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Natuzzi SpA Message Board

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  • wbplc1998 wbplc1998 Oct 3, 2004 3:33 AM Flag

    What If

    Already stated, sales are @ 1/2 & 1/2

    The rate of change is what will swing eps short term. If there was a rapid USD decline then margins would be compressed short term because it takes time for consumers to adjust to retail prices. A falling USD by axiom means the US standard of living (purchasing power) is declining.

    The compensation hedge for NTZ is its China/Yuan/USD pegged manufacturing of low end product. Sales of EURO cost high end product would likely decline in the US market but the growth in USD/Yuan cost low end product may well accelerate even faster in the US market than the present 20% p.a. as it would have more price/point 'space' in the market.

    The US is 30% of world GDP, NOT more or less. If you are a global company you always have these issues. It's better being exposed to a 30% Fx effect than a 0% effect (your not global) or a 100% effect (your only domestic), that's business.

    What's more important is paying a cheap price for the company especially given most global companies are exposed to the same Fx possibility.

    If you have a long time horizon most of these issues become insignificant. It took 40 years for NTZ to become the world leader with @ 10% market share. What's the problem holding them for 10+ years and watching them grow to 20% market share.

    Cheers WBplc

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    • Interesting point. Good protection so long as the renminbi stays locked on the tail of the USD in its power dive.

      • 1 Reply to astral_tsar
      • "Interesting point. Good protection so long as the renminbi stays locked on the tail of the USD in its power dive..."

        astral, I'm not sure where else you might suggest a *global* company could manufacture and be price competitive everywhere including the USA?

        China, Brazil, Romania pretty much covers the lowest cost juristictions. India or Africa maybe but the transport cost probably negates any fractional labor advantage!

        There seems to be a fear factor surrounding NTZ that doesn't fit the facts. Name another company in the same line of business that has a chance to win against NTZ globally over the next 10 years, with similar... global penetration, financial muscle, aligned management and as cheap?

        Cheers WBplc

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