.8			25.0
Current portion of long-term debt					3.1			3.3
Accounts payable-trade					75.0			67.4
Accounts payable-other					30.0			25.8
Unrealized foreign exchange losses					0.5			0.2
Income taxes					1.1			7.1
Deferred income taxes					1.0			1.0
Salaries, wages and related liabilities					18.3			8.3
Total current liabilities					149.8			138.2
Long-term liabilities:
Employees' leaving entitlement					20.9			24.8
Long-term debt					6.0			4.2
Deferred income for capital grants					8.0			8.6
Other liabilities					21.2			34.4
Total long-term liabilities					56.2			72.1
Minority interest					3.0			2.7
Shareholders' equity:
Share capital					54.9			54.9
Reserves					42.8			42.8
Additional paid-in capital					8.4			8.4
Retained earnings					64.9			102.8
Total shareholders' equity					171.0			208.9
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY					380.0			421.9

Natuzzi S.p.A. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows					Twelve months ended on
(Expressed in million of Euro)					31-Dec-14			31-Dec-13
Cash flows from operating activities:
Net earnings (loss)					(49.4)			(68.6)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization					14.2			16.6
Write-off of fixed assets								0.4
Impairment of long lived assets					2.5			8.6
One-time termination benefit								20.0
Deferred income taxes					(0.2)			0.1
Minority interest					0.0			0.2
(Gain) loss on disposal of assets					0.8			0.1
Unrealized foreign exchange losses (gains)					0.7			0.5
Extraordinary items, net					(0.8)
Deferred income for capital grants					(0.5)			(0.6)
Non monetary operating items					16.7			45.8
Change in assets and liabilities:
Receivables, net					(20.5)			14.2
Inventories					(11.2)			3.3
Prepaid expenses and accrued income					0.6			0.1
Accounts payable					8.7			4.1
Income taxes					(6.1)			(2.1)
Salaries, wages and related liabilities					7.3			0.4
Other assets/liabilities, net					31.9			1.5
Net working capital					10.7			21.5
One-time outflow from restructuring activities					(14.3)			(0.9)
Net cash generated/(used) by operating activities					(36.2)			(2.2)
Cash flows from investing activities:
Property, plant and equipment:
Additions					(7.5)			(7.1)
Disposals					7.1			0.2
Other Assets								(1.1)
Dividends distribution								(0.2)
Minority interest acquisition								(0.0)
Government grants received					5.2
Net cash generated/(used) by investing activities					4.8			(8.2)
Cash flows from financing activities:
Long-term debt:
Proceeds					5.0
Repayments					(3.3)			(3.3)
Short-term borrowings					(4.2)			(1.9)
Net cash generated/(used) by financing activities					(2.5)			(5.2)
Effect of translation adjustments on cash					5.7			(1.0)
Increase (decrease) in cash and cash equivalents					(28.2)			(16.7)
Cash and cash equivalents, beginning of the year					61.0			77.7
Cash and cash equivalents, end of the period					32.9			61.0

Contacts:

NATUZZI INVESTOR RELATIONS
Piero Direnzo, +39.080.8820.812
[e-mail]
or
NATUZZI CORPORATE COMMUNICATION
Vito Basile (Press Office), +39.080.8820.676
[e-mail]