Natuzzi, S.p.A.

Your passcode has been confirmed. Please wait while you are joined to the conference. The conference is now being recorded.

Hello everyone. Thank you for joining the Natuzis conference call for the 2025 third quarter financial results. After a brief introduction, we will give room for the Q&A session. Before proceeding, we would like to advise our listeners that our discussion today could contain certain statements that constitute forward-looking statements under the United States securities laws. Obviously, actual results might differ materially from those in the forward-looking statements because of risks and uncertainties that can affect our results of operations and financial condition. Please refer to our most recent annual report on Form 20-F filed with the SEC for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. And now I would like to turn the call over to the company's chief executive officer. Please, Mr. Rotuzzi.

Thank you very much. Good morning, everyone. And thank you for taking part in this quarterly call. To what was already communicated in our press release, I would like to add some more details and remarks. While the geopolitical situation has not changed, and in some respects is worsening as a result, consumer confidence remains weak. Despite our investment in marketing, food traffic in our stores, particularly in the United States and Europe, continues to lag. while in some cases we are seeing improvement in conversion rates these gains are not sufficient to offset the decline in overall traffic in spite of the current challenging business environment we have improved our gross margin this quarter surpassing the levels recorded in the first two quarters of the year this achievement was made possible by A more favorable sales mix. In fact, sales of Natuzzi Italia, which deliver higher margin than other product lines, grew by 18% compared to the third quarter of last year, while sales of unbranded products, which are not core to our business, decreased by 20%. we intend to continue in this direction, supporting the blended sales that then offer higher margin. The closing of the Shanghai factory last year, which enabled us to realize a cost saving on industrial operation in China. However, it is important to note that improvements in margin remain limited by labor costs in Italy. following the reshoring process from China to Italy of the Natuzzi edition production from the North American market, completed in the second half of 2024. Commercial and administrative costs deserve a separate mention. While wages and transportation expenses decrease this quarter, overall SG&A costs remain high relative to our current revenue base. Therefore, both myself and the management team remain committed to support ourselves while reducing fixed costs at the group level. We certainly continue our discussion with the Italian government, which has recognized the company as an enterprise of strategic relevance for the country. I would like to inform you that next Monday, I will personally be in Rome at the relevant ministry to seek to improve quality, reducing transformation costs at our Italian factory. and thereby increasing production efficiency lastly we continue to invest time and resources in participating in inter international trade events as well as the in-store visual merchandising and external architecture design in order to offer customer an engaging and compelling shopping experience Recently we were in India and just yesterday we completed a commercial roadshow in China meeting with the leading architecture firms to develop a project similar to the Natuzzi Harmony Residence presented in Dubai and Jerusalem. I'm sorry, you know, we are really doing not our best, more than that, really to satisfy the expectation of our shareholders and our stakeholders, and we will continue to do so. So if there are any questions, I would be pleased to answer together with Carlo, our CFO. Thank you. Thank you very much for listening.