Natuzzi, the world's largest manufacturer of leather-upholstered furniture, today announced first quarter 2003 net sales decreased 14.1 percent to $196.9 million, compared to $187.3 million in the first quarter 2002.

Net upholstery sales in first quarter 2003 were $176.6 million, 15.8 percent lower than the prior year's quarter while total seat units sold in the first quarter 2003 decreased 4.3 percent over first quarter 2002 to 739,404 seats.

First quarter net upholstery sales in the Americas decreased 18.8 percent to $85.0 million. In Europe, net upholstery sales decreased 13.3 percent to EUR 76.7 million, or $82.3 million, on a weak end-user demand and depressed consumer confidence. The appreciation of the Euro also against far east currencies together with a lower order flow, led down upholstery sales in the Rest of the World by 7.4 percent over first quarter 2002 to EUR 8.7 million, or $9.3 million.

Pasquale Natuzzi
Chairman and Chief Executive Officer
"The strong appreciation of the Euro versus the US dollar and other main currencies compared to the same period in 2002, produced a negative translation effect that was responsible for most of the decline in sales"

"The decrease in net income was the result of lower revenues, higher contribution of sales from the promotional brand Italsofa and unchanged marketing investments that the Company is incurring to raise Natuzzi brand awareness and improve its distribution quality."

"Current market conditions continue to negatively impact orders. The order flow is almost 5% lower than the same period last year, while the back log is 5.4 weeks. The Natuzzi brand is affected by price competition never seen before in the marketplace driven by competitors based in countries with low cost production facilities. For this reason we are continuing to invest in brand related marketing activities the goal of which is to position Natuzzi in the medium-high end of the upholstery market. At the same time we support the growth of Italsofa as a solid competitor in the low-end market."

Given these factors, the continuing strengthening of the Euro and the difficult forecast conditions, both short- and long-term, we do not expect full year results to improve over the level we had in the first quarter."