Table of Contents
Natuzzi S.p.A.
Annual Report on Form 20-F
2025
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 2025
Commission file number: 001-11854
NATUZZI S.p.A.
(Exact name of Registrant as specified in its charter)
Republic of Italy
(Jurisdiction of incorporation or organization)
Via Iazzitiello 47, 70029, Santeramo in Colle, Bari, Italy
(Address of principal executive offices)
Mr. Pietro Direnzo
Tel.: +39 080 8820 111; pdirenzo@natuzzi.com; Via Iazzitiello 47, 70029 Santeramo in Colle, Bari, Italy
(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
American Depositary Shares, each representing five Ordinary Shares
NTZ
New York Stock Exchange
Ordinary Shares, with a par value of €1.00 each*
New York Stock Exchange*
*Not for trading, but only in connection with registration of American Depositary Shares
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
As of December 31, 2025: 55,073,045 Ordinary Shares
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (§ 15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐ International Financial Reporting Standards as issued ☒ Other ☐
by the International Accounting Standards Board
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Page
PART I
3
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3. KEY INFORMATION
Risk Factors
ITEM 4. INFORMATION ON THE COMPANY
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Business Overview
Organizational Structure
17
Strategy
18
Manufacturing
23
Supply-Chain Management
25
Products
26
Innovation
27
Advertising
29
Retail Development
30
Markets
Customer Credit Management
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Incentive Programs and Tax Benefits
35
Management of Exchange Rate Risk
36
Trademarks and Patents
Regulation
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Environmental Regulatory Compliance
Insurance
Description of Properties
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Capital Expenditures
ITEM 4A. UNRESOLVED STAFF COMMENTS
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
39
Non-GAAP Financial Measures
Results of Operations
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2025 Compared to 2024
41
2024 Compared to 2023
45
Liquidity and Capital Resources
Research and Development
49
Trend information
Critical Accounting Estimates
51
New Accounting Standards under IFRS
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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Compensation of Directors and Officers
58
Statutory Auditors
59
Employees
60
Share Ownership
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
61
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
62
Major Shareholders
Related Party Transactions
63
ITEM 8. FINANCIAL INFORMATION
64
Consolidated Financial Statements
Export Sales
Legal and Governmental Proceedings
Dividends
ITEM 9. THE OFFER AND LISTING
65
Trading Markets
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ITEM 10. ADDITIONAL INFORMATION
66
By-laws
Material Contracts
71
Exchange Controls
72
Taxation
73
Documents on Display
78
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
79
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
81
ITEM 12A. DEBT SECURITIES
ITEM 12B. WARRANTS AND RIGHTS
ITEM 12C. OTHER SECURITIES
ITEM 12D. AMERICAN DEPOSITARY SHARES
PART II
83
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
ITEM 15. CONTROLS AND PROCEDURES
ITEM 16. [RESERVED]
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ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
ITEM 16B. CODE OF ETHICS
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
85
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
ITEM 16G. CORPORATE GOVERNANCE
ITEM 16H. MINE SAFETY DISCLOSURE
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ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
ITEM 16J. INSIDER TRADING POLICIES
ITEM 16K. CYBERSECURITY
PART III
91
ITEM 17. FINANCIAL STATEMENTS
ITEM 18. FINANCIAL STATEMENTS
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PRESENTATION OF FINANCIAL AND OTHER INFORMATION
In this annual report on Form 20-F (the “Annual Report”), references to “€” or “Euro” are to the Euro and references to “U.S. dollars,” “dollars,” “U.S.$” or “$” are to United States dollars.
The consolidated financial statements of Natuzzi S.p.A. as at December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”), including interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS. The consolidated financial statements and the notes thereto included in Item 18 of this Annual Report are referred to collectively as the “Consolidated Financial Statements”.
All discussions in this Annual Report are in relation to IFRS, unless otherwise indicated.
In this Annual Report, the term “seat” is used as a unit of measurement. A sofa consists of three seats; an armchair consists of one seat.
In this Annual Report “revenue” is also referred to as “net sales”.
The terms “Natuzzi,” “Natuzzi Group,” “Company,” “Group,” “we,” “us,” and “our,” unless otherwise indicated or as the context may otherwise require, mean Natuzzi S.p.A. and its consolidated subsidiaries.
None of the websites referred to in this Annual Report, including where a link is provided, nor any of the information contained on such websites is incorporated by reference in this Annual Report.
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FORWARD-LOOKING INFORMATION
The Company makes forward-looking statements in this Annual Report. Statements that are not historical facts, including statements about the Group’s beliefs and expectations, are forward-looking statements. Words such as “believe,” “expect,” “intend,” “plan,” “anticipate,” “likely,” “project,” “target,” “seek,” “goal,” “aim,” “could,” “should,” “would,” “may,” “might,” “will,” “strategy,” “future,” “continue,” “potential” and similar expressions are intended to identify forward-looking statements but are not exclusive means of identifying such statements. These statements are based on management’s current plans, estimates and projections, and therefore readers should not place undue reliance on them. Forward-looking statements speak only as of the dates they were made, and the Company undertakes no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.
Projections and targets included in this Annual Report are intended to describe our current targets and goals, and not as a prediction of future performance or results. The attainment of such projections and targets is subject to a number of risks and uncertainties described in the paragraph below and elsewhere in this Annual Report. See “Item 3. Key Information—Risk Factors.”
Forward-looking statements involve inherent risks and uncertainties, as well as other factors that may be beyond our control. The Company cautions readers that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to: the effects on the Group from competition with other furniture producers, material changes in consumer demand or preferences, significant economic developments in the Group’s primary markets, the Group’s execution of its reorganization plans for its manufacturing facilities and offices (including the outcome of labor negotiations and workforce restructuring), significant changes in labor, material and other costs affecting the construction of new plants, significant changes in the costs of principal raw materials, labor, transportation and energy, significant exchange rate movements or changes in the Group’s legal and regulatory environment, including developments related to the Italian Government’s investment incentive or similar programs, the duration, severity and geographic spread of any public health outbreaks (including the spread of any future epidemic), events affecting consumer demand, our supply chain (such as tensions in the Middle East region and disruptions of transit through the Persian Gulf and the Strait of Hormuz, potentially leading to the rerouting of shipping) and the Company’s financial condition (including the outcome and timing of corporate crisis management procedures under Italian law, and the Company’s business plan and capital structure initiatives), business operations and liquidity, the Company’s ability to continue as a going concern, the geopolitical tensions and market uncertainties resulting from the ongoing armed conflict between Russia and Ukraine and conflicts in the Middle East region and the inflationary environment and potential increases in interest rates, as well as protectionist trade policies, tariffs and related retaliatory measures. The Company cautions readers that the foregoing list of important factors is not exhaustive. When relying on forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and events.
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Not applicable.
Investing in the Company’s American Depositary Shares (“ADSs”) involves certain risks. You should carefully consider each of the following risks and all of the information included in this Annual Report.
We may not be able to continue our business as a going concern, and we may be unable to raise the additional capital necessary to fund our operations—Our consolidated financial statements for the year ended December 31, 2025 were prepared on a going concern basis, which assumes that the Group will be able to meet its obligations as they fall due within one year from the date of the approval of such consolidated financial statements. However, as discussed in Note 3(f) to the Consolidated Financial Statements and in “We have a history of operating losses and cannot assure you that we will be profitable in the future; our future profitability, financial condition and ability to maintain adequate levels of liquidity depend, to a large extent, on our ability to overcome operational challenges” and “Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position”, the Company has suffered recurring losses from operations and reported a revenue decline of 3.32% for the year ended December 31, 2025. In addition, the Company’s revenue and cash flows for the first months of 2026 have been negatively affected by a combination of unfavorable macroeconomic conditions, including prolonged geopolitical instability, a significant discontinuity in international demand for upholstered furniture—further compounded by the recent tightening of the U.S. tariff framework—elevated inflation and interest rates in prior years leading to a reduction in consumers’ disposable income, and a subdued real estate market.
The impact of these factors on Group’s liquidity raises substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans to mitigate the adverse effects of such events and conditions are described in Note 3(f) to the Consolidated Financial Statements. In particular, in May 2026 the Company’s management, following the guidelines approved in December 2025, approved an economic and financial plan covering the period up to June 2027 (the “One-Year Budget”), aimed at restoring efficiency and profitability across the Group, which envisage, among other things, a significant reduction in fixed costs, shutdown of certain underutilized facilities, closure of non-performing directly operated stores, divestiture of certain non-strategic Italian assets, and outsourcing of low value-added activities. Most notably, the implementation of the One-Year Budget requires raising resources to cover the cash requirements through a combination of i) non-strategic asset disposals and ii) a review of the Company’s capital structure and potential capital strengthening actions including a capital increase with potential access by a national government relaunch agency. In addition, on May 14, 2026 the board of directors conferred delegated authority on the Chief Executive Officer ad interim to initiate an out-of-court composition proceeding (Composizione negoziata della crisi, the "Composition") a voluntary, debtor-in-possession restructuring tool under Italian Legislative Decree No. 14 of January 12, 2019, designed to address financial distress at an early stage through consensual negotiations, with limited court involvement. The formal request to initiate the Composition will be filed in the next forthcoming days.
As described in Note 3(f), certain actions under the One-Year Budget have already been undertaken. Management further notes that the Group’s cash flow forecasts covering a 12-month period from the date of approval of the consolidated financial statements for the year ended December 31, 2025 are heavily dependent, in particular, on the planned strengthening of the capital structure, including a potential capital increase with a potential access by national government relaunch agency, net of the cash proceeds generated by the disposal of non-strategic assets. There can be no assurance that the necessary financing will be available, or that it will be available on acceptable terms or within the envisaged timeframe. If we are unable to raise sufficient capital, we may be required to curtail our operations, reduce planned expenditures, or take other measures that could have a material adverse effect on our business and financial condition. As a result of this circumstance there is material uncertainty that raises substantial doubt about the Group’s ability to continue as a going concern for a reasonable period of time and, therefore, to continue realizing its assets and discharging its liabilities in the normal course of business. If we are not successful in implementing the One-Year Budget, we may not be able to continue operations as a going concern and our shareholders may lose their entire investment in us.
Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position — Our results of operations are materially affected by economic and political conditions in Italy, in the European Union and in the world, which may be influenced by several factors, most of which are beyond our control. Such factors include public health outbreaks (including the spread of any future epidemic), geopolitical instability, including trade wars, the war between Russia and Ukraine, the conflicts in the Middle East region (including the Israel-Hamas conflict and the recent military operations in Iran), the resulting disruption of transit through the Persian Gulf and the Strait of Hormuz, stock market performance, interest and exchange rates, inflation, recession and fears of recession, economic and political uncertainty, the availability of consumer credit, changes in global trade policies, tax rates, unemployment levels and other matters that influence consumer confidence. Deteriorating general economic conditions and generalized high levels of inflation may reduce consumers’ disposable incomes and, therefore, client demand, which may negatively impact our profitability and put downward pressure on our prices and volumes. Moreover, sales of home furnishing goods tend to be significantly affected during recessionary periods or times of increased interest rates, when the level of disposable income tends to be lower or when consumer confidence is low.
Of particular relevance in the global macro-economic environment are the uncertainties relating to the scope and duration of the ongoing military conflicts. In particular, the conflict between Russia and Ukraine and the sanctions levied by the U.S., NATO and the European Union in connection thereto, and the conflicts in the Middle East region, are worsening global macro-economic conditions. More specifically, as a result of such geopolitical instability, the global economy has experienced high levels of inflation and may continue to experience high levels of inflation in the future, which may result in increases in the costs of raw materials and labor, and other goods or services required to operate and grow our business, and such increases may continue to impact us in the future and expose us to risks associated with significant levels of cost inflation. Moreover, the high inflation rates have resulted in, and may continue to result in, higher interest rates, as central banks adjust interest rates in an attempt to manage the inflationary environment as well as economic volatility. Although global inflation levels decreased slightly in 2024 and 2025, inflation rates remain exposed to upward risk due to general macroeconomic and geopolitical uncertainty. Interest rates increased substantially in recent years and, despite having decreased slightly in 2025, they remain relatively high, in part due to the persistent inflationary pressures associated with, among other things, geopolitical instability, including the disruption of transit in the Strait of Hormuz and the resulting volatility in energy prices. The high level of inflation and increases in interest rates in recent years have affected clients’ disposable incomes, thus causing consumers to delay or reduce investments in their existing homes and to become more price conscious, resulting in a shift in demand toward less expensive products. The combination of high interest rates and high levels of inflation has resulted in recent years in more expensive mortgages, and, therefore, in a weakening of the housing market, by reducing home improvement projects and new construction activity. These factors have affected, and may in the future affect, demand for our products, thus resulting in lower revenues and lower profitability, which adversely affected, and may in the future affect, our results of operations.
Moreover, although the specific impact of the conflicts and tensions in the Middle East region, including disruptions of transit through the Persian Gulf and the Strait of Hormuz, and the potential escalation thereof, remains uncertain, such impact could include, among other things, increased volatility in financial and commodity markets, increased energy prices, increased transportation costs, a higher level of general market and macroeconomic instability, and violent protests or social unrest in areas outside the immediate conflict area. These conflicts and the potential escalation thereof, as well as any other military or geopolitical conflicts that may arise in the future, could lead to a deterioration of global macroeconomic conditions, reduced household disposable income and weakened consumer demand, which could materially adversely affect our operations, financial position, and results of operations.
Uncertainties regarding current and future trade arrangements and industrial policies in various countries or regions pose an additional macroeconomic risk. In particular, since the beginning of 2025, the U.S. presidential administration has announced and, in certain cases, implemented multiple new tariff measures under various authorities. In response, certain countries have announced and, in certain cases, implemented reciprocal tariffs or other similar actions. These tariffs have been announced, modified, suspended, or reinstated with limited notice. As a result of these developments, there remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such measures, and the potential imposition of new or increased tariffs and other trade barriers or protectionist industrial policies; such uncertainty, in turn, may adversely affect global trade and macroeconomic conditions, resulting in higher costs for both producers and consumers. Governments may continue to resort to trade barriers to protect domestic industries from foreign imports, to retaliate against similar measures imposed by other countries, or to address economic challenges such as currency deflation. The imposition of tariffs, along with the uncertainty of whether, and to what extent, new tariffs (or other new related laws or regulations) will be enacted, and the impact of such actions on us, our business, financial condition and results of operations, as well as on our industry and on global consumer purchasing power, may have a negative impact on our results of operations.
Adverse economic conditions may also affect the financial health and performance of our franchises and large distributors in a manner that will affect sales of our products or their ability to meet their commitments to us. In addition, if our retail customers are
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unable to sell our products or are unable to access credit, they may experience financial difficulties leading to bankruptcies, liquidations, and other unfavorable events. If any of these events occur, or if unfavorable economic conditions continue to challenge the consumer environment, our future sales, results of operations and liquidity would likely be adversely impacted.
Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations — Our business is significantly exposed to raw material, transportation and labor costs, which are generally dependent on a number of factors beyond our control. Specifically, prices of the raw materials we use in our production processes generally depend, among other things, on macroeconomic factors that may affect commodity prices; changes in supply and demand; energy and transportation costs; general economic conditions; inflation and interest rates; significant political events; supply costs; competition; import duties, tariffs, anti-dumping duties and other similar costs; currency exchange rates and government regulation; and events such as natural disasters and widespread outbreaks of infectious diseases.
In addition, changes in global trade policies, including the imposition of new or increased tariffs, taxes, customs duties or other similar trade restrictions by the U.S. government and/or other foreign governments on certain products and materials, could potentially disrupt our existing supply chains and increase the cost of raw materials critical to the manufacture of our products and we may be unable to find a supplier in the relevant country of production that can economically provide the necessary raw materials in the quantities we require. This, in turn, would increase the overall cost of our products and reduce their demand. To manage the increased costs, we would either have to raise prices, which may result in reduced sales in the affected markets, or accept lower profit margins. Tariffs and other non-tariff trade practices and policies may adversely affect our business in other ways beyond increased costs for our products. We have taken, and may in the future take, steps to move our supply chain away from countries with higher tariff rates in favor of other jurisdictions, but these countermeasures may prove to be ineffective and the ability to predict tariff rates in different countries may be difficult as policies may change on short notice. Uncertainty about trade policy, tariff rates, and other changes in practices affecting international trade might have an adverse effect on our business and results of operation and we may face challenges in implementing the optimal responses to changing trade conditions.
In 2025, approximately 49.6% of our total upholstered and home furnishings net sales came from leather-upholstered furniture sales. The consumption of cattle hides represented approximately 12% of the total cost of goods sold for the year ended on December 31, 2025. The dynamics of the raw hides market are dependent on the consumption of beef, the levels of worldwide slaughtering, worldwide weather conditions and the level of demand in a number of different sectors, including footwear, automotive, furniture and clothing.
During the first part of 2025, prices for certain raw materials—including leather, wood, iron, aluminum, steel, cardboard packaging, and polyethylene—continued to decline, primarily driven by lower energy costs. This trend began to partially reverse in the latter part of the year. As a result, in 2025 our consumption of raw materials, semi-finished and finished products represented 37.2% of revenue compared to 36.0% in 2024. There can be no assurance that current prices will remain stable or that the recent upward trend will not continue in the future, including as a result of the evolving tariff landscape.
In addition, we are exposed to increases in transportation costs. Although transportation costs were stable in 2025, representing 7.7% of revenue compared to 7.8% in 2024, there can be no assurance that such costs will not increase in the future due to, among other things, high levels of inflation, surge in demand for transportation, or other specific circumstances, such as current geopolitical tensions, especially conflicts in the Middle East region, and the resulting disruption of transit through the Persian Gulf and the Strait of Hormuz, which could cause the rerouting of shipping, as was the case in the last part of 2023 and during 2024 due to the attacks by Houthi militants from Yemen on commercial shipping in the Gulf of Aden and Red Sea, which have caused the rerouting of shipping away from the Suez Canal. The re-routing of vessels could significantly increase traffic in bunkering ports on the alternative routes and cause bunker fuel demand on such routes to rise sharply. Shipping companies could repass the costs of re-routing vessels to their customers, including us, which could significantly increase our freight costs for the shipping of products. There can be no assurance that we will be able to successfully pass along additional cost increases as they arise, and rising inflation could have an adverse impact on consumer demand for discretionary items such as home furnishings. Production delays due to disruptions in transportation and upward trends in raw material prices could result in lower sales or margins, thereby affecting our earnings.
Moreover, our production process is labor-intensive and, therefore, we are exposed to increases in labor costs. In 2025, we experienced an increase in labor-related costs per employee compared to 2024 and 2023, due to renegotiation of national collective bargaining agreements in certain countries, especially in Romania (where the base salary for our employees increased on an annual basis by 9% in 2025 after increasing by 18% in 2024), Italy (where the base salary for our employees increased on an annual basis by 2.9% in 2025 after increasing by 5.9% in 2024), and Brazil (where the base salary for our employees increased on an annual basis by 5.9% in 2025 after increasing by 5.5% in 2024).
The profitability of our business depends in part upon the margin between the cost to us of certain raw materials, our production costs associated with converting such raw materials into assembled products (including labor-related costs) and our costs associated with transporting our products to consumers, as compared to the selling price of our products. Although we could offset part of our
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increased costs with increased pricing for our products, any unrecovered increased operating costs could adversely impact our margins and, therefore, have a material adverse effect on our results of operations. Moreover, an increase in our product prices could negatively affect our business by making consumers more price conscious, thus resulting in a shift in demand to less expensive products.
We have a history of operating losses and cannot assure you that we will be profitable in the future; our future profitability, financial condition and ability to maintain adequate levels of liquidity depend, to a large extent, on our ability to overcome operational challenges — We have a history of operating losses having recorded an operating loss of €10.6 million in 2020, €22.5 million in 2019, €25.5 million in 2018 and €24.0 million in 2017. Although we achieved an operating profit of €4.9 million and €8.5 million in 2021 and 2022, respectively, we recorded an operating loss of €9.5 million in 2023, an operating loss of €6.3 million in 2024, and an operating loss of €18.8 million in 2025, and we may not be able to achieve or sustain profitable operations in the future or generate positive cash flows from operations.
Furthermore, during the last fourteen years, we have incurred aggregate financial obligations in the amount of €64.2 million (€0.7 million, €9.6 million, €3.1 million, €0.1 million, €0.3 million, €3.8 million, €3.8 million, €1.4 million, €16.9 million, €4.5 million, €4.5 million, €13.5 million, €1.4 million and €0.6 million for the years 2025, 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013 and 2012 respectively), almost entirely in connection with our efforts to reduce redundant workers. See “We have redundant workers at our Italian operations, which remains an unresolved issue, and have benefited in 2025 and in previous years from temporary work force reduction programs; if we continue to be unable to reduce our redundant workers and/or if such temporary work force reduction programs are not continued, our business, results of operations and liquidity may continue to be impacted or may be impacted at a greater extent.”
Our results of operations and ability to maintain adequate levels of liquidity in the future will depend on our ability to overcome these and other challenges. Our failure to achieve profitability in the future could adversely affect the trading price of our ADSs and our ability to raise additional capital and, accordingly, our ability to grow our business. There can be no assurance that we will succeed in addressing any or all of these risks, and the failure to do so could have a material adverse effect on our business, results of operations and financial condition.
We have redundant workers at our Italian operations, which remains an unresolved issue, and have benefited in 2025 and in previous years from temporary work force reduction programs; if we continue to be unable to reduce our redundant workers and/or if such temporary work force reduction programs are not continued, our business, results of operations and liquidity may continue to be impacted or may be impacted at a greater extent — Our Italian operations employ redundant workers. In line with the previous years, the Company has entered into a series of agreements with Italian trade unions pursuant to which government funds have been used to pay a substantial portion of the salaries of such redundant workers, who are subject to either temporary layoffs, as in the case of the Cassa Integrazione Guadagni Straordinaria (“CIGS”), or reduced work schedules, as in the case of the Solidarity Facilities (as defined below). The use of such temporary work force reduction programs has also resulted in a series of lawsuits brought against the Company.
In May 2017, the Italian Supreme Court (Corte di Cassazione) rejected the Company’s appeal of a lawsuit brought by two former employees of the Company relating to the implementation of the CIGS, ruling in favor of the plaintiffs. As a result of this decision, several further workers have brought lawsuits against the Company over time for alleged misapplication of the CIGS. Since then, the Company has accordingly increased its provision for legal claims. As of December 31, 2025, provision for legal claims amounted to €2.9 million, of which €1.4 million referred to the probable contingent liability related to the legal proceedings initiated for the alleged misapplication of the CIGS. For additional information, see Note 26 to the Consolidated Financial Statements.
In addition, in October 2016, the Company laid off 176 Italian workers as part of an organizational restructuring, 166 of whom were then re-employed as the Bari Labor Court deemed the dismissals to have been carried out improperly. In March 2017, the Company and the Italian institutions representing those workers agreed to extend the scope of an agreement signed by the Company and the Minister of Labor and Social Politics in 2015 to reduce working hours per day (the “2015 Solidarity Facility”) in order to lessen the impact of re-employments in 2018. Pursuant to the 2015 Solidarity Facility, a higher number of workers, as compared to the Company’s need, may continue to work at the Company, though with a salary reduction that is less than proportional to the reduction in working hours as a result of government financial support.
In December 2018 and 2019, the Company and the relevant trade unions and Italian authorities agreed to extend the scope of the 2015 Solidarity Facility, which was later suspended following the COVID-19 outbreak. Indeed, from March 2020 to June 2021, in agreement with trade unions, the Company adopted certain social safety nets made available by the Italian Government to mitigate the impacts of the COVID-19 pandemic on the cost of labor. As a result, the scope of the 2015 Solidarity Facility was extended until November 2021. Since November 2021, the scope of the 2015 Solidarity Facility has been further extended over the years, most recently on January 14, 2025, until October 31, 2025.In addition, on June 19, 2025, the Company, the relevant trade unions and Italian authorities entered into a further agreement to reduce working hours per day and to provide access to the CIGS for workers
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employed at plants not covered by any similar measures, for the period from July 1, 2025 to April 30, 2026 (the “2025 Solidarity Facility” and, together with the 2015 Solidarity Facility, the “Solidarity Facilities”). However, on November 5, 2025, following the Company’s formal recognition as an “Enterprise of Strategic Relevance for the Country”—which entitles the Company to access certain measures provided by applicable national legislation to further mitigate labor costs—the Company, the relevant trade unions and Italian authorities entered into a new agreement (the “2025 CIGS Agreement”) enabling the Company to benefit from CIGS for up to 805 workers for the period from November 1, 2025 to December 31, 2025, and providing for the early termination of the 2025 Solidarity Facility. On January 27, 2026, the 2025 CIGS Agreement has been further extended, allowing the Company to benefit from CIGS for up to 794 workers until December 31, 2026.
Additionally, starting from December 2018, the Company and the relevant trade unions and Italian authorities agreed on the use by the Company of CIGS in order to support the Company’s reorganization process. From January 1, 2019 until March 2020, the Company benefitted from CIGS for up to 487 workers employed at the plant located in Altamura. From March 2020 to June 2021, in agreement with trade unions, the Company adopted certain social safety nets made available by the Italian Government to mitigate the impacts of the COVID-19 pandemic. As a result, CIGS was extended until February 2022. In February 2022, the Company and the relevant trade unions and Italian authorities signed an agreement allowing the Company to benefit from CIGS for up to 463 workers employed at the plant located in Altamura until mid-February 2023. In January 2023, the Company and the relevant trade unions and Italian authorities signed an agreement allowing the Company to benefit from CIGS for up to 449 workers employed at the plant located in Altamura until December 31, 2023. Furthermore, on July 11, 2023, the Company, the relevant trade unions and Italian authorities signed an agreement (the “Early Retirement Agreement”) that provides for (i) early retirement for employees who are within 60 months of reaching retirement age, (ii) the hiring of new employees, (iii) the implementation of training programs and (iv) access to the CIGS for redundant employees. As a result, among other things, the Company was allowed to benefit from CIGS for up to 875 workers employed at various plants of the Group until June 30, 2025 under the Early Retirement Agreement.
If these temporary work force reduction programs are not continued in the future, our business, results of operations and liquidity may be significantly impacted.
Furthermore, since 2021, we and the other parties involved have agreed to set up an incentive plan for workers who voluntarily terminate their employment relationship, that is expected to remain in place through 2026. If this or other efforts to reduce redundant workers are not successful, the labor cost associated with such redundant workers will continue to have an adverse effect on our business, results of operations and financial condition.
In recent months, the Company has been engaged in active negotiations with the relevant Italian authorities, including trade unions and the competent Italian Ministry, to address labor-related challenges (including by obtaining government support measures for a workforce restructuring process) and support the Company’s long-term sustainability. The Company’s primary objective is to reach an agreement with the Italian authorities in the near term, as such an agreement could facilitate a more orderly workforce restructuring process and mitigate the associated social impact. However, as of the date of this Annual Report, the outcome of these negotiations remains uncertain, as are the potential economic and financial impacts thereof.
Our ability to generate sufficient cash flows from operations to service our existing and anticipated debt obligations and to maintain adequate levels of liquidity depends on numerous factors, many of which are beyond our control— Our ability to make scheduled payments due on our existing and anticipated debt obligations and on our other financial obligations, and to refinance and to fund planned capital expenditure and development efforts will depend on our ability to generate cash. See “We have a history of operating losses and cannot assure you that we will be profitable in the future; our future profitability, financial condition and ability to maintain adequate levels of liquidity depend, to a large extent, on our ability to overcome operational challenges”. Our ability to obtain cash to service our existing and projected debts is subject to a range of economic, financial, competitive, legislative, regulatory, business and other factors (including recent heightened volatility and uncertainty), many of which are beyond our control. We may not be able to generate sufficient cash flow from our operations to satisfy our existing and projected debt and other financial obligations, in which case, we may have to undertake alternative financing plans, sell assets, reduce or delay capital investments, or seek to raise additional capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the financial markets and our financial condition at such time. To the extent we have borrowings under bank overdrafts and short-term borrowings that are payable upon demand or which have short maturities, we may be required to repay or refinance such amounts on short notice, which may be difficult to do on acceptable financial terms or at all.
Our ability to generate sufficient cash flows from operations and to maintain adequate levels of liquidity is currently exposed to an environment characterized by heightened volatility and uncertainty. The geopolitical tensions caused by the ongoing conflicts in Ukraine and in the Middle East region, including the Israel-Hamas conflict, the recent military operations in Iran and the resulting disruption of transit through the Persian Gulf and the Strait of Hormuz, as well as any further escalation thereof, the imposition of sanctions, taxes and/or tariffs against Russia and Russia’s response to such sanctions, the imposition of new or increased tariffs and other trade barriers by the U.S. or other foreign governments, the risk of increased energy and raw material prices, the risk of rising inflation on a global basis and the resulting potential increases in interest rates by major central banks in major economies to curb
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inflation, and the resulting impacts on financial markets, have contributed, and may continue to contribute, to instability in global financial markets, disruptions in supply chains, increased costs, reduced consumer confidence and weaker demand in certain markets in which we operate. These factors have also resulted, and may result in the future, in diminished liquidity and credit availability, which could impair our ability to access capital if needed. In response to the significant threat posed by these factors to the liquidity of financial markets and the high level of inflation — which has resulted in reduced consumer purchasing power and weakened consumer confidence — most central banks around the world have taken significant actions in recent years to return inflation levels to their respective expected targets. There can be no assurance that these interventions will be successfully transmitted into the real economy or that the financial markets will not experience significant contractions in available liquidity.
In addition, persistent inflationary pressures, together with volatility in foreign exchange markets and fluctuations in energy, oil and raw material prices, could adversely affect our cost structure, margins and operating cash flows. Given our international operations and exposure to multiple currencies, unfavorable movements in foreign exchange rates may also negatively impact our revenues, costs, debt servicing capacity and the translation of our financial results, notwithstanding any hedging or other mitigating actions we may undertake. Furthermore, a tightening of credit conditions, reduced liquidity in financial markets and volatility in financing costs may limit our ability to refinance existing indebtedness or obtain additional financing on acceptable terms, or at all. Any deterioration in our financial condition or in global or regional financial market conditions could materially constrain our access to liquidity.
At December 31, 2025, we had €22.2 million of bank overdrafts and short-term borrowings outstanding and €20.3 million of cash and cash equivalents. In response to these challenges, we have undertaken, and may continue to evaluate reorganization initiatives aimed at improving efficiency, optimizing our industrial and commercial footprint and strengthening cash generation; however, such initiatives are subject to execution risks, market conditions and other uncertainties, and there can be no assurance that they will achieve the intended results within the expected timeframe or at all. We cannot assure you that any refinancing or reorganization would be possible, that any assets could be sold, or, if sold, of the timing of the sales or the amount of proceeds that would be realized from those sales. We cannot assure you that additional financing could be obtained on acceptable terms, if at all, or would be permitted under the terms of our various debt instruments then in effect. Our failure to generate sufficient cash flow to satisfy our existing and projected debt obligations, or to refinance our obligations on commercially reasonable terms, would have an adverse effect on our business, results of operations and financial condition.
The Company uses a securitization program as part of its liquidity management strategy; any reduction in availability, increased restrictions or termination of such program could adversely affect the Company’s liquidity—The Company operates a trade receivable securitization program as part of its liquidity management strategy. On July 9, 2015, the Company entered into an accounts receivable securitization program with an affiliate of Intesa Sanpaolo S.p.A. (the “Assignee”), which was subsequently amended and renewed on July 22, 2020 for a five-year period (the “Securitization Program”). The Securitization Program has been further amended on July 25, 2025 and January 14, 2026 (collectively, the “Securitization Program Amendments”). Following the Securitization Program Amendments, the maximum aggregate amount of receivables that may be transferred under the Securitization Program has been reduced to €18.0 million from €40.0 million, reflecting decreasing revenue levels and the Company’s downgraded creditworthiness as assessed by the Assignee. In addition, the revolving period has been extended for a one-year period and is currently scheduled to expire, absent early termination, no later than June 2027.
Under the Securitization Program, the Company may assign eligible trade receivables on a revolving basis, retaining substantially all risks and rewards associated with such receivables on a pro-solvendo basis. The effective availability of funding under the Securitization Program is subject not only to the reduced portfolio cap, but also to revised and more restrictive eligibility criteria and concentration limits introduced by the recent amendments, including, among other things, stricter requirements relating to the credit quality of eligible debtors, insurance coverage, individual debtor exposure limits, geographic and jurisdictional constraints, ageing thresholds, and the exclusion of receivables overdue beyond specified time limits. As a result, the volume of receivables that can be transferred at any given time may be materially lower than the contractual maximum amount, depending on the composition and quality of the Company’s accounts receivable portfolio.
Any deterioration in customer creditworthiness, changes in insurance coverage, increased payment delays, disputes, concentration breaches or failure to meet updated eligibility requirements could further limit or suspend the Company’s ability to utilize the Securitization Program.
If the Securitization Program were terminated, not renewed beyond the current revolving period, or otherwise became unavailable or significantly restricted, the Company would lose an important source of short-term liquidity. In such circumstances, the Company may be required to rely more heavily on alternative financing sources or internal cash generation, which may not be available on acceptable terms, or at all. Any of these events could have a material adverse effect on the Company’s liquidity, financial condition and results of operations.
Our operations may be adversely impacted by strikes, slowdowns and other labor relations matters — Many of our employees, including many of the workers at our Italian plants, are unionized and covered by collective bargaining agreements. As a result, we
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are subject to the risk of strikes, work stoppages or slowdowns and other labor relations matters, particularly in our Italian plants. Any strikes, threats of strikes, slowdowns or other resistance in connection with our reorganization plan, the negotiation of new labor agreements or otherwise could adversely affect our business and impair our ability to implement further measures to reduce structural costs and improve production efficiencies. A lengthy strike that involves a significant portion of our manufacturing facilities could have an adverse effect on our cash flows, results of operations and financial condition.
Additionally, we renegotiate these collective bargaining agreements at routine intervals and may be unable to renew these collective bargaining agreements on the same or similar terms, or at all.
We may not execute our budget plan, successfully or in a timely manner, which could have a material adverse effect on our results of operations or on our ability to achieve the objectives set forth in our plans — The Company’s board of directors approved the One-Year Budget, aimed at restoring efficiency across the Group.
The one-year budget envisages:
Most notably, the One-Year Budget envisages raising resources to cover the cash requirements through a combination of (i) non-strategic asset disposals and (ii) a review of the Company’s capital structure and potential capital strengthening actions, including a capital increase with potential access by national government relaunch agency.
The gradual improvement in the Group's profitability depends on the successful and timely execution of the Company's One-Year Budget. Failure to successfully and timely achieve the objectives included in the One-Year Budget could result in a failure to reduce costs, which could negatively affect the marginality of the Group.
Failure to offer a wide range of products that appeal to consumers in the markets we target and at different price-points could result in a decrease in our future profitability — Our sales depend on our ability to anticipate and reflect consumer tastes and trends in the products we sell in various markets around the world, as well as our ability to offer our products at various price points that reflect the spending levels of our target consumers. While we have broadened the offering of our products in terms of styles and price points over the past several years in order to attract a wider base of consumers, our results of operations are highly dependent on our continued ability to properly anticipate and predict these trends. Our potential inability to anticipate consumer tastes and preferences in the various markets in which we operate, and to offer these products at prices that are competitive to consumers, may negatively affect our ability to generate future earnings.
In addition, with a significant portion of our revenue deriving from the sale of leather-upholstered furniture, consumers have the choice of purchasing upholstered furniture in a wide variety of styles and materials, and consumer preferences may change. There can be no assurance that the current market for leather-upholstered furniture will grow consistently with our internal projections or that it will not decline.
Demand for furniture is cyclical and may fall in the future — Historically, the furniture industry has been cyclical, fluctuating with economic cycles, and sensitive to general economic conditions, housing starts, interest rate levels, credit availability and other factors that affect consumer spending habits. Due to the discretionary nature of most furniture purchases and the fact that they often represent a significant expenditure to the average consumer, such purchases may be deferred during times of economic uncertainty. Should current economic conditions worsen (including as a result of current geopolitical tensions or of new or increased tariffs or other trade restrictions), the current rate of housing continue to decline, inflation rates resume an upward trend, or new or increased tariffs or other trade restrictions be implemented by the United States or other countries, consumers’ disposable incomes could be affected, thus deteriorating consumer demand, as well as consumer confidence, for home furnishings, which may have an adverse effect on our business, results of operations and financial condition. See “Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position.”
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Our inability to accurately forecast demand for our products could affect our profitability — The delivery lead time for certain raw materials that we use in our manufacturing process, such as leather, is lengthy and, therefore, we purchase these raw materials well in advance of their consumption. This requires us to make forecasts and assumptions regarding current and future demand for our products. Inaccuracies in these forecasts and assumptions may hinder our ability to efficiently manage our operations, facilities, and production capacity, thereby adversely affecting our results of operations.
Our forecasts concerning product demand influence inventory management. Over-purchasing certain raw materials may impair the value of our inventory, thus reducing our margins and negatively affecting our financial condition and liquidity. Conversely, under-purchasing certain raw materials may result in an inability to timely meet customer orders, which could also adversely affect our sales, earnings, financial condition, and liquidity.
The furniture market is highly competitive — We operate in a highly competitive industry that includes a large number of manufacturers. No single company has a dominant position in the industry. Competition is generally based on product quality, brand name recognition, price and service. We mainly compete in the upholstered furniture sub-segment of the furniture market. In Europe, the upholstered furniture market is highly fragmented. In the U.S., the upholstered furniture market includes a number of relatively large companies, some of which are larger and have greater financial, technical, marketing and other resources than us. Some of our competitors offer extensively advertised, well-recognized branded products. Competition has increased significantly in recent years as foreign producers from countries with lower manufacturing costs have begun to play an important role in the upholstered furniture market. Such manufacturers are often able to offer their products at lower prices, which increases price competition in the industry. In particular, manufacturers in Asia and Eastern Europe have increased competition in the lower-priced segment of the market. In November 2021, we launched our e-commerce service for online sales which is currently active in the U.S. only. Therefore, we compete with other retailers offering consumers the ability to purchase home furnishings via the internet for home delivery and expect such competition to increase in the future. As a result of the actions and strength of our competitors and the inherent fragmentation in some markets in which we compete, we are continually subject to the risk of losing market share, which may lower our sales and profits. Market competition may also force us to reduce prices and margins, thereby negatively affecting our cash flows, or prevent us from raising the prices of our products in response to current inflationary pressures or increasing costs, which could result in a decrease in our profit margins. Although price is a significant basis of competition in our industry, we also compete on the basis of on-time delivery and our reputation for quality and customer service. If we fail to maintain our current standards for product quality, the scope of our distribution capabilities or our customer relationships, our reputation, financial condition, results of operations and cash flows could be adversely affected. Additionally, the imposition of new or increased tariffs or other trade restrictions could also trigger retaliatory responses from other countries which may decrease the competitiveness of our products in foreign markets.
Fluctuations in currency exchange rates and interest rates may adversely affect our results of operations — We conduct a substantial part of our business outside of the Euro-zone and are exposed to market risks stemming from fluctuations in currency and interest rates. In particular, an increase in the value of the Euro relative to other currencies used in the countries in which we operate has in the past, and may in the future, reduce the relative value of the revenues from our operations in those countries, and therefore may adversely affect our operating results or financial position, which are reported in Euro. Additionally, we are subject to currency exchange rate risk to the extent that our costs are denominated in currencies other than those in which we earn revenues. In 2025, in the ordinary course of business, about 60% of the operating payments we received and about 38% of the operating payments we made were denominated in currencies other than the Euro. We also hold a substantial portion of our cash and cash equivalents in currencies other than the Euro. Therefore, we are exposed to the risk that fluctuations in currency exchange rates may adversely affect our results, as has been the case in recent years.
In addition, foreign exchange movements might also negatively affect the relative purchasing power of our clients, which could also have an adverse effect on our results of operations. Although we seek to manage our foreign currency risk in order to minimize negative effects from rate fluctuations, including through hedging activities, there can be no assurance that we will be able to do so successfully. Therefore, our business, results of operations and financial condition could be adversely affected by fluctuations in market rates, particularly during times of high volatility, such as those currently experienced due to the adverse effects on financial markets of inflation pressure, the ongoing conflicts in Ukraine and in the Middle East region, including the Israel-Hamas conflict and the recent military operations in Iran, as well as new or increased tariffs imposed by the U.S. presidential administration or other countries.
In the normal course of business, we also face risks that are either non-financial or non-quantifiable. Such risks principally include country risk, credit risk and legal risk. For more information about currency and interest rates risks, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”
We face risks associated with our international operations — We are exposed to risks arising from our international operations, including changes in governmental regulations, tariffs or taxes and other trade barriers (as has been the case with import duties imposed by the U.S. and Canadian administrations on home furnishings imported from certain Asian countries and with the tariffs
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and other trade restrictions imposed by the U.S. presidential administration, or any new or increased tariffs that the U.S. presidential administration may impose in the future, on goods imported from foreign countries); price, wage and currency exchange controls; political, social, and economic instability in the countries in which we operate (including as a result of the ongoing conflicts in Ukraine and in the Middle East region); natural disasters, such as a fire, an earthquake or a flood; outbreaks or public health crises, such as the spread of any future epidemic; inflation, exchange rate and interest rate fluctuations; extended lead time in ordering and disruptions in the supply chain due to, among other things, shortages of raw materials or the closure of certain routes (see “Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations”). Any of these factors could have a material adverse effect on our results of operations.
Compliance with laws may be costly, and changes in laws could make conducting our business more expensive or otherwise change the way we do business — We are subject to numerous laws and regulations, including tax, labor and employment, customs, truth-in advertising, consumer protection, e-commerce, privacy and cybersecurity, health and safety, real estate, zoning, occupancy, and environmental, social and governance laws, intellectual property, and other laws and regulations that regulate the operations in our stores, plants and suppliers or otherwise govern our business. In addition, to the extent we expand our operations as a result of engaging in new business initiatives or product lines or expanding into new international markets, we become subject to further regulations and regulatory regimes. We may need to continually reassess our compliance procedures, personnel levels and regulatory framework in order to keep pace with the numerous business initiatives that we are pursuing, and there can be no assurance that we will be successful in doing so. If the regulations applicable to our business operations were to change or were violated by us or our vendors or buying agents, the costs of certain goods could increase, or we could experience delays in shipments of our goods, be subject to fines or penalties, or suffer reputational harm, which could reduce demand for our products and harm our business and results of operations.
Our past results and operations have significantly benefited from government incentive programs, which may not be available in the future — We receive, and received, benefits from certain governments in the form of grants, incentives and tax credits. In the past, we used to benefit from Italian Government’s investment incentive programs for under-industrialized regions in Southern Italy, including tax benefits, subsidized loans and capital grants. See “Item 4. Information on the Company-Incentive Programs and Tax Benefits.” In recent years, the Italian Parliament has replaced these incentive programs with an investment incentive program to promote industrialization in the southern regions of Italy, which we are currently benefitting from, that includes grants, research and development benefits.
Moreover, we have manufacturing operations in China, Brazil, Romania and Vietnam, and in some cases we were granted tax benefits and export incentives by the relevant governmental authorities in those countries. There can be no assurance that we will benefit from such grants, benefits, tax credits or export incentives in connection with our current or future investments or relevant governmental authorities will continue to provide such incentives, grants and benefits on similar terms or at all.
Expectations relating to environmental, social and governance factors may impose additional costs and expose us to new risks — The focus from certain investors, customers and other key stakeholders relating to environmental, social and governance (“ESG”) matters, including environmental stewardship, social responsibility, diversity and inclusion, racial justice and workplace conduct, has increased in recent years and may lead to new and more restrictive environmental laws and regulations in certain jurisdictions. Most recently, sentiment critical of certain ESG practices has gained momentum in certain jurisdictions, and certain investors, stakeholders and regulators may express or pursue opposing views, legislation and investment expectations with respect to ESG initiatives.
As a result, if our corporate responsibility procedures or standards do not meet evolving stakeholder expectations and/or if we fail to adapt to and comply with new laws and regulations or changes to legal or regulatory requirements concerning ESG matters, our brand, reputation, share price, access to and cost of capital and ability to attract and retain employees may be negatively impacted. Additionally, we may be required to make substantial investments in matters related to ESG which could affect our results of operations.
Furthermore, in the event that we communicate certain initiatives and goals regarding ESG matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could be criticized for the scope of such initiatives or goals. Any such adverse perceptions of our Company could negatively affect our reputation and, in turn, our business or results of operations.
Climate change, or legal, regulatory or market measures to address climate change, may materially adversely affect our financial condition and business operations — Our manufacturing facilities are located in Italy, Romania, China, and Brazil and are engaged in manufacturing processes that, by using energy, produce greenhouse gas emissions (“GHGs”), including carbon dioxide. Some of such jurisdictions are considering implementing, or have already implemented, legislation on climate change and schemes addressing the regulation of carbon emissions. Such regulations on climate change may not be consistent across these countries. As a result, adaptation to such provisions may cause compliance burdens and costs to meet the regulatory obligations and economic and regulatory uncertainty. Any laws or regulations that are adopted to reduce emissions of GHGs could (i) increase our
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costs for raw materials, (ii) increase our costs to operate and maintain our facilities, (iii) increase costs to administer and manage emissions programs, and (iv) have an adverse effect on demand for our products.
Climate change resulting from increased concentrations of GHGs and carbon dioxide could present risks to our future operations from natural disasters and extreme weather conditions, such as hurricanes, tornadoes, wildfires or flooding. Such extreme weather conditions and events could pose physical risks to our facilities and disrupt operations of our supply chain and may increase operational costs. In particular, our timber inventory could be affected by such weather conditions with the risk of changes in timber growth cycles, fire damage, insect infestation, disease, prolonged drought and natural disasters, causing a reduction in our timber inventory and adversely affecting our raw material sourcing. Climate change may also subject our business to significant increases or volatility in the prices of certain commodities, including but not limited to electronic componentry, fuel, oil, natural gas, rubber, cotton, plastic resin, steel and chemical ingredients used to produce foam.
Furthermore, any adverse contractual disputes arising from climate change-related disruptions, could result in increased litigation, costs and could also have a negative impact on our business and reputation.
In July 2024, the European Union adopted the Ecodesign for Sustainable Products Regulation (ESPR) to ensure that products sold in the EU meet new sustainability standards. While Natuzzi already strives to design products that are durable, recyclable and energy efficient, this regulation will introduce additional requirements, including the implementation of enhanced transparency measures (e.g., a digital product passport).
The evolving regulatory landscape (e.g., the expanded EU regulatory framework for chemicals as part of the zero-pollution goal under the European Green Deal) could restrict or ban the use of materials critical to our production and significantly impact material choices in our business, requiring substantial R&D efforts and potentially leading to increased costs and adjustments to our supply chain. In addition, the increasing fragmentation of requirements, both globally and in specific markets (e.g., individual states in the United States), could further complicate operational efficiency.
Failure to protect our intellectual property rights could adversely affect us — We believe that our intellectual property rights are important to our success and market position. We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements, third-party nondisclosure and assignment agreements, and confidentiality and restricted use agreements. We believe that our patents, trademarks and other intellectual property rights are adequately supported by applications for registrations, existing registrations and other legal protections in our principal markets. However, we cannot exclude the possibility that our intellectual property rights may be challenged by others, that agreements designed to protect our intellectual property may be breached, that we may not have adequate remedies for any such breach, or that we may be unable to register our patents, trademarks or otherwise adequately protect them in some jurisdictions. Any significant impairment of our intellectual property rights, including as a result of changes in U.S. or foreign intellectual property laws, the absence of effective legal protections or enforcement measures, or our failure to obtain licenses of intellectual property from third parties, could harm our business, financial condition and results of operations or our ability to compete. Moreover, we cannot provide assurance that the use of our technology or proprietary know‐how or information does not infringe the intellectual property rights of others. If we have to litigate to protect or defend any of our rights, such litigation could result in significant costs. In addition, the adoption of artificial intelligence tools may further exacerbate these risks.
We rely on information technology to operate our business, and any disruption to our technology infrastructure could harm our operations — We operate many aspects of our business including financial reporting and customer relationship management through server and web-based technologies. We store various types of data on such servers or with third parties who in turn store it on servers and in the “cloud.” Any disruption to the internet or to our global technology infrastructure or to that of our service providers, including malware, insecure coding, “acts of God”, attempts to penetrate networks, data theft or loss and human error, could have adverse effects on our operations. A cyber-attack to our systems or networks that impairs our information technology systems could disrupt our business operations and result in loss of service to customers. Our ability to keep our business operating effectively depends on the functional and efficient operation of our information, data processing and telecommunications systems, including our design, procurement, manufacturing, inventory, sales and payment process. Due to the geopolitical uncertainty arising from the ongoing conflicts in Ukraine and in the Middle East region, there is a possibility that an escalation of tensions could result in cyber-attacks that could either directly or indirectly affect our operations. Additionally, the methods used to obtain unauthorized access to systems and networks are becoming increasingly sophisticated and rapidly evolving (particularly with the growing use of artificial intelligence technologies), which may limit our ability to anticipate, detect, or prevent all such attacks before they occur. Although we experience cybersecurity incidents from time to time, we have not identified any risks from cybersecurity threats that have had, or are reasonably likely to have, a material impact on our operations, business, customer relationships or reputation. While we have invested and continue to invest in information technology risk management, cybersecurity and disaster recovery plans (see “Item 16K. Cybersecurity”), these measures cannot fully insulate us from technology disruptions or data theft or loss and the resulting adverse effects on our operations and financial results.
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In response to shifts in employee workplace preferences, we have allowed certain of our employees the option of a hybrid work schedule where they may choose to work partially from home. Although we continue to implement strong physical and cybersecurity measures to ensure that our business operations remain functional and to ensure uninterrupted service to our customers, because of our remote work arrangements, our systems and our operations remain vulnerable to cybersecurity incidents, including breaches of information systems security, which could damage our reputation and commercial relationships, disrupt operations, increase costs and/or decrease net revenues, and expose us to claims from customers, suppliers, financial institutions, regulators, payment card associations, employees and others, any of which could have a material adverse effect on our results of operations and financial conditions. Furthermore, the risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased, including as a result of the Russia-Ukraine conflict and conflicts in the Middle East region.
In addition, we are subject to data privacy and other similar laws in various jurisdictions, which require, among other things, that we undertake costly notification procedures in the event we are the target of a cybersecurity attack resulting in unauthorized disclosure of our customer data. If we fail to implement appropriate safeguards or to detect and provide prompt notice of unauthorized access as required by some of these laws, we could be subject to potential claims for damages and other remedies, which could have a material adverse effect on our results of operations.
In 2025, we continued our strategy of migrating our business applications to the cloud, and this process will continue throughout 2026. Although these cloud migrations have increased, and will continue to increase, efficiency and functionality, such migrations make the Company more reliant on third party service providers. Any material disruption or slowdown of the Company’s information systems could result in the loss of critical data, the inability to process and properly record transactions and the material impairment of the Company’s ability to conduct business, leading to cancelled orders and lost sales.
We are dependent on qualified personnel — Our ability to maintain our competitive position will depend to some considerable degree upon the personal commitment of our founder, Executive Chairman of the Board of Directors and Chief Executive Officer ad interim, Mr. Pasquale Natuzzi, as well as on our ability to continue to attract and maintain highly qualified managerial, finance, IT, manufacturing and sales and marketing personnel. As previously disclosed, Mr. Antonio Achille, our former Chief Executive Officer and executive director, stepped down from his roles effective as of July 30, 2025 and pending the appointment of a successor, the Board of Directors has temporarily delegated the Chief Executive Officer’s powers and responsibilities to Mr. Pasquale Natuzzi, who serves in an interim capacity. There can be no assurance that the loss of key personnel, or the difficulties in attracting and retaining other talented and experienced personnel, would not have a material adverse effect on our results of operations. See “Item 6. Directors, Senior Management and Employees”.
Investors may face difficulties in protecting their rights as shareholders or holders of ADSs — The Company is incorporated under the laws of the Republic of Italy. As a result, the rights and obligations of its shareholders and certain rights and obligations of holders of its ADSs are governed by Italian law and the Company’s statuto (or the By-laws). These rights and obligations are different from those that apply to U.S. corporations. Furthermore, under Italian law, holders of ADSs have no right to vote the shares underlying their ADSs. However, pursuant to the Deposit Agreement (as defined below), ADS holders do have the right to give instructions to BNY Mellon, National Association (“BNY” or the “Depositary”), the ADS depositary, as to how they wish such shares to be voted. For these reasons, the Company’s ADS holders may find it more difficult to protect their interests against actions of the Company’s management, board of directors or shareholders than they would if they were shareholders of a company incorporated in the United States.
One shareholder has a controlling stake in the Company — Mr. Pasquale Natuzzi, founder of the Company and Executive Chairman of the Board of Directors and Chief Executive Officer ad interim, beneficially owns, as of the date of this Annual Report, an aggregate amount of 30,967,521 ordinary shares of the Company (the “Ordinary Shares”), representing 56.2% of the Ordinary Shares outstanding (61.3% of the Ordinary Shares outstanding if the Ordinary Shares owned by members of Mr. Natuzzi’s immediate family (the “Natuzzi Family”) are aggregated). As a result, Mr. Natuzzi has the ability to exert significant influence over our corporate affairs and to control the Company, including its management and the selection of its board of directors. Since December 16, 2003, Mr. Natuzzi has held his entire beneficial ownership of Natuzzi S.p.A. shares through INVEST 2003 S.r.l., an Italian holding company wholly-owned by Mr. Natuzzi with its registered office located at Via Gobetti 8, Taranto, Italy.
In addition, under the Deposit Agreement dated as of May 15, 1993, as amended and restated from time to time (the “Deposit Agreement”), among the Company, the Depositary, and owners and beneficial owners of ADSs, the Natuzzi Family has a right of first refusal to purchase all the rights, warrants or other instruments which BNY Mellon, as Depositary under the Deposit Agreement, determines may not lawfully or feasibly be made available to owners of ADSs in connection with each rights offering, if any, made to holders of Ordinary Shares.
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Because a change of control of the Company would be difficult to achieve without the cooperation of Mr. Natuzzi and the Natuzzi Family, the holders of the Ordinary Shares and the ADSs may be less likely to receive a premium for their shares upon a change of control of the Company.
Past and future grants of share-based awards may have an adverse effect on our financial condition and results of operations and have dilutive impact to your investment — In 2022, we adopted the Natuzzi 2022-2026 Stock Option Plan (the “SOP”) to grant share-based compensation awards to key employees and directors to incentivize their performance and align their interests with ours. The maximum number of Ordinary Shares we are authorized to issue pursuant to the SOP is 5,485,304 Ordinary Shares. As of March 31, 2025, we have granted stock options for the purchase of a total of 2,812,560 Ordinary Shares (equivalent to 562,512 ADSs), of which 220,000 Ordinary Shares (equivalent to 44,000 ADSs) were subscribed for in 2022. See “Item 6. Directors, Senior Management and Employees-Compensation of Directors and Officers-Natuzzi 2022-2026 Stock Option Plan” and Note 24 included in the Consolidated Financial Statements. If we grant any stock options to attract and retain key personnel, our expenses associated with share-based compensation may increase, which may have an adverse effect on our financial condition and results of operations and have a dilutive impact on your investment. However, if we do not grant stock options or reduce the number of stock options that we grant, we may not be able to attract and retain key personnel.
Purchasers of our Ordinary Shares and ADSs may be exposed to increased transaction costs as a result of the Italian financial transaction tax or the proposed European financial transaction tax — On February 14, 2013, the European Commission adopted a proposal for a directive on the financial transaction tax (hereafter “EU FTT”) to be implemented under the enhanced cooperation procedure by 11 member states initially (Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovenia, Slovakia and Spain). Following Estonia’s formal withdrawal on March 16, 2016, 10 member states continued to participate in the negotiations on the proposed directive. If the proposed directive is adopted and implemented in local legislation, investors in Ordinary Shares and ADSs may be exposed to increased transaction costs. However, in its work program for 2026, the European Commission indicated that it intends to withdraw the EU FTT proposal.
The Italian financial transaction tax (the “IFTT”) applies with respect to trades entailing the transfer of (i) shares or equity-like financial instruments issued by companies resident in Italy, such as the Ordinary Shares; and (ii) securities representing the shares and financial instruments mentioned under (i) above (including depositary receipts such as the ADSs), regardless of the residence of the issuer. The IFTT may also apply to the transfer of Ordinary Shares and ADSs by a U.S. resident. The IFTT does not apply to companies having an average market capitalization lower than €500 million in the month of November of the year preceding the year in which the trade takes place. In order to benefit from this exemption, companies whose securities are listed on a foreign regulated market, such as the Company, need to be included on a list published annually by the Italian Ministry of Economy and Finance. Since the Company has not been included in the list issued by the Italian Ministry of Economy and Finance of companies having an average market capitalization lower than €500 million in the month of November 2024, the IFTT would apply on transfers of Ordinary Shares or ADSs made in 2026. See “Item 10. Additional Information-Taxation-Other Italian Taxes-Italian Financial Transaction Tax.”
Emerging issues related to our development, integration and use of artificial intelligence (“AI”) could give rise to legal or regulatory action, damage our reputation or otherwise materially harm our business — We increasingly develop, integrate and use AI technology in our operations, including to drive productivity and data analytics. While we aim to develop, integrate and use AI responsibly, including attempting to identify and mitigate ethical or legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues, such as accuracy issues, cybersecurity risks, unintended biases, and discriminatory outputs, before they arise. AI is a relatively new and emerging technology in early stages of commercial use and presents a number of risks inherent in its use by us, our customers, suppliers and other business partners and third-party providers, or through the use of third-party hardware and software. These risks include, but are not limited to, ethical considerations, public perception, intellectual property protection, regulatory compliance, privacy concerns and data security, all of which could have a material adverse effect on our business, reputation, results of operations and financial position. As a result, we cannot predict future developments in AI and related impacts to our business and our industry. If we are unable to successfully and accurately develop, integrate and use AI technology, as well as address the risks and challenges associated with AI, our business, reputation, results of operations and financial position could be negatively impacted. Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our reputation, business, financial condition, and results of operations may be materially adversely affected. While we are implementing measures designed to mitigate the potential adverse effects associated with the development, integration and use of AI technologies, such as policies, governance framework and internal controls designed to promote the responsible and compliant use of AI within our operations, there can be no assurance that these measures will be sufficient to prevent or mitigate all associated risks or their potential impacts on our business.
We may be unable to remain in compliance with the New York Stock Exchange requirements for continued listing and as a result our ADSs may be delisted from trading on the New York Stock Exchange, which would have a material effect on us and the liquidity of our ADSs – On January 6, 2026, we received notice from the New York Stock Exchange (“NYSE”) that we were no longer in compliance with the continued listing standards set forth in Section 802.01B of the NYSE Listed Company Manual
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because our 30 trading-day average market capitalization and our last reported stockholders’ equity as of September 30, 2025 were each below U.S.$50 million. Following receipt of the notice, on February 5, 2026, we disclosed to the market that we were considering available alternatives to cure the deficiency and regain compliance with the applicable continued listing standards and, on February 18, 2026, notified the NYSE accordingly. Pursuant to Section 802.03 of the NYSE Listed Company Manual, a company has an 18-month cure period following receipt of the notice of non-compliance to regain compliance with the NYSE’s minimum requirements, subject to the NYSE’s receipt and approval of a plan submitted by the company demonstrating how the company intends to regain compliance with the NYSE’s continued listing standards. In accordance with the timing requirement under the notice and pursuant to Section 802.03 of the NYSE Listed Company Manual, we submitted a remediation plan on April 6, 2026, which, as of the date of this Annual Report, is under the 45-day review period by the NYSE. We cannot assure that (i) the plan will be accepted by the NYSE, (ii) even if accepted, we will be able to meet the milestones set forth therein, or (iii) we will regain compliance with the NYSE continued listing standards. If the plan is not accepted by the NYSE, or if we otherwise fail to regain or maintain compliance with any continued listing requirements of the NYSE Listed Company Manual, the NYSE may commence delisting proceedings or take any other action in the course of monitoring our compliance with these requirements.
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History and development of the Company — Founded in 1959 by Pasquale Natuzzi, Natuzzi Group is one of the most renowned players in the production and distribution of design and luxury furniture. With a global retail network of 564 Natuzzi mono-brand stores and 1,043 wholesale points of sale, including 487 Natuzzi galleries and 556 curated placements within larger multi-brand retail environments, as of December 31, 2025, and with manufacturing plants in Italy, China, Romania, Brazil and Vietnam to efficiently serve different markets, Natuzzi distributes its collections worldwide. In 2025, the Company distributed its products in 107 countries on five continents. Natuzzi’s products embody the finest spirit of Italian design and the unique craftsmanship details of “Made in Italy”, as a predominant part of its production takes place in Italy. Natuzzi has been listed on the New York Stock Exchange since May 13, 1993. For additional information on the Company’s listing on the New York Stock Exchange, see “Item 9. The Offer and Listing—Trading Markets.”
Continuous stylistic research, creativity, innovation, solid craftsmanship, industrial know-how and integrated management throughout the entire value chain are the mainstays that have made Natuzzi one of the few players with global reach in the furniture market.
In the early 2000s, to respond to a global competition based mainly on price, the Company began to reposition its brand by introducing a total living concept in its offer, encompassing the production of sofas and armchairs not only in leather but also in fabric, together with the offering of living room furniture and beds. Moreover, Natuzzi is accelerating its retail expansion worldwide, leveraging a global manufacturing footprint to strategically support the development of its brands. This is a crucial step as the Company consolidates the foundations for its transformation from a pure “B2B” manufacturer to a lifestyle brand and retailer, which has required investments in organization, marketing, R&D, IT and product for more than a decade.
Committed to social responsibility and environmental sustainability since its inception, Natuzzi is ISO 9001 and 14001 certified (Quality and Environment), ISO 45001 certified (Safety in the Workplace) and FSC® Chain of Custody, CoC (FSC-C131540).
The brand portfolio of the Group includes two main brands: Natuzzi Italia and Natuzzi Editions. For a detailed description of each brand and its target markets, see “Strategy—The Brand Portfolio and Merchandising Strategy” and “Products” below.
As of December 31, 2025, the Group distributed its branded products as follows:
The Group also offers unbranded products through its Italsofa by Natuzzi Group line (also referred to as “private label” products in this Annual Report), designated to address the specific needs of key accounts globally. The Group intends to focus on selected large accounts selling unbranded products and serve them with a more efficient go-to-market model.
Every year, the Group presents its products at the world’s leading furniture fairs. In 2025, the Group participated in prominent global furniture events, including the Milano Design Week, widely regarded as the foremost international design fair, the High Point Furniture Market in North Carolina, United States, and several other furniture and design fairs during the year, such as the ICFF in New York, the Riyadh Design Week, the Dubai Design Week, the India Design Mumbai. In 2025, the Group also hosted business congresses for all its clients for both brands, held at the Group’s headquarters in Santeramo in Colle, Italy, and in China.
The statuto (or By-laws) of the Company provides that the duration of the Company is until December 31, 2050. The Company, which operates under the trademark “Natuzzi,” is a società per azioni (joint stock company) organized under the laws of the Republic of Italy and was incorporated in 1959 by Mr. Pasquale Natuzzi, who is currently Executive Chairman of the Board of Directors, Chief Executive Officer ad interim and controlling shareholder of the Company. Most of the Company’s industrial operations are carried out through various subsidiaries that individually conduct a specialized activity, such as leather processing or furniture manufacturing.
The Company’s principal executive offices are located at Via Iazzitiello 47, 70029 Santeramo in Colle, Italy, which is approximately 25 miles from Bari, in Southern Italy. The Company’s telephone number is: +39 080 882-0111. The Company’s general sales agent subsidiary in the United States is Natuzzi Americas, Inc. (“Natuzzi Americas”), located at 130 West Commerce Avenue, High Point, North Carolina 27260. Natuzzi Americas’ telephone number is: +1 336 887-8300.
The SEC maintains a website (www.sec.gov/edgar.shtml) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Company’s website is www.natuzzi.com.
Natuzzi S.p.A. is the parent company (the “Parent Company” or the “Parent”) of the Natuzzi Group. As of December 31, 2025, the Company’s principal operating subsidiaries were:
Name
Percentage as at31/12/2025
Percentage as at31/12/2024
Percentage as at31/12/2023
Share/quota capital
Ownershipregistered office
Activity
Italsofa Romania S.r.l.
100.00
RON 109,271,750
Baia Mare, Romania
(1)
Natuzzi (China) Ltd
CNY 106,414,300
Shanghai, China
Italsofa Nordeste S/A
BRL 159,300,558
Salvador de Bahia, Brazil
Natuzzi Quanjiao Limited
CNY 10,000,000
Quanjiao County-Anhui province, China
Natuzzi Vietnam JSC
69.19
—
VDONG 30.625.000.000
Ho Chi Minh City, Vietnam
Natco S.p.A.
99.99
EUR 4,420,000
Santeramo in Colle, Italy
(2)
Nacon S.p.A.
EUR 2,800,000
(3)
Lagene S.r.l.
EUR 10,000
Natuzzi Americas Inc.
USD 89
High Point, N. Carolina, USA
Natuzzi Florida LLC
51.00
USD 4,955,186
Natuzzi Iberica S.A.
EUR 386,255
Madrid, Spain
Natuzzi Switzerland AG
CHF 2,000,000
Dietikon, Switzerland
Natuzzi Services Limited
GBP 25,349,353
London, UK
Natuzzi UK Retail Limited
70.00
GBP 100
Cardiff, UK
Natuzzi Germany Gmbh
EUR 25,000
Köln, Germany
Natuzzi Japan KK
74.40
JPY 28,000,000
Tokyo, Japan
Natuzzi Russia OOO
RUB 8,700,000
Moscow, Russia
Natmx S.DE.R.L.DE.C.V
MXN 68,504,040
Mexico City, Mexico
Natuzzi France S.a.s.
EUR 70,727
Paris, France
Natuzzi Oceania PTI Ltd
AUD 320,002
Sydney, Australia
Natuzzi Singapore PTE. LTD.
USD 7,654,207
Singapore, Republic of Singapore
Natuzzi Shanghai Co. Ltd
CNY 500,000
Natuzzi Netherlands Holding
EUR 34,605,000
Amsterdam, Holland
(4)
Natuzzi Trade Service S.r.l.
EUR 14,000,000
(5)
Natuzzi Industrial S.r.l.
EUR 10,000.00
During 2025, the following companies were added to the Group’s scope of consolidation:
The Group is focused on strengthening its brands, expanding its retail network with Natuzzi mono-brand stores in key markets, where the Natuzzi brand is well known, and on its ability to create value by improving the efficiency of its industrial and supply-chain operations. At the same time, the Group focuses on implementing cost control measures to reduce and streamline costs, including the headquarter-related costs.
With the aim of positioning its offering toward the medium and high end of the market and at the same time differentiating its brand and product proposition from the low end of the market, where price is the main driver, in 2016 the Group started reorganizing its commercial operations on the basis of two divisions (the Natuzzi branded division and the unbranded division) and two business models (retail and wholesale).
In 2019, the Group further developed its sales organization by focusing on the distribution channel, in addition to its two divisions: the retail channel, represented by mono-brand stores operated directly by the Group and by third-party dealers, and the wholesale channel, consisting primarily of Natuzzi-branded galleries in multi-brand stores as well as mass distributors selling mainly unbranded products.
Consistent with such effort, in November 2021, the Group defined a new organizational model, pivoting in particular on the Group’s two main brands, Natuzzi Italia and Natuzzi Editions. Indeed, the Natuzzi Italia and Natuzzi Editions brands are increasingly pursuing a distinct but complementary development path in terms of customer segmentation, product merchandising, visual merchandising, marketing and distribution strategy and, therefore, required a dedicated organization (see below “The Brand Portfolio and Merchandising Strategy”).
During 2023, 2024 and 2025, the Group continued the transformation of its business to pursue a positioning of the Natuzzi brand as a life-style brand by further focusing principally on the branded part of its business, which is mainly distributed through the retail channel: in 2025, 94.9% of the Group’s sales of upholstery furniture and home furnishing accessories (excluding revenue from “Other sales”, consisting of “Sale of polyurethane foam” and “Sale of other goods”) came from the sale of its branded products (compared to 92.7% in 2024 and 92.5% in 2023). See Note 34 to the Consolidated Financial Statements. In addition, the Group intends to continue to expand its branded presence in key strategic markets where the Natuzzi brand’s awareness is well established, such as the U.S., Greater China and certain European countries, in particular the UK and Italy.
In addition, in March 2025, the Company introduced a new organizational structure to evolve its commercial model from a brand-based matrix to one that emphasizes distribution channels: Retail, Wholesale, and Project.
The primary goal of this reorganization is to better serve individual markets and implement the consumer engagement strategies outlined in the brand, marketing, merchandising, retail, and wholesale guidelines.
Under this new structure, channel officers work in close collaboration with Regional Managers to define and achieve performance targets in line with internal objectives.
Like the Retail division, the Wholesale division is also responsible for ensuring the consistency of the brand values across all markets by applying specific brand, retail, merchandising and marketing guidelines.
Additionally, the Wholesale division defines and coordinates the Gallery opening and renovation plans in collaboration with the Regional Managers.
Natuzzi continues the Group’s digital transformation with improvements to the Natuzzi global website, which is part of a broader omnichannel strategy to fully integrate the digital and physical sides of the business. The Company confirms its strategic decision to digitize sales and service processes, enhance customer relationships, and bolster competitiveness through the utilization of data and artificial intelligence.
As of the date of this Annual Report, the Group’s strategy is mainly based on the following drivers, with the ultimate goal of creating value for its shareholders:
More generally, the Company intends to implement actions aimed at developing its business and improving the Group’s overall efficiency on the basis of the following three main levers:
1) Focus on business development by leveraging its main brands, Natuzzi Italia and Natuzzi Editions, through:
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2) Focus on margins through:
3) Focus on capital efficiency through:
In addition to the Natuzzi branded business, which has represented over the last few years, and will continue to represent, according to our current plans, the most strategic portion of the business, the Group continues to offer unbranded products to a number of wholesale accounts globally. This unbranded division produces and offers leather upholstery to some of the world’s renowned wholesale distributors in the medium/low end of the market. This market segment is exposed to all competitors offering products at competitive price ranges, with consequent downward pressure on margins. The Company intends to focus on selected large accounts selling unbranded products and serve them with a more efficient go-to-market model. Over the recent years, the Group has further refined its approach to managing the unbranded business, as it intends to focus on those customers that meet specific business requirements, along with a continued simplification of its operating model, by further evolving the engineering processes of the relevant product/model platforms, as well as, by leveraging the Group’s global footprint, identifying the most suitable production allocation to efficiently serve such customers.
In order to enhance efficiency and flexibility, as well as better serve wholesale mass distributors (“Mass Merchants”), in December 2019, we started an outsourcing program in Vietnam intended to supply an increasing portion of Mass Merchants in North America. In 2025, the Group opened a new proprietary facility in Vietnam to serve the Indian market and the American wholesale free market. This program represents an opportunity not only for the unbranded business, but also for the branded business, with specific reference to Natuzzi Editions, specifically addressing the wholesale distribution channel.
Since the Group’s production manufactured in Asia for the North American market is primarily affected, among the others, by the trade dispute between the U.S. and China, the Group continues to explore further external production capacity in low-cost countries to avoid import custom duties and, at the same time, to increase its production flexibility, particularly with regard to its unbranded production. There is no assurance that such additional outsourced production capacity could be implemented and that the relevant efficiency gains expected could be reached in the future. For information on the Company’s revision of its industrial footprint as a result of these challenges, see “—Manufacturing.”
Additionally, we also face uncertainty and risks related to tariffs and other trade policies that the new U.S. presidential administration introduced or may in the future introduce, which could negatively affect our existing supply chains and increase the cost of raw materials critical to the manufacture of our products. See “Item 3. Key Information—Risk Factors—Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations.”
The Company has taken steps to sell some non-strategic assets and real estate properties in the U.S. and Italy. The sale of these assets should increase the flexibility of our operations and reduce working capital needs. The sale proceeds will be reinvested mainly in retail expansion, with a specific focus on North America, and restructuring programs, particularly in Italy. Moreover, the Group continued to streamline its overall cost structure, with particular reference to its Italian operations. As part of this strategy, in June 2020, the Company signed a sale agreement with a third party for the disposal of the land located in the “Santeramo in Colle-Jesce” area, just a few miles away from its headquarters. Moreover, in March 2021, the Company completed the sale of IMPE S.p.A.
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(“IMPE”), a subsidiary dedicated to the production of flexible polyurethane foam, as well as the idle industrial real estate complex “Fornello” located in the city of Altamura (Bari). In addition, in May 2021, the Company completed the sale of the idle industrial real estate complex “Via Dell’Avena” located in the city of Altamura (Bari).
On March 25, 2025, Natuzzi Americas, a wholly-owned U.S. subsidiary of the Company, entered into a sale and purchase agreement with The Steel Vessel Corporation, a Delaware corporation affiliated with the Company’s majority shareholder, pursuant to which Natuzzi Americas transferred the ownership of the property located in High Point, North Carolina, USA (including, without limitation, the land, all buildings, structures and improvements thereon, all rights, privileges and easements appurtenant thereto, all mechanical systems, business records, advertisements and equipment, and other related intangible assets) to The Steel Vessel Corporation, for a total consideration of U.S.$12.1 million (€11.6 million). A preliminary agreement was entered into between the same parties on October 17, 2024, pursuant to which U.S.$3.8 million (€3.5 million) was deposited by The Steel Vessel Corporation with Natuzzi Americas as earnest money. The remaining balance of U.S.$8.3 million (€8.1 million) was collected by Natuzzi Americas on March 25, 2025. Subsequent to the sale of the High Point property, on the same date of March 25, 2025, the same parties entered into a lease agreement pursuant to which The Steel Vessel Corporation, as lessor, leased the High Point property to Natuzzi Americas, as lessee. The lease has a term of 9 years and 9 months, expiring on December 31, 2034, and an annual rent of U.S.$0.7 million (€0.7 million). Natuzzi Americas will continue to sublease portions of the High Point building that it does not intend to use for the Group’s needs. See Notes 7, 45 and 46 to the Consolidated Financial Statements included in this Annual Report. A copy of the sale and purchase agreement and a copy of the lease agreement are attached as Exhibit 4.9 and Exhibit 4.10, respectively, to this Annual Report.
In November 2024, Italsofa Romania S.r.l., the Company’s wholly-owned Romanian subsidiary, entered into a preliminary agreement with a third-party for the sale of a plot of land located near our Romanian plant in Baia Mare for a total consideration of €2.8 million, of which €0.4 million was received as an advance payment. The sale was completed in June 2025, with the collection of the remaining balance of €2.4 million. See Note 7 to the Consolidated Financial Statements included in this Annual Report.
More recently, in November 2025, the Company entered into a preliminary agreement with a third-party for the transfer of a business unit comprising six photovoltaic plants. The transfer was completed on January 29, 2026 and, on the closing date, the Company received a total consideration of €7.1 million. See Note 46 to the Consolidated Financial Statements included in this Annual Report. A copy of the transfer agreement is attached as Exhibit 4.11 to this Annual Report.
The Brand Portfolio and Merchandising Strategy — The Group, through its two brands and its unbranded offering, competes in all price segments of the upholstered furniture market with an increasingly important offer of furnishings and accessories.
Precise market segmentation, clear brand positioning and clearly defined customer and consumer targets are intended to enhance the Group’s competitive strengths in all market segments to gain market share through its different product lines, as described below.
─ Natuzzi Italia is the Group’s luxury furniture brand, targeting affluent and more sophisticated global consumers. The Natuzzi Italia collection is mainly sold through the retail channel in mono-brand stores, concessions and galleries in multi-brand specialized stores and high-end department stores. The offer includes sofas designed and manufactured at the Company’s factories in Italy, positioned at the high end of the market, using unique and customized materials, workmanship and finishes thanks to the Natuzzi heritage of fine craftsmanship in the leather sofa segment. The Natuzzi Italia product line, which is largely consistent across all our stores globally to better represent the Natuzzi Italia brand, includes furnishings and accessories for the living room, as well as beds, bed linens and bedroom furnishings to further expand its product offering.
─ Natuzzi Editions is the Group’s contemporary collection designed in Italy, which was initially designed specifically for the U.S. market. This collection includes a wide range of leather upholstery products, targeting the medium/medium-high segment of the market and leveraging the know-how and high credibility of the Natuzzi brand in the leather upholstery industry. Natuzzi Editions products are strategically manufactured almost entirely at the Group’s industrial plants (located in Romania, China and Brazil) to efficiently serve different geographies and are mainly sold through mono-brand stores and galleries. The retail and merchandising format of Natuzzi Editions has evolved over time and now also includes a wider offering of furnishings. Natuzzi Editions products are manufactured and distributed in Italy under the Divani&Divani by Natuzzi brand, through both directly-owned and franchise stores. The store merchandising of Natuzzi Editions is based on a common collection, which is then tailored to best fit the opportunities of each market. Natuzzi Editions and Divani&Divani by Natuzzi are two brands with different banners and store concepts, but with the same merchandising offer (i.e., same positioning and consumer target). Divani&Divani by Natuzzi is focused on the Italian market where it was first launched, whereas Natuzzi Editions is distributed in other countries around the world.
─ In addition to Natuzzi mono-brand stores and galleries, the Group operates a key account program for the distribution of unbranded products and certain Natuzzi Editions products to compete in the entry price segments of the market by conducting business mainly through large distributors. Products involved in this key account program are manufactured at the Group’s plants located in Romania, China and Brazil, as well as through an outsourcing program in Vietnam.
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Natuzzi has innovated its wholesale branded shop-in-shop gallery to meet the evolving needs of modern retail. Leveraging Natuzzi’s global brand recognition, we introduced the ‘Re-Imagined Gallery Concept’, which is centered around a specific ‘Consumer Engagement Plan’ that uses digital and print channels to drive brand awareness and sales. The new ‘Display System’ enhances consumer engagement through immersive room sets, while being free-standing and installation-free to reduce set-up costs. Updated merchandising guidelines also include ‘total look’ room sets to enhance the overall consumer experience and improve commercial performance.
Improvement of the Group’s Retail Program and Brand Development — The Group has made significant investments to improve its existing distribution network and strengthen the Natuzzi brand. The high level of the Natuzzi brand awareness among high-end consumers is the result of efforts the Company has made over the past decade in its products, communication, in-store experience and customer service. This brand awareness encourages the Company to continue its brand development and further enhance the Group’s distribution network, in order to further increase consumers’ familiarity with the Natuzzi brand and its association with a high-end brand.
The Group intends to continue the transformation of its commercial operations to become a more retail-oriented company. Accordingly, it is evolving its commercial organization to improve agility and accountability throughout the retail process.
In 2023, we established the Global Retail Division, dedicated to modernizing and professionalizing our retail approach by developing tools to support our regions and dealers in enhancing retail performance and elevating in-store customer experience. We standardized all retail-related KPIs to accelerate the diagnosis of areas requiring immediate intervention to foster organic growth. Leveraging the experience gained in our direct stores, we now offer franchising partners turn-key retail programs, including IT systems, training, and guidelines on store layout, merchandising, and visuals. Moreover, in 2025, we achieved a wider implementation of certain retail tools, aimed at ensuring a standardized shopping experience for our customers and gaining better control over all KPIs related to the retail business. Specifically, more than 150 stores are now equipped with a traffic counter system and the vast majority of our network is properly implementing the latest release of the order management system, which provides proper visibility into the most relevant KPIs to make informed business decisions. Additionally, the 3D room configurator (Floor Planner) was first rolled out across our entire DOS network in 2024 and further expanded to more than 200 dealer stores in 2025. A new release of the Natuzzi Editions store concept was also introduced during the year, with the first store opening in London shortly before year-end 2025.
Specifically, in order to implement its retail business model, the Group’s Global Retail Division carries out various cross-functional activities, such as: i) analyzing the performance of the Group’s DOS to identify possible issues and implement specific action plans in collaboration with the regional commercial managers; ii) defining the Group’s retail merchandising platform to support the merchandising team in identifying the right product mix by store cluster and consumer target; iii) defining the Group’s retail customer-experience guidelines, including sales ceremonies and in-store communication, in line with the Natuzzi brand’s commercial strategies; iv) defining training content aimed at improving the performance of sales staff, their product knowledge and store management; v) developing the trade business in collaboration with the Trade & Contract division, through the implementation of procedures and initiatives aimed at attracting trade professionals, such as architects and interior designers; vi) defining guidelines and tools for managing the process of opening new Natuzzi stores; vii) promoting store concept evolution within the existing network.
During 2025, 10 Natuzzi Italia stores were opened, of which 6 in China and 1 in each of Slovakia, South Africa, South Korea and Thailand.
Natuzzi Editions and the Divani&Divani by Natuzzi retail chains are characterized by a medium positioning in the upholstery business. Natuzzi Editions and Divani&Divani by Natuzzi are two brands with different banners and store concepts, but with the same merchandising offer (i.e., same positioning and consumer target). Divani&Divani by Natuzzi is mostly focused on the Italian market, where it was first launched, whereas Natuzzi Editions is distributed in other countries around the world.
During 2025, 37 Natuzzi Editions stores were opened (of which 28 in China, 2 in Brazil, and 1 in each of Nigeria, Cyprus, Czech Republic, USA, Guatemala, Taiwan and the United Kingdom), in addition to 2 Divani&Divani by Natuzzi stores opened in Italy.
Product Diversification and Innovation — The Group has continued to collaborate with the most outstanding international designers to launch the new 2025 Natuzzi Italia Comfortness collection and further enrich The Circle of Harmony collection. The Circle of Harmony project, launched in 2018, aims at creating a physical and virtual community wherein artists, architects, and designers converge to imagine and create Natuzzi Italia’s stylistic evolution, using the brand’s history and heritage as milestones for this purpose. This creative contamination fosters creative synergy, yielding innovative reinterpretations of the Natuzzi DNA manifested in contemporary interior design solutions tailored for a global audience seeking an immersive Mediterranean lifestyle experience.
The Comfortness collection revolves around the concept of comfort. Here, comfort is interpreted as a lifestyle, an intimate and personal aspect that serves as a conduit for strength and well-being, essential for transforming moments dedicated to self-care and
22
relaxation into precious interludes. This latest concept introduces a new paradigm that is central to improving the quality of life as it aims to combine comfort with design, beauty with functionality.
The Group has also launched three new product collections for the Natuzzi Editions brand: Feelwell, Dolcevita and Neo Heritage. The Feelwell collection introduces a new vision of comfort to the Natuzzi Editions brand, offering consumers an approach to relaxation that combines physical comfort with overall wellbeing through innovative product solutions. The Dolcevita collection introduces an innovative approach to motion products, applying motion technology to new designs aimed at a younger target. The Neo Heritage collection offers a modern reinterpretation of classic designs, tapping into the growing trend of the rediscovery of vintage products.
The Group believes that a wider offer of collections will strengthen its relationships with the world’s leading distribution chains, which are interested in offering branded solutions. The Group has also continued to invest in the Natuzzi’s style center in Santeramo in Colle, Italy (the “Style Center”), which serves as a creative hub for the Group’s design activities and is at the core of the Company’s integrated value chain, a key differentiator for Natuzzi. Through the integrated value chain, the Company directly controls every step of the process, from product design and manufacturing to delivery at the customer’s home: a distinctive approach to creating value and ensure the quality of home living solutions.
As of the date of this Annual Report, our manufacturing facilities are located in Italy, China, Romania, Brazil and, from 2025, Vietnam. In addition, since December 2019, the Group has used outsourcing programs in Vietnam.
Due to the current challenges arising from global competition, and the continued imposition of tariffs by the U.S. on goods imported from China, and, from 2021, of customs duties imposed by the Canadian authorities on goods imported from China and Vietnam, in 2024, the Group continued a comprehensive reorganization of its global manufacturing footprint aimed at enhancing operational efficiency, reducing transformation costs, and strengthening competitiveness in key markets.
In particular, as part of such process, in 2023 we downsized our Chinese manufacturing plant located in Shanghai, leading to a further reduction in the number of workers. Following the downsizing, our Shanghai plant mainly served the Chinese market with regard to our Natuzzi Editions branded products, whereas production for the North American and Rest of APAC markets was gradually shifted from the Shanghai plant to the plant located in Quanjiao - County - Anhui province, established in 2022. The Quanjiao plant was meant to gradually absorb part of the production capacity of the Shanghai plant, allowing for a significant reduction in manufacturing costs. In October 2024, the Group completed the closure of its Shanghai facility. As a result, the Quanjiao plant now exclusively serves both the Chinese and broader Asia-Pacific markets, while the Natuzzi Editions production for the United States has been transferred to the European facilities as of November 2024.
This strategic move (i.e., shifting production from the plant located in Shanghai to the one located in Quanjiao) resulted in an approximately 30% reduction in transformation costs, primarily driven by savings in fixed production and labor costs and semi-finished materials. The transition aims to significantly improve the cost competitiveness of the entire Chinese manufacturing footprint. The Group has been operating in China since 2002.
In the second half of 2024, the Group shifted the production serving the U.S. market from its Chinese operations to its European industrial hub as part of a broader medium-term industrial plan aimed at optimizing the Group’s industrial footprint, improving the capacity utilization across underutilized European manufacturing facilities, particularly in Italy, and mitigating the overall impact of import tariffs. However, the subsequent imposition by the U.S. administration of trade tariffs on products manufactured in Europe, including in Italy and Romania, has largely offset the expected savings from this production shift.
As a result of this strategic production shift from the Group’s Asian to its European factories, our total operations in China represented 8% of the Group’s total consolidated upholstered revenue in 2025, decreasing from 22% in 2024. Conversely, our total operations in Italy represented 61% of the Group’s total consolidated upholstered revenue in 2025, compared to 46% in 2024, whereas Romania was substantially stable at 22% of the Group’s total consolidated upholstered revenue in both 2025 and 2024.
In addition, within the revision of its industrial footprint in Asia, the Group continued in 2025 to leverage its strategic partnerships with two key outsourcing partners in Vietnam, which represent a critical competitive advantage in the U.S. free market, combining cost efficiency and production flexibility. In addition, in 2025, the Group opened a new proprietary facility in Vietnam, intended to serve the Indian market and the U.S. wholesale free market channel.
Our five Italian plants dedicated to the production of upholstered products and three Italian warehouses are located either at or within 25 kilometers from Santeramo in Colle, where the Group’s headquarters are located. Collectively, these facilities extend over almost 160,000 square meters. As of December 31, 2025, these facilities employed 1,367 workers, the majority of whom were subject to layoff programs. See “Item 6. Directors, Senior Managers and Employees—Employees.” With the exception of the South American
market, the Italian plants are the exclusive producers of Natuzzi Italia and Divani&Divani by Natuzzi products. In 2025, these plants generated 61% of the Group’s total consolidated upholstery revenue, compared to 46% in 2024, mainly due to increased production of Natuzzi Editions products, as described above. In 2023, three Italian plants were restructured according to the Factory 4.0 production model and, since 2024, the Group has continued to make investments in the remaining Italian factories according to such model. Further investments are planned on the warehousing system and related facilities, as well as the supply chain model. For additional information on the Factory 4.0 program, see “Item 4. Information on the Company—Innovation.”
We have one 22,000 square meter manufacturing facility located in Quanjiao - County - Anhui province, China, Natuzzi Quanjiao Limited, which is wholly indirectly controlled by the Company through Natuzzi China, became operational in 2022 and was expanded in 2024 as a result of the closure of the Shanghai facility. As of December 31, 2025, the Natuzzi Quanjiao Limited plant employed 201 workers. In 2025, our Chinese plants (including the Shanghai facility, which was operational until its closure in October 2024) produced about 8% of the Group’s total consolidated upholstered revenue, compared to 22% in 2024 as result of the above mentioned production shift in Europe.
Our Romanian plant is located in Baia Mare. Extending over 75,600 covered square meters, it has been in operation since 2003. As of December 31, 2025, it employed 614 people, of whom 510 were laborers. It produces Natuzzi Editions and unbranded products for the EMEAI market. In 2025, the Romanian plant produced about 22% of the Group’s total consolidated upholstered revenue, as in 2024.
Our Brazilian plant is located in Salvador De Bahia. Extending over 28,700 square meters, it has been in operation since 2000. As of December 31, 2025, our Brazilian plant employed 175 people, of whom 125 were laborers. Since the end of 2016, in addition to Natuzzi Editions and unbranded products, the Brazilian plant produces Natuzzi Italia branded products for the South American market.
Both the Romanian and Brazilian plants underwent targeted right-sizing and process optimization. These efforts enabled the sites to offset the impact of local inflationary pressures, including significant increases in minimum wage levels, ensuring continued cost control and production sustainability.
As of December 31, 2025, the Group had one additional plant in Italy, located in Udine (Natco S.p.A. (“Natco”)), extending over 21,000 square meters, and dedicated to the production of leather. As of December 31, 2025, this facility employed 102 people, of whom 85 were laborers.
During 2025, the Company further consolidated the innovative production methods and technologies developed in 2023 and 2024, including the upgrade of Factory 4.0 program, coordinated by a planning and management information system that integrates our suppliers into an extended supply chain. Moreover, we developed a set of KPI to deeply monitor production performances, as well as an enhanced quality control system. For additional information on the Factory 4.0 program, see “Item 4. Information on the Company—Innovation.”
Raw Materials — The principal raw materials used in the manufacture of the Group’s products are hides (mainly cattle hides), fabrics, polyurethane foam, polyester fiber and wood. In 2025, the total cost of raw materials used in the manufacture of the Group’s products decreased in the first part of the year but rose slightly in the last quarter. We observed a sustained easing in input cost pressures, with a downward trend in leather and other key raw materials—including mechanical and electrical components, wood, and polyurethane foam—during the first half of 2025, compared to 2024 levels. However, in the last quarter of 2025, this trend partially reversed, with input costs increasing across both raw materials and chemical components. The chemical components of polyurethane foam are petroleum-based commodities and, as such, their prices are subject to, among other factors, fluctuations in crude oil prices. More recently, escalating geopolitical tensions in the Middle East region, and the resulting disruption of traffic through the Strait of Hormuz, have significantly impacted global energy and petrochemical supply chains. This has led to a sharp increase in petrochemical-related input costs, with certain categories experiencing price rises of up to approximately 45% since early March 2025, reflecting heightened supply constraints and elevated oil price volatility.
The Group purchases hides from slaughterhouses and tanneries located primarily in Brazil, Germany, India and other South American and European countries. The hides purchased by the Group are divided into several categories. The lowest category hides are mainly purchased in South America and India. The middle category hides are purchased in Europe or South America and the highest quality hides are purchased in Italy and France.
The supply of cattle hides is principally dependent upon beef consumption, rather than demand for leather.
The prices for cattle hides decreased at the beginning of 2025 and remained stable for the rest of 2025. As the current situation remains uncertain, and due to the volatile nature of the hides market, there can be no assurance that current prices will remain stable. Indeed, given the current inflationary pressure, exchange rate volatility, the uncertainties surrounding the developments of the war in Ukraine, the Israel-Hamas conflict, the related conflicts in the Middle East and any potential escalation thereof, the potential
24
imposition of new tariffs and other trade barriers by the new U.S. presidential administration, we expect that such prices could trend upward and that raw material supply can be difficult starting from the second quarter of 2026. See “Item 3. Key Information—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position”, “Item 3. Key Information—Risk Factors— Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations.”
The Group also purchases fabrics and microfibers to be used in coverings. Most of the fabrics are purchased in Italy from a dozen of suppliers which provide the finished product. Microfibers are purchased from suppliers in China, Spain and Italy. Fabrics and microfibers are generally purchased weekly from suppliers based on purchase orders specifying the quantity (in linear meters) and the delivery date. In 2025, the price for fabrics and microfibers decreased compared to 2024.
In 2025, wood prices slightly decreased compared to 2024. It is the Company’s practice to address any possible fluctuations by diversifying the portfolio of wood suppliers. See “Item 3. Key Information—Risk Factors—Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations.”
The Supply Chain department is responsible for monitoring logistics solutions to ensure their effectiveness. In addition, to improve access to supply chain information across the Group, the Supply Chain department uses a portal that allows it and other departments (such as the Customer Service and Sales Department) to monitor the movement of goods through the supply chain and to monitor key performance indicators (KPIs).
In 2025, the Group continued to revise its supply chain processes and planning systems, such as the material requirements planning (MRP) system, which determines what raw materials, components and semifinished goods are needed during the production cycle, and when to assemble the finished goods, based on demand and the bill of materials.
As consumer expectations continue to evolve and supply chain complexity increases in a volatile global marketplace, the Company has determined that a more agile and technology-driven approach to operational planning is required. In this context, and as part of the Group’s broader digital transformation strategy, in 2025 the Company started a project with the support of ToolsGroup B.V., a third party advisory company, aimed at strengthening supply chain resilience, improving operational efficiency, and enhancing customer satisfaction across global markets.
The collaboration focuses on the implementation of ToolsGroup’s SO99+ platform, an advanced supply chain planning solution that employs statistical demand forecasting, seasonality analysis, and inventory optimization capabilities. The platform provides planners with real-time visibility and data-driven insights, enabling more accurate demand anticipation, optimized inventory allocation, and faster, more informed decision-making. By automating certain previously manual planning activities, the Company expects to increase operational agility, reduce supply chain risks, and ensure more consistent service levels throughout its international operations.
Through this initiative, the Company is pursuing four primary operational objectives: i) optimizing inventory levels across its distribution network; ii) improving service levels and product availability for customers; iii) increasing automation in planning and forecasting processes; and iv) enhancing end-to-end visibility across the supply chain ecosystem. These efforts are intended to transition the Company’s supply chain management approach from a reactive model to a more proactive and predictive framework, enabling potential disruptions to be anticipated and mitigated in advance.
Management considers this initiative a key component of the Company’s ongoing modernization of its operational infrastructure. The implementation of advanced planning technologies is expected to support the Group’s long-term strategy of combining design excellence with operational efficiency, while reinforcing its commitment to innovation and customer experience.
The Company has also established a “control tower” providing full end-to-end supply chain visibility, enabling management to analyze and proactively respond to potential demand fluctuations while ensuring the availability of production inputs and reducing waste.
This supply chain approach enables management to leverage automation and ensure that work is allocated and processed effectively across the organization, thereby allowing the Group to better adapt its business to supply chain challenges, market volatility, and rising costs, with the ultimate goal of improving working capital management.
The Company remains focused on improving service levels and on-time delivery on a global basis.
See also “Item 3. Key Information—Risk Factors—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position.”
Production Planning (Order Management, Warehouse Management, Production, Procurement) — The Group’s commitment to reorganizing procurement logistics is aimed to:
The Group also plans its procurement of raw materials and components as follows:
(i) “On demand” for those materials and components (which the Group identifies by code numbers) that require a shorter lead time to complete the order than the standard production planning cycle for customers’ orders. This system allows the Group to handle a higher number of product combinations (in terms of models, versions and coverings) for customers around the world, while maintaining a high level of service and minimizing inventory size. “On demand” procurement of raw materials and components eliminates the risk that these materials and components would become obsolete during the production process; and
(ii) “Upon forecast” for those materials and components that require a long lead time to complete the order. The Group uses a forecasting methodology that balances the Group’s desire to maintain low inventory levels with the Sales Department’s need for flexibility in fulfilling orders.
Lead times can be longer than those mentioned above when a large number of unexpected orders are received. Delivery times vary depending on the location of unloading (transportation times vary greatly depending on the distance between the final destination and the production plant).
Load Optimization and Transportation — The Group delivers goods to customers via common carriers. Goods destined for the Americas and other markets outside Europe are transported by sea in 40-foot high cube and 20-foot containers, while those produced for the European market are generally delivered by truck or rail. In 2025, the Group shipped 2,478 containers overseas and 3,156 fully loaded mega-trailers trucks.
With the aim of decreasing costs and safeguarding product quality, the Group uses a software to manage load optimization.
The Group mainly relies on several shipping and trucking companies operating under “time-volume” service contracts to deliver its products to customers and to transport raw materials to the Group’s plants and processed materials from one plant to another. In general, the Group prices its products to cover its door-to-door shipping costs, including all customs duties and insurance premiums.
See “Item 3. Key Information—Risk Factors—Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations” for a discussion of the impact of supply chain disruptions and increases in transportation costs.
Products are mainly designed in the Company’s Style Center, but the Group also collaborates with international designers for the conception and prototyping of certain products in order to enhance brand visibility, especially with respect to the Natuzzi Italia product line. See “Item 4. Information on the Company—Strategy— Product Diversification and Innovation.”
New models are the result of a constant information flow from the market, in which preferences are analyzed, interpreted and turned into a brief for designers in terms of style, function and price point. Designers draw the sketches of new products in accordance with the guidelines they are provided and, through collaboration with the prototype department, approximately 80 new sofa models are generally introduced each year. The diversity of customer tastes and preferences, as well as the Group’s inclination to offer new solutions, results in the development of products that are increasingly personalized. 61 highly qualified employees conduct the Group’s R&D efforts from its headquarters in Santeramo in Colle, Italy.
The Group’s wide range of products includes a comprehensive collection of sofas and armchairs with particular styles, coverings and functions, with more than two million combinations.
In addition to upholstered products, the Group also offers a collection of home furnishing accessories (tables, lamps, rugs, home accessories and wall units in different materials), which are purchased from third-party suppliers. Most of these suppliers are located in Italy, while some handmade products (such as rugs) are made in India. Before any items are introduced into our collection, they are tested in accordance with European and world safety standards. In the design phase particular attention is paid to the choice of innovative technological solutions that add value to the product and ensure long-lasting quality.
The Group operates in accordance with strict quality standards and has earned the ISO 9001 certification for quality and the ISO 14001 certification for the management of environmental impacts. The ISO 14001 certification also applies to the Company’s tannery subsidiary, Natco. Further, the Group has obtained the ISO 45001 certification for management systems of occupation health and safety.
In addition, in 2025 the Company received again the Responsibility Award, previously obtained in 2024. The Responsibility Award is issued by Bureau Veritas and recognizes Natuzzi’s commitment to the responsible management of the three pillars of corporate management: Quality, Environment, and Corporate Social Responsibility.
The Group invests time and resources to design and innovate processes and products to achieve higher levels of efficiency, quality and service.
Decisions on new products are made through a well-defined phase-gate process with explicit, fact-based criteria, such as product lifecycle, forecast, market segment and reduction of complexity of the existing portfolio. Accurate and granular data on product costs and financial sustainability of the business is available at every stage of the value chain (from development through manufacturing, distribution, and support). Standardized development tools (such as product lifecycle management) enable seamless global collaboration between the R&D department and the Group’s industrial footprint. The Group’s global innovation and product development department aims at integrating processes (“concurrent engineering”) by bringing together engineers from different backgrounds in cross-functional product and process teams and by interacting with suppliers to enable a faster product cycle and more efficient product development. Concurrent engineering is a working methodology that emphasizes the parallelization of tasks within a process (i.e., performing tasks concurrently), sometimes called “simultaneous engineering” or “integrated product development”, because it uses an integrated product team approach. It is an approach to product development that integrates various functions of design and manufacturing engineering, among others, to reduce the time required to bring a new product to market.
An open innovation network across the business enables collaborations with external entities (e.g., research institutions, universities, innovation centers) to rapidly source new ideas that can be turned into practical products. Once a new idea is applied to projects, it is protected by means of a specific patent.
The Company pays particular attention to the comfort of its products and its certification. The evaluation process is based on an ergonomic-principle conformity check (gap analysis), which includes the performance of several tests selected according to types of evaluation required and performed in the corresponding ergonomic reference areas. The Company performs several types of ergonomic evaluations, including tests performed or supervised by experts (certified European ergonomists), CAD 3D virtual seat evaluations and simulations, and tests with real users selected to represent the categories of end users (e.g., through biomechanical analysis, usability/distraction tests, interviews, focus groups). Based on the specific product type and request, users are asked to interact with the tested products by performing representative tasks of a physical (biomechanical interaction) or cognitive nature (cognitive ergonomics). Such evaluations are carried out to determine the compliance of the products with the ergonomic principles and requirements established by the sector technical standards, and may result in an ergonomic certification. This new evaluation process has allowed to achieve the highest certification, Human Centered Design: Product & Organization according to (ISO 92141-210) and (ISO 9241-220).
Starting from 2023, Natuzzi participated in the Made in Italy Circolare e Sostenibile consortium (“MICS”). MICS is a partnership between universities, research centers, and enterprises financed by MUR - Ministero dell’Università e della Ricerca with funds provided by the European Union under the NextGenerationEU (PNRR) program. MICS connects businesses and research in the public and private sectors, creating a unique unity of purpose. Presently, three key sectors of the Italian industrial scenario are involved, namely fashion, furniture, and factory automation. By dividing research into eight thematic areas, referred to as “Spokes”, MICS is at the forefront of addressing challenges to Italy’s design, production, and consumption models, as well as to end-of-life materials, products, production technologies, and processes necessary for transitioning to greener and more circular pathways and patterns. Through this partnership, Natuzzi aims to enhance its sustainability practices, from product design through the entire order-to-delivery and fulfillment process.
The innovation along the R&D processes and products has been implemented and successfully integrated with the entire value-added chain, with suppliers, production and customers through the experimentation of an innovative production and process model called “Factory 4.0”. The Factory 4.0 operational model has been studied since 2020 as a proprietary production model aimed at reducing production costs, based on a bespoke cellular production principle that evolved the moving line production model. Such production model relies on a more advanced technological clustering of industrial processes in order to more efficiently manage the complexity arising from the manufacturing of different product families (also referred to as the “factory within the factory” system).
This new cellular production system is an advanced form of lean production that uses the same basic principles but in a mixed-model environment to efficiently manage the complexity of make-to-order production. The basic underlying principle is that instead of grouping workers by a single process within the same production line, workers are grouped into separate production value streams for each product family. Cellular manufacturing principles can be applied to a wide range of volumes and product mixes, resulting in a more flexible production environment. Cellular production methods involve clustering the processes and machines needed to complete a product family. The goal is to improve value stream efficiency. This new approach to production concept makes it possible to simplify the production flow and reduce part movement, buffer inventory and waste in general. Cellular production focuses on first identifying the value-adding activities of the process, then mapping the value stream, implementing the process flow, creating a pull system, and finally creating quality through continuous improvement.
The new factory model is supported by digital systems based on 4.0 technologies, which make it possible to connect people, machines and systems as a network. All assembly processes and material handling technology are real-time ready. The assembly, sewing, packaging and cutting departments are completely digitalized. Employees work with monitors and personal pads. Workstations and processes have been virtually tested and ergonomically designed. All the warehouses and picking zone are equipped with a digitalized logistics and visual management “Andon” systems, the necessary materials for assembly in a so-called pick zone use (“pick-to-light” systems), advanced transport and handling systems are in use to speed up the efficiency of the internal logistics system. A real-time monitoring approach has been designed and implemented into Factory 4.0, as the resulting data can now be collected and analyzed at the end of a shift using big data technology. The findings are used to improve existing production processes, prevent efficiency losses and take predictive action. This helps to increase uptime and improve quality.
Networking is not only within Factory 4.0 but also throughout the supply chain from suppliers to production to customers. In coordination with our suppliers, we plan to integrate their systems with the Natuzzi SAP system (“Systems, Applications, Products in Data Processing”) and manufacturing execution system (MES) to track arrivals, avoid shortages and enable early detection of discrepancies in the supply chain, thus reducing response time.
Natuzzi continues to invest in technological and process innovation, with a focus on efficiency, quality and digital transformation. These investments reflect the Group’s broader commitment to sustainable industrial development and are in line with its strategy, particularly in the areas of supply chain and operational resilience. Throughout 2025, significant progress was made in the deployment of Industry 4.0 technologies across the Group’s Italian manufacturing footprint. As of the date of this Annual Report, most of the Italian operating factories have been fully migrated to the proprietary Factory 4.0 model.
Natuzzi Group remains focused on improving operational quality through cost optimization and the reduction of customer complaints. Building on this trend, the Group intends to launch a structured quality optimization program in 2026. Grounded in Six Sigma principles—which is a data-driven methodology designed to eliminate defects and reduce variability in manufacturing and business processes—this initiative is intended to refine internal processes and sustain the Group’s continuous quality improvement trajectory.
R&D expenses, which include labor costs for the R&D department, design and modeling consultancy expenses and other costs related to the R&D department, were €3.8 million in 2025, €3.4 million in 2024 and €3.8 million in 2023.
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Natuzzi’s marketing mission continues to capitalize on our brand’s core values of harmony, quality and craftsmanship, combining design with innovation, and a commitment to social responsibility. We amplify these values through our brand’s dynamic story. Told through our predominant Mediterranean, Italian, modern lifestyle, this brand story honors our history as a quintessential Italian brand while allowing us to promote a broad yet curated product range that results in a combination of product value and personalized experience.
By adopting a fresh, ever-evolving creative approach that is increasingly driven by digital strategies, we have continually reinvigorated our brand, enhancing its desirability and visibility. Our vertically integrated approach allows us to manufacture most of the products we sell in our own plants, which we believe gives us great control over the quality of our products, the service we provide, and flexibility in make-to-order production, thus supporting an exceptional breadth of styles and customization options.
Our combination of creative and analytics-driven strategies enables us to drive new and repeat customer traffic to both our stores worldwide and our website, natuzzi.com. Using our fully integrated customer relationship management system, we create personalized customer journeys, targeted communications and retargeting campaigns. We develop persuasive, aspirational and relevant messages and we convey them through a variety of media, including direct mail, geo-targeted tools, radio, digital and social channels and email marketing. Taken together, these strategies allow us to constantly expand and update our client base while maintaining existing relationships.
We work on continually improving our digital platform, which includes both brand lines to enhance the user experience across the Natuzzi universe. New technologies and effective user experience solutions contribute to the growth of our digital key performance indicators.
Along with the new digital platform, we maintain the e-commerce channel for Natuzzi Italia products in the U.S. market to amplify the brand’s potential and make it more accessible to customers. Our e-commerce strategy is to generate business by combining technology with excellent personal service. We consider our website an extension of our retail stores and not a separate segment of our business. We expect most of our customers to use the internet for inspiration and as the beginning of their shopping process to view products and their prices. Since most of our products are customizable, we encourage our website customers to get personal help from our interior design professionals, either in person or online. This complimentary direct contact with one of our knowledgeable interior design professionals, whether remotely or in-person, represents an additional service we provide our website customers. This enhances the online experience and leads to internet customers becoming customers of our network of retail stores.
In particular, as a result of the increased focus on online shopping and virtual merchandising platforms, we continue to strategically focus on digital touchpoints through our ongoing implementation of conversion rate optimization updates. We also invest in targeted search engine optimization and paid search marketing for both national and local markets, driving both referral traffic to our website and physical traffic to our stores. In addition, improved on-site search capabilities, expanded online appointment booking capabilities, and product listing and display page enhancements continue to elevate our users’ experience. We continue to promote brand visibility on various social media platforms, placing greater emphasis on visual and video-driven content. Both paid social media campaigns and organic social media presence have helped us grow our social following and take a more prominent place in the cultural conversation.
In 2025, the Natuzzi Editions brand continued its transition to become a retail brand by expanding partnerships and improving the quality of distribution through mono-brand stores and galleries that represent the Group’s lifestyle concept.
The developments in the retail environment have also been reinforced with a newly designed in-store communication that enhances the consumer experience, supported by a digital footprint, a new website, and digital tools. All marketing materials are available to our customers through a marketing platform to provide 360° support to our partners in communicating the Group’s brand values to our consumers.
We plan to further invest in our digital footprint, including our website, in order to enhance our customer experience, expanding a customized and engaging approach to products. We are also continually improving our customers’ journey from the time they visit our website to the delivery of their purchased products or their visit to our points of sale by boosting our engagement tools. We view the combination of online and in-store traffic in a holistic fashion whereby our customers generally experience our brand on our website before visiting a store in person. Our online traffic continues to increase each year and our marketing teams remain focused on enhancing our digital outreach strategies to further drive more traffic and keep our brand relevant in today’s social media-oriented world.
The Group is still focused on expanding its retail distribution network internationally in its most important markets, by opening new stores and closing/relocating those stores that have not met the expected revenue goals.
During 2025, 10 Natuzzi Italia stores were opened, of which 6 in China, and 1 in each of Slovakia, South Africa, South Korea and Thailand.
The expansion of the network will continue in 2026, mainly through dealership agreements within the most relevant geographies, namely China, Europe and Emerging Markets. We plan to open approximately 50 Natuzzi franchises worldwide in 2026, of which 20 in China, 3 in the UK, 2 in each of Brazil, Cameroon, Egypt, Italy, Portugal, Saudi Arabia and South Africa, and the remaining in various Countries.
The Group markets its products internationally and in Italy. Historically, the distribution of the Group’s products has been through the wholesale channel, which still represents a significant portion of our entire business.
The Group continues in its effort to expand its retail distribution through Natuzzi mono-brand stores, both directly operated and franchises. In 2025, retail sales accounted for 65.1% of our consolidated upholstered and home furnishings revenue, compared to 64.8% in 2024.
The following tables show the number of Group stores (both directly operated and franchises) as of December 31, 2025 according to our principal geographic areas.
STORES
NatuzziItalia
NatuzziEditions
Divani&Divaniby Natuzzi
TOTAL
Americas(1)
United States and Canada
33
Other Americas
54
68
Total Americas
101
EMEAI
West & South Europe (excluding Italy)
42
Italy
Middle East, Africa and India
Other EMEAI
Total EMEAI
77
46
202
Asia-Pacific
China (2)
176
236
Other Asia-Pacific
Total Asia-Pacific
76
185
261
189
296
564
In addition to the stores indicated in the above table, as of December 31, 2025, there were 3 Natuzzi Italia and 9 Natuzzi Editions concessions (galleries or store-in-store points of sale), all directly managed by the Company’s Mexican subsidiary.
The following tables show the Group’s consolidated revenue of upholstery furniture, beds and home furnishing accessories, broken down by geographic market and branded/unbranded business for each of the years indicated therein and in thousands of Euro.
2024
2023
118,028
39.5
%
125,063
40.3
122,820
38.4
Natuzzi brand(2)
109,416
36.6
111,191
35.8
109,894
34.4
Unbranded
8,612
2.9
13,872
4.5
12,926
4.0
142,501
47.7
144,777
46.6
150,789
47.1
136,801
45.8
137,366
44.2
141,413
5,700
1.9
7,411
2.4
9,376
38,130
12.8
40,702
13.1
46,228
14.5
37,315
12.5
39,346
12.7
44,615
13.9
815
0.3
1,356
0.4
1,613
0.5
Total
298,659
100.0
310,542
319,837
The following tables show the number of upholstered seats sold broken down by geographic market and branded/unbranded business for each of the years indicated therein:
173,995
32.4
196,210
34.0
205,183
32.2
138,403
25.8
145,866
25.3
155,797
24.5
35,592
6.6
50,345
8.7
49,386
7.8
279,385
52.1
296,240
51.4
327,494
251,593
46.9
260,372
45.2
283,635
44.6
27,791
5.2
35,868
6.2
43,859
6.9
83,274
15.5
84,129
14.6
103,978
16.3
79,413
14.8
78,272
13.6
96,760
15.2
3,861
0.7
5,857
1.0
7,218
1.1
536,653
576,579
636,655
In 2025, net sales of upholstered sofas, beds and home furnishings (“main business”) amounted to €298.7 million, a decrease of 3.8% compared to 2024, as a result of a 1.5% decrease in Natuzzi branded sales and a 33.2% decrease in net sales of unbranded products.
The Group’s performance also during 2025 was impacted by ongoing macroeconomic, geopolitical, and industry-specific challenges, that continued to dampen consumer spending capacity and delay purchases of durable goods.
More broadly, in recent years, the Group’s sales performance across all major regions and brands has been adversely impacted by ongoing macroeconomic and industry-specific challenges. Persistent geopolitical uncertainty, weak consumer sentiment and rising inflationary pressures have eroded disposable incomes, leading consumers to delay or reduce spending on home investments. This also led to increased price sensitivity, resulting in a shift in demand towards more affordable products. See “Item 3. Key Information-Risk Factors—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position.” As a result, in 2025, the Group’s sales overall decreased compared to both 2024 and 2023.
The Group’s strategy is to increase the portion of revenue represented by the Natuzzi branded sales, mainly through the expansion of its retail network in priority markets, such as the U.S., China and Europe, primarily the UK and Italy, and, at the same time, to focus on selected large accounts selling unbranded products to serve them with a more efficient go-to-market model.
For additional information on the results of our operations in 2025 as compared to 2024, see “Item 5. Results of Operations.”
31
1. The Americas
In 2025, net sales of leather and fabric-upholstered furniture, beds and home furnishings in the U.S. and the rest of the Americas (including Brazil) were €118.0 million, down 5.7% compared to 2024, and the number of seats sold decreased by 11.3% to 173,995 in 2025, compared to 2024. In 2025, net sales of our Natuzzi branded products were €109.4 million, down 1.6% compared to 2024, and net sales of unbranded products were €8.6 million, down 38.1% compared to the prior year, as the unbranded part of the business is no longer strategic.
Net sales in the Americas were affected by the weak performance of both the retail network and the wholesale channel. With respect to the retail segment, the Company continues to invest in product innovation, design and marketing to enhance the customer experience and drive new business opportunities, including through the Trade & Contract division. The Company also remains firmly committed to developing new projects and collections and engaging in promotional events—including international trade fairs and design shows, Natuzzi Congresses and targeted initiatives with real estate developers and designers—to consolidate the Natuzzi brand’s positioning and support commercial performance. The wholesale channel likewise remains a strategic priority in several geographies, including the U.S. To support this focus, at the beginning of 2025, we introduced the ‘Re-Imagined Gallery Concept’, first presented in the last quarter of 2024, which is designed to provide a practical setting for sales associates to engage with customers, narrate the captivating Natuzzi story, present our collections, and support sales.
The Group’s strategy for the Americas is to continue focusing on the branded business mostly through the opening of mono-brand Natuzzi stores in addition to Natuzzi galleries, mainly in the U.S., and at the same time to focus on selected large unbranded distributors in an effort to serve them with a more efficient go-to-market model.
Over the last few years, our unbranded business has been affected by difficult retail conditions experienced in the North American market, resulting in a reduction of their points of sale, and, more generally, by increased price competition in the low segment of the market. In addition, the unbranded production, which has been entirely served by our operations in Asia, has been negatively affected by tariffs imposed by the U.S. customs authorities on goods manufactured in China and, more recently, by Canadian customs authorities on goods manufactured in China and Vietnam, as well as any new or increased tariffs or other trade barriers that the new U.S. presidential administration has imposed, or may in the future impose, on goods imported from foreign countries.
Since December 2019, in light of the tariffs imposed by the U.S. on goods imported from China, the Company has started outsourcing part of its unbranded production in Vietnam for some key accounts in the U.S. In addition, the Group is leveraging its global footprint to mitigate the negative effects from customs duties imposed by Canadian authorities. See “—Manufacturing.” In addition, since the beginning of the new U.S. presidential election, the Group is also constantly monitoring any development regarding the imposition by the U.S. administration of new or increased import tariffs or other similar trade restrictions on goods imported from foreign countries, including Vietnam.
The Group’s principal wholesale customers are major distributors. The Group advertises its products to distributors and, more recently, to end-consumers in the U.S., Canada, Central and South America (excluding Brazil) both directly and through the use of various marketing tools. The Group also relies on its network of sales representatives and on furniture fairs held at its High Point, North Carolina, to promote its products.
Natuzzi Americas maintains offices in High Point, North Carolina and provides the Company with agency services. The staff at High Point provides customer service, trademarks and products promotions, credit collection assistance, and generally acts as the customers contact for the Group. As of December 31, 2025, Natuzzi Americas employed a total of 74 persons, of which 47 employees, in addition to 12 independent sales representatives.
Our commercial activities in Brazil and South America are overseen from our Salvador de Bahia facility. The Group’s commercial structure for the South American region has been reinforced over the years by an increase in personnel, from 12 representatives in 2012 to 23 as of the end of 2025. 2025 net sales in Brazil were €10.8 million, from €13.5 million in 2024. As a result of the focus to the Brazilian and more generally South American high-end consumer market, the Group currently distributes a Natuzzi Italia “made in Brazil” collection, entirely manufactured in Brazil and exclusively dedicated to the South American market.
In 2016, the Group acquired seven Natuzzi Italia stores all located in Florida. In December 2016, the Company established a new trading subsidiary located in Mexico, Natmx S.de.R.L.de.C.V. (“NATMX”). In January 2017, NATMX signed an agreement with the owners of Muebleria Standard. Under the agreement, NATMX acquired the three existing Natuzzi Italia stores located in Mexico City-Altavista, Guadalajara and Monterrey. In addition to the directly operated stores, as of December 31, 2025, NATMX sells our products in Mexico through 12 directly managed concessions (three under the Natuzzi Italia brand and nine under the Natuzzi Editions brand) in Palacio de Hierro, a high-end retailer having shopping malls in excellent locations throughout Mexico.
In June 2017, the Company opened its new North American retail store in West Palm Beach, Florida, which was closed in February 2026 as part of our strategy to improve the quality of our network. During 2018, the Company opened four new directly operated
32
stores in the U.S., namely one in Chicago, one in Los Angeles-Costa Mesa, one in Paramus – New Jersey and one in Philadelphia (within the King of Prussia Mall). In 2019, one Natuzzi Italia store was opened in the Sarasota and the Fort Lauderdale store, initially opened in 2016, was relocated. In 2022, three new Natuzzi Editions stores were opened, of which one in Kennessaw, Georgia, operated directly by the Group, and two Natuzzi Editions stores, in South Lake and Dallas, Texas, managed in joint venture with a local partner. In 2023, six Natuzzi Italia stores were opened, and, specifically five DOS in San Diego, Manhasset, Houston, Miami and Atlanta, and one franchise in Forth Worth, as well as one Natuzzi Editions DOS in Frisco, Texas, operated in joint venture with a local partner. In 2024, one Natuzzi Italia DOS was opened in Denver. These store openings are part of the strategy announced in 2016 to open Company-managed stores in high traffic and prime retail locations, showcasing the new store design, merchandising concept and overall Natuzzi consumer experience.
As of December 31, 2025, there were 20 Natuzzi Italia stores in the Americas (18 in the U.S. and two in Mexico) and one Natuzzi Editions store in the U.S. directly managed by the Group, in addition to three Natuzzi Editions stores in the U.S. managed in joint venture with a local partner.
As of the same date, there were also 16 Natuzzi Italia stores operating in the Americas that are owned by local franchisees (six in Brazil, three in the U.S., two in Venezuela, one in each of Argentina, Bolivia, Canada, Panama and Paraguay). Furthermore, as of the same date, there were 61 Natuzzi Editions franchise stores, of which 44 were located in Brazil, seven in the U.S., two in each of Colombia, Ecuador and Uruguay, and one in each of Argentina, Guatemala, Perù and Venezuela.
2. EMEAI
In 2025, net sales of leather and fabric-upholstered furniture and beds as well as home furnishings in Europe (including Italy), the Middle East, Africa and India (collectively, “EMEAI”) were €142.5 million, down 1.6% compared to 2024, with the number of seats decreasing by 5.7% to 279,385 in 2025. Natuzzi branded sales amounted to a total of €136.8 million in 2025 (down 0.4% from 2024), and unbranded products net sales decreased by 23.0% to €5.7 million.
2a) West & South Europe (excluding Italy). The Group sells its products in West & South Europe (outside Italy) mainly through stores (franchises or directly operated stores). As of December 31, 2025, 42 stores were operating in Europe: 23 were under the Natuzzi Italia name (eight in the UK, seven in Spain, two in each of the Netherlands, Portugal and Switzerland, and one in each of Austria and France). As of the same date, there were 19 Natuzzi Editions stores of which 15 located in the UK, two in Spain, and one in each of Austria and Ireland. Of these stores, as of December 31, 2025, the Group directly owned 14, of which 12 were operated under the Natuzzi Italia name (seven in Spain, two in each of the UK and Switzerland and one in France) and two were operated under the Natuzzi Editions name, all in the UK.
2b) Italy. Since 1990, the Group has sold its upholstered products in Italy principally through the Divani&Divani by Natuzzi franchise network of furniture stores. As of December 31, 2025, there were 79 Divani&Divani by Natuzzi stores (of which 12 directly operated by the Company), and two Natuzzi Italia stores, all directly operated by the Company.
2c) Middle East, Africa and India. As of December 31, 2025, the Group had a total of 25 Natuzzi Italia stores in the Middle East, Africa and India: five in Israel, three in each of India and United Arab Emirates, and one in each of Algeria, Bahrain, Bangladesh, Egypt, Iraq, Ivory Coast, Kuwait, Lebanon, Pakistan, Qatar, Saudi Arabia, Senegal, South Africa and Tunisia. In addition, there were nine Natuzzi Editions franchise stores: three Natuzzi Editions stores were operating in Egypt, two in the United Arab Emirates and one in each of Israel, Kuwait, Nigeria and Senegal.
2d) Other EMEAI. As of December 31, 2025, 45 stores were operating in the remaining part of EMEAI: 27 were under the Natuzzi Italia name (five in Russia, three in each of Czech Republic and Turkey, two in Ukraine, and one in each of Azerbaijan, Bosnia, Bulgaria, Croatia, Cyprus, Greece, Hungary, Malta, Poland, Romania, Serbia, Slovakia, Slovenia and Uzbekistan). As of the same date, there were 18 Natuzzi Editions of which four in the Czech Republic, three in Slovakia, two in each of Croatia and Romania, and one in each of Bosnia, Cyprus, Hungary, Malta, Poland, Serbia and Ukraine.
In January 2012, following the worsening of the European Union’s diplomatic relations with Iran and Syria, the Company decided to cease all business relations with these two countries. No impairment issue arose following the cessation of business relations with those two countries. The Group has had no sales in Iran or Syria since 2016. Our prior interests and activities in Iran or Syria were not a material investment risk, either from an economic, financial or reputational point of view. The Group has not had, nor does it plan to have, any commercial contacts with the governments of Iran or Syria, or with entities connected with such governments.
The Group has never generated sales in Sudan, North Korea or Cuba.
3. Asia-Pacific Region
In 2025, net sales of leather and fabric-upholstered furniture and beds as well as home furnishings in the Asia-Pacific region were €38.1 million, down 6.3% from 2024, and the number of seats sold decreased by 1.0% to 83,274 in 2025. In 2025, Natuzzi branded sales decreased by 5.1% to €37.3 million, and unbranded sales decreased by 40.3% to €0.8 million compared to 2024.
The general strategy for the Natuzzi brand in the Asia-Pacific region is to further expand its store network. In China in particular, the Group is prioritizing the quality of its retail presence and the market positioning of its two principal brands. With respect to Natuzzi Editions, the Company is streamlining its network by applying more selective partnership criteria and upgrading existing stores. To support growth, the Group is also expanding its digital presence through a partnership with JD.com, one of China’s leading e-commerce platforms, launched in March 2026, while transitioning from traditional trade fairs to a series of regional events designed to strengthen engagement with local customers. With respect to Natuzzi Italia, the focus remains on reinforcing its premium market positioning through strategic collaborations—including the planned opening of a flagship store in Beijing in July 2026—and cross-industry co-branding initiatives, particularly in the automotive sector, alongside the continued development of digital channels. The Company expects to open approximately 20 franchise-operated Natuzzi stores in 2026.
The Group’s commercial part of the business throughout the Asia-Pacific region was run by Natuzzi Trading (Shanghai) Co., Ltd. until July 27, 2018. On that date, the Company announced the completion of the transactions (the “Closing”) contemplated by the joint venture agreement, signed in March 2018, between the Company and Kuka Furniture (Ningbo) co., Ltd. (“Kuka”). As a result of the Closing, the Company’s wholly-owned Chinese subsidiary, Natuzzi Trading (Shanghai) Co., Ltd. (“Trading Co.”) became a joint venture in which each of the Company and Kuka owns, as of the date of this Annual Report, a 49% and a 51% stake, respectively. See Note 11 to the Consolidated Financial Statements.
This joint venture is aimed at strengthening the Company’s retail network in Mainland China, Hong Kong and Macau (the “Territory”). Trading Co. distributes the Natuzzi Italia and Natuzzi Editions branded products through a network of single-brand directly operated stores and franchise stores in the Territory, as well as through online stores.
In April 2021, the Company announced that it had entered into a preliminary and non-binding agreement (the “Preliminary Agreement”) with Truong Thanh Furniture Corporation (“TTF”), a company incorporated under the laws of the Republic of Vietnam and which engages in production and distribution of furniture, to form a partnership aimed at strengthening the Natuzzi Group’s operations in the APAC region excluding Greater China (the “Rest of the APAC Territory”). Under the Preliminary Agreement, TTF intended to acquire up to a 20% stake in Natuzzi Singapore PTE. LTD (“Natuzzi Singapore”), which was incorporated by the Company in the Republic of Singapore in April 2020 and became operating in 2021. Natuzzi Singapore engages in sales and distribution of furniture and upholstery products under the trademarks of the Group in the Rest of the APAC Territory. At the time of the Preliminary Agreement, Natuzzi Singapore was 93% controlled by Natuzzi S.p.A., while the remaining 7% stake was owned by Mr. Richard Tan, the head of Natuzzi industrial operations in Asia since their inception in 2001, as well as a minority shareholder of one of the Group’s subsidiaries in China. In March 2022, TTF obtained all applicable authorizations by the relevant Vietnamese authorities and acquired a 20% stake in Natuzzi Singapore, for a total cash consideration of $5.4 million (equivalent to €4.9 million) to Natuzzi Singapore. As a result of the above transaction, Natuzzi S.p.A. TTF and the other minority shareholder, Mr. Richard Tan, own 74.4%, 20.0% and 5.6% of the share capital of Natuzzi Singapore, respectively. In addition, Natuzzi S.p.A. maintains the majority of the board members of Natuzzi Singapore.
As of December 31, 2025, there were 76 Natuzzi Italia stores operating in the Asia-Pacific market: 58 in China (of which nine directly operated by the joint venture in China), five in Taiwan, four in Australia, two in each of Hong Kong, South Korea and Thailand , and one in each of Indonesia, Philippines and Vietnam. In addition, as of the same date, there were 185 Natuzzi Editions stores, of which 175 located in China (including six directly operated by the joint venture in China), and three in Australia (of which two directly operated by the Group), two in Taiwan, and one in each of Hong Kong, South Korea, Philippines, Thailand and Vietnam. The Group also maintains galleries in the Asia-Pacific region under the Natuzzi Italia and Natuzzi Editions.
The Group maintains an active credit management program. The Group evaluates the creditworthiness of its customers on a case-by-case basis according to each customer’s credit history and information available to the Group. Throughout the world, the Group utilizes “open terms” in 75% of its sales and obtains credit insurance for 100% of this amount; 11% of the Group’s sales are commonly made to customers on a “cash against documents” and “cash on delivery” basis; lastly, about 14% of the Group’s sales are supported by a “letter of credit” or “payment in advance and at sight”. See Note 33(C) to the Consolidated Financial Statements. In addition, the Group uses a Securitization Program as part of its liquidity management strategy, in the context of which the Company entered into the Securitization Program. The Securitization Program, which has been most recently amended on July 25, 2025 and January 14, 2026, allows the Group to assign eligible trade receivables on a revolving basis, retaining substantially all risks and rewards associated with such receivables on a pro-solvendo basis, in exchange for short-term funding. Following the
Securitization Program Amendments, the maximum aggregate amount of receivables under the Securitization Program has been reduced to €18.0 million, and the revolving period is currently scheduled to expire, absent early termination, no later than June 2026. See “Item 3. Key Information—Risk Factors—The Company uses a securitization program as part of its liquidity management strategy; any reduction in availability, increased restrictions or termination of such program could adversely affect the Company’s liquidity.”
The effective availability of funding under the Securitization Program depends on compliance with revised and more restrictive eligibility criteria and concentration limits, including, among other things, stricter requirements relating to the credit quality of eligible debtors, insurance coverage, individual debtor exposure limits, geographic and jurisdictional constraints, ageing thresholds, and the exclusion of receivables overdue beyond specified time limits. As a result, the volume of receivables that can be transferred at any given time may be materially lower than the contractual maximum amount, depending on the composition, credit quality and insurance coverage of the Group’s accounts receivable portfolio. Nevertheless, the Securitization Program continues to represent an important source of short-term liquidity for the Group.
Historically, the Group has benefited from the Italian government’s investment incentive program for under-industrialized regions in Southern Italy, which includes the area that serves as the center of the Group’s operations. The investment incentive program provides tax benefits, capital grants and subsidized loans. There can be no assurance that the Group will continue to be eligible for such grants, benefits or tax credits for its current or future investments in Italy. See “Item 3. Key Information—Risk Factors—Our past results and operations have significantly benefited from government incentive programs, which may not be available in the future.”
In September 2015, the Company presented to the Italian Ministry of Enterprises and Made in Italy (Ministero delle Imprese e del Made in Italy, the “Ministry”) a €49.7 million investment program for industrial development consisting of six programs, including a research and development program and the upgrade of its Italian facilities located in the regions of Puglia and Basilicata. In 2015, the Company formally requested that the grant from the Ministry be €37.3 million from public incentives. On September 23, 2015, the Company entered into a formal agreement (the “Development Contract”) with the Ministry and the governments of Puglia and Basilicata reflecting this investment. On January 23, 2017, following its review of such program, the Ministry reduced the amount of investments from €49.7 million to €37.8 million, according to the following allocation: €27.6 million to upgrade the Italian plants located in Puglia and Basilicata and €10.2 million for innovation, research and development expenses. Consequently, grants from public incentives were reduced from €37.3 million to €26.9 million (€11.0 million as a capital grant and €15.9 million as subsidized loan). The Company began the planned investment activity in 2016. Specifically, it invested €5.0 million in 2016 and €2.0 million in 2017. In January 2018, the Ministry issued a decree for the Company to sign. Following the unfavorable judgement by the Labor Court of Bari, which required the Company to re-employ 166 workers, the Company decided not to sign the decree because it considered that the conditions set out in the decree, including the obligation not to fire workers for a 10-year period, were too onerous. On March 5, 2019, the Company presented to the Ministry of Economic Development an updated document concerning the Development Contract. In July 2019, the Ministry issued a decree which valued the Company’s investment program at €45.7 million, of which €33.9 million considered eligible for public incentives, and granted the Company: (i) a €4.3 million capital grant and a €12.7 million subsidized loan for the upgrade of the Italian facilities in Puglia and Basilicata and (ii) a €5.9 million capital grant and a €1.2 million subsidized loan for innovation, research and development expenses, for a total of €24.1 million in grants from public incentives. In December 2019, the Company received €7.2 million from the Ministry, equivalent to 30% of the total grants, of which €3.0 million as a capital grant and €4.2 million as a subsidized loan. By signing the decree, the Company undertook to carry out the research and development program and the upgrade of the Italian facilities in Puglia and Basilicata by December 31, 2020. On July 31, 2020, the Company presented a first set of the expenditure documentation relating to such investment program. Following the COVID-19 outbreak, the Company requested an extension of the deadline to March 31, 2022 to complete the investments under the program.
In March 2022, the Company presented to the Ministry a revised program with a new set of investments aimed at improving the flexibility of the industrial processes in its Italian plants located in the regions of Puglia and Basilicata, through the introduction of the “4.0” technologies together with a new workflow organization based on “cellular manufacturing”. According to such revised program, the total amount of investments is €34.4 million, of which €25.3 million is for the upgrade of the Italian plants in Puglia and Basilicata and €9.1 million for innovation, research and development expenses. The amount in grants from public incentives has not changed (i.e., €24.1 million, of which €7.2 million received in December 2019). In March 2023, the Ministry issued the approval decree providing for a total investment amount of €31.3 million, of which €23.6 million for the upgrade of the Italian plants in Puglia and Basilicata and €7.7 million for innovation, research and development expenses. The amount in grants from public incentives was about 70% of the €31.3 million investment amount, and the Ministry granted the Company up to €8.7 million capital grant and up to €13.6 million subsidized loan. The Company requested and obtained from the Ministry an extension of the deadline to December 31, 2023 to complete the investments under the program.
During 2023, the Company submitted to the Ministry two distinct sets of expenditure documentation pertaining to the investments and expenses incurred under the program in 2023. Specifically, according to said documentation, the total amount of investments and expenses was equal to €20.0 million, of which €14.8 million allocated for the upgrade of the Italian plants in the Puglia and Basilicata regions, and €5.2 million designated for innovation, research, and development expenses.
As a result, in 2023, the Ministry granted the Company a total of €3.1 million in capital grant (of which €1.6 million for the upgrade of the Italian plants in the Puglia and Basilicata regions, and €1.5 million for innovation, research, and development expenses), and a €5.7 million subsidized loan (of which €5.6 million for the upgrade of the Italian plants in the Puglia and Basilicata regions, and €0.1 million for innovation, research, and development expenses, the latter pertaining to the first set of expenditure documentation submitted to the Ministry in 2023). Of the total €8.8 million granted by the Ministry, €7.6 million was received in 2023, while €1.2 million was received on April 9, 2024. The investment program – covering both production and R&D – was formally approved on April 14, 2025, as confirmed by the official communication from the Ministry.
The investment program—covering both industrial investments and research and development activities—was completed on April 14, 2025, when the Company formally notified the Ministry of the conclusion of the relevant activities. Following such notification, the Company initiated the final expenditure reporting process, which was completed in July 2025. Subsequently, the Ministry commenced its assessment of the amounts formally reported and, in March 2026, recognized and granted public incentives in connection with the industrial investments, consisting of a subsidized loan of €2.1 million and a capital grant of €0.6 million. With respect to the research and development activities, the Company is currently awaiting the Ministry’s formal recognition of the amounts to be granted, which the Company expects to be approximately €1.0 million.
The Group is subject to currency exchange rate risk in the ordinary course of its business to the extent that its costs are denominated in currencies other than those in which it earns revenues. Exchange rate fluctuations also affect the Group’s operating results because it recognizes revenues and costs in currencies other than Euro but publishes its financial statements in Euro. The Group also holds a substantial portion of its cash and cash equivalents in currencies other than the Euro. The Group’s sales and results may be materially affected by exchange rate fluctuations. For additional information see “Item 3. Key Information—Risk Factors—Fluctuations in currency exchange rates and interest rates may adversely affect our results of operations” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”
The Group’s products are sold mainly under the Natuzzi Italia® and Natuzzi Editions® trademarks. These trademarks and certain other trademarks, such as Divani&Divani by Natuzzi® and Natuzzi Re-vive®, have been registered in all jurisdictions in which the Group has a commercial interest, such as Italy, the EU and elsewhere. To protect its investments in new product development, the Group has also undertaken the practice of registering certain new designs in most of the countries in which such designs are sold. As of the date of this Annual Report, the Group has approximately 1,000 certificates of design registrations referring to single and multiple applications for a total of 1,100 models (the same model may be registered in more than one country and/or jurisdiction, resulting in about 16,500 registrations related to 1,100 models in several countries) and two patents (registered and pending).
Applications are made with respect to new product introductions that the Group believes will enjoy commercial success and have a high likelihood of being copied.
In 2013, the Natuzzi Group launched Re-vive®, an innovative armchair that was the result of a collaborative effort between Natuzzi’s Style Center and the Formway Design Studio of Wellington, New Zealand. The Re-vive® recliner combines style and comfort, Italian artisan expertise and innovative New Zealand design. This innovative armchair is internationally protected by several patents covering both its shape and all of its components. In particular, the design patent was filed in 15 countries, while the mechanism patent was filed in 14 countries.
As for the distribution of the products that are manufactured in the Group’s plants and identified under various names (Natuzzi Italia®, Natuzzi Editions®, Divani&Divani by Natuzzi® and Natuzzi Re-vive®), the Group has entered into business agreements under the form of sale licenses (product supply and brand usage licenses) with its customers (distributors and retailers).
Furthermore, the Group has supply agreements in place with large wholesalers for the supply of Unbranded products that are manufactured by the Group’s industrial plants outside of Italy.
The Company is incorporated under the laws of the Republic of Italy. The principal laws and regulations that apply to the operations of the Company—those of Italy and the European Union—are different from those of the United States. Such non-U.S. laws and regulations may be subject to varying interpretations or may be changed, and new laws and regulations may be adopted, from time to time. Our products are subject to regulations applicable in the countries where they are manufactured and sold. Our production processes are regularly inspected to ensure compliance with applicable regulations. While management believes that the Group is currently in compliance in all material respects with such laws and regulations (including rules with respect to environmental matters), there can be no assurance that any subsequent official interpretation of such laws or regulations by the relevant governmental authorities that differs from that of the Company, or any such change or adoption, would not have an adverse effect on the results of operations of the Group or the rights of holders of the Ordinary Shares or the owners of the Company’s ADSs. See “—Environmental Regulatory Compliance,” “Item 10. Additional Information—Exchange Controls” and “Item 10. Additional Information—Taxation.”
The Group, to the best of its knowledge, operates all of its facilities in compliance with all applicable laws and regulations.
The Group places environmental sustainability among the priority commitments of its business activities. Since 2003, in compliance with this commitment, the Group has implemented an environmental management system, certified ISO 14001, integrated with a quality management system, certified ISO 9001. These systems reflect Natuzzi’s commitment to offering high value products and services, while minimizing environmental impact and complying with all applicable laws and regulations.
Below are the main commitments made by the Group in relation to environmental sustainability:
1) constant monitoring of the environmental impact of the Group’s business activities through:
2) prioritizing the recovery and recycling of the waste generated rather than its disposal, protecting soil and subsoil from potential spills; managing temporary industrial waste storage areas such as mastics and solvents; separate collection to facilitate waste recovery and disposal;
3) raising awareness and training its employees on the issue of environmental sustainability;
4) promoting the adoption of correct environmental behavior by its suppliers, giving priority to those who offer the greatest guarantee of sharing Natuzzi’s corporate policy;
5) maintaining an open and constructive dialogue with public administration bodies and with individual territorial in the areas in which the Group operates.
The Group maintains insurance against a number of risks. The Group insures against loss or damage to its facilities, loss or damage to its products while in transit to customers, failure to recover receivables, certain potential environmental liabilities, product liability claims and Directors and Officer Liabilities. While the Group’s insurance does not cover 100% of these risks, management believes that the Group’s present level of insurance is adequate in light of past experience.
The location, approximate size and function of the principal physical properties used by the Group as of March 31, 2026 are set forth below:
Country
Location
Size(approximatesquare meters)
Function
ProductionCapacity perday
Unit ofMeasure
Santeramo in Colle (BA)
28,000
Headquarters, prototyping, showroom (owned)
N.A.
2,000
Experimental laboratory: leather cutting, sewing, assembling wooden parts for frames, product assembly (owned)
Seats
Santeramo in Colle, Jesce (BA)
Sewing and product assembly (owned)
298
Matera La Martella
38,000
General warehouse of sofas and accessory furnishing (owned)
Matera, Jesce
12,500
Leather cutting, sewing, assembling wooden parts for frame, product assembly (owned)
180
Graviscella
8,000
122
Laterza (TA)
12,000
Leather and fabrics warehouse, leather and fabrics cutting (owned)
10,500
Sewing, assembling wooden parts for frames, product assembly (owned)
184
19,000
Semi-finished products and accessories warehouse (owned)
Pozzuolo del Friuli (UD)
21,000
Leather dyeing and finishing (owned)
11,000
Square Meters
U.S.A.
High Point, North Carolina
10,000
Office and showroom for Natuzzi Americas (leased) *
Romania
Baia Mare
75,600
Leather cutting, product assembly, manufacturing of wooden frames, polyurethane foam shaping, fiberfill production and wood and wooden product manufacturing (owned)
850
China
Quanjiao County – Anhui province
22,000
Sewing and product assembly, manufacturing of wooden frames, polyurethane foam shaping, fiberfill production (leased)
286
Brazil
Salvador de Bahia – Bahia
28,700
Leather cutting, sewing and product assembly, manufacturing of wooden frames, polyurethane foam shaping, fiberfill production (owned)
108
Vietnam
Ho Chi Minh
5,000
Leather cutting, sewing, assembling wooden parts for frames, product assembly (leased)
* For further details on the sale and sublease of the property located in High Point, see “Item 4. Information on the Company—Strategy”, “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” and Notes 7, 45 and 46 to the Consolidated Financial Statements included in this Annual Report.
The Group believes that its production facilities are suitable for its production needs and are well maintained.
The following table sets forth the Group’s capital expenditures for the three-year period ended December 31, 2025:
Year ending December 31,
(millions of Euro)
Land and plants
0.1
Equipment
4.2
9.8
Intangible assets
1.2
4.1
5.5
11.3
11.2
Capital expenditures in the last three years have been made primarily to make improvements in property, plant and equipment, to expand our retail network, to develop software for analytical accounting and digital archiving, to invest in various projects, such as CRM Dynamics and “Factory 4.0”, and for cybersecurity and artificial intelligence purposes (refer to Notes 8 and 10 in the Consolidated Financial Statements).
As of March 31, 2026, the Group spent €1.2 million on capital expenditures since January 1, 2026.
The Group expects that capital expenditures in 2026 will be around €2.6 million mainly related to the ordinary maintenance and upgrade of the Italian and foreign factories and are expected to be financed mainly through cash flow generated by operations, as well as through public incentives. For information on potential impacts of macro-economic and political conditions, see “Item 3. Key Information—Risk Factors—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position.”
The following discussion of the Group’s results of operations, liquidity and capital resources is based on information derived from the audited Consolidated Financial Statements and the notes thereto included in Item 18 of this Annual Report. These financial statements have been prepared in accordance with IFRS and are included in Item 18 of this Annual Report. All information that is not historical in nature and disclosed under “Item 5. Operating and Financial Review and Prospects” is deemed to be a forward-looking statement. See “Forward-Looking Information.”
The consolidated financial statements of Natuzzi S.p.A. as at and for the years ended December 31, 2025 and 2024 have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”), including interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS.
We monitor and evaluate our operating and financial performance using several non-GAAP financial measures including: Adjusted EBITDA, Adjusted EBITDA margin and Net Financial Position.
We believe that these non-GAAP financial measures provide useful and relevant information regarding our performance and our ability to assess our financial performance and financial position. They also provide us with comparable measures that facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions. While similar measures are widely used in the industry in which we operate, the financial measures we use may not be comparable to other similarly titled measures used by other companies nor are they intended to be substitutes for measures of financial performance or financial position as prepared in accordance with IFRS.
Adjusted earnings before interest, tax, depreciation and amortisation (Adjusted EBITDA)
Management has presented the performance measure Adjusted EBITDA because it monitors this performance measure at a consolidated level and it believes that this measure is relevant to an understanding of the Group’s financial performance. Adjusted EBITDA is calculated by adjusting profit or loss from continuing operations to exclude the impact of taxation, net finance income/(costs), depreciation, amortisation, government grants only related to depreciation of property, plant and equipment (PPE) and share of profit of equity-method investees.
Adjusted EBITDA is not a defined performance measure in IFRS. The Group’s definition of Adjusted EBITDA may not be comparable with similarly titled performance measures and disclosures by other entities.
The following tables show the reconciliation of Adjusted EBITDA to profit or loss for the years ended December 31, 2025, 2024 and 2023 (amounts in thousands of euro).
Profit/(loss) for the year
(30,592
)
(15,382
(16,162
Income tax expense
1,036
684
1,090
Profit/(loss) before tax
(29,556
(14,698
(15,072
Adjustments for:
- Addition (subtraction) of net finance income/(costs)
10,370
8,818
8,470
- Addition (subtraction) of share of profit/(loss) equity-method inv.
371
(389
(2,897
- Addition of depreciation
18,843
19,619
21,331
- Addition of amortisation
2,152
1,569
1,041
- Subtraction of government grants related to PPE
(1,408
(1,455
(1,648
Adjusted EBITDA
772
13,464
11,225
In applying IFRS 16, in relation to the leases that were classified as operating leases, the Group recognizes depreciation and interest costs, instead of operating lease expense. In relation to those leases, the Group recognised €10.0 million of depreciation charges and €3.3 million of additional interest costs from leases in 2025 (€10.6 million and €3.8 million, respectively, in 2024; €12.0 million and €3.1 million, respectively, in 2023).
Adjusted EBITDA is presented by management to aid investors in their analysis of the performance of the Group and to assist investors in the comparison of the Group’s performance with that of other companies.
Net Financial Position
Net Financial Position is defined as “Cash and cash equivalents,” less “Bank overdrafts and short-term borrowings,” less “Current portion of long-term borrowings,” less “Non-current portion of long-term borrowings,” less “Current portion of lease liabilities,” less “Non-current portion of lease liabilities.”
As of December 31, 2025, 2024 and 2023 our Net Financial Position was as reported in the following tables (amounts in thousands of euro):
31/12/2025
31/12/2024
31/12/2023
Cash and cash equivalents
20,320
20,322
33,610
Bank overdrafts and short-term borrowings
(22,197
(23,327
(22,834
Current portion of long-term borrowings
(7,251
(4,532
(5,200
Non-current portion of long-term borrowings
(23,095
(14,188
(12,153
Net Financial Position before lease liabilities, positive (negative)
(32,223
(21,725
(6,577
Current portion of lease liabilities
(9,480
(10,350
(9,413
Non-current portion of lease liabilities
(39,963
(47,400
(52,914
(81,666
(79,475
(68,904
In June 2024, Natuzzi Singapore granted a loan of U.S.$1.4 million to TTF, a minority shareholder of Natuzzi Singapore, for a 12-month term, renewable for an additional 12 months. The agreed interest rate was set at U.S.$1-Month Libor minus 0.25%, matching the interest rate Natuzzi Singapore would have obtained from a bank deposit. This loan has been renewed for an additional 12-month term. See Notes 17 and 45 to the Consolidated Financial Statements included in this Annual Report.
We believe our Net Financial Position provides useful information for investors because it gives evidence of our consolidated position either in terms of net indebtedness or net cash by measuring our capital resources based on cash and cash equivalents and the total level of our financial indebtedness.
Summary — In 2025, similarly to 2024 and 2023, our results of operations were affected by persistent macroeconomic and industry-specific challenges, including high levels of inflation and interest rates, which resulted in a stagnant real estate market and affected clients’ disposable incomes, thus causing consumers to delay or decrease investments in their existing homes and making them more price conscious, resulting in a shift in demand to less expensive products. See “Item 3. Key Information—Risk Factors—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position.” These factors contributed to a continued decline in sales in 2025, affecting the Company’s ability to adequately absorb fixed costs.
The Company’s financial performance in 2025 was further impacted by structural challenges, particularly excess workforce capacity and high labor costs at its Italian operations. These difficulties were compounded by changes in global trade policies: the introduction of new tariffs by the U.S. administration in early 2025 on goods produced in China and Europe (including Italy) disrupted the commercial environment, as distributors and retailers prioritized inventory reduction over new orders, depressing sales volumes below expectations.
During 2025, the Company manufactured its products in line with its new industrial footprint, including the relocation of its Chinese operations from Shanghai to Quanjiao and the partial transfer of production for the North American market to its Italian facilities, with the aim of eliminating its exposure to U.S. tariffs on goods sourced from China. However, the additional trade duties subsequently imposed by the U.S. presidential administration since April 2025 on products manufactured in Europe (including Italy) significantly diminished the expected benefits of the production shift to Italy. As a result, despite an improvement in sales compared to 2024, the Company incurred higher labor costs in Italy and was compelled to implement pricing adjustments to mitigate the impact of trade tariffs, leading to a significant compression of margins.
Therefore, the current level of gross profit remains insufficient to adequately absorb selling and administrative expenses, which, although reduced, continue to be disproportionately high relative to revenues.
Furthermore, the overall result for the year 2025 was burdened by €2.2 million in labor-related costs associated with the Group’s staff reduction program, of which €1.1 million were included in cost of sales, €0.7 million in selling expenses, and €0.4 million in administrative expenses.
In the last few years, the Group has started a thorough reorganization process covering its industrial, sales and service operations.
In the current operating context, and with the aim of addressing both external challenges and Company-specific structural issues, management has prepared a comprehensive restructuring plan. Its key elements include a significant reduction in fixed costs, increased flexibility of production capacity, the divestment of selected non-strategic Italian assets, the outsourcing of low value-added activities, and a review of the capital structure, including potential strengthening measures.
Similarly, in 2024, the overall result was burdened by €5.3 million in labor-related costs associated with the Group’s staff reduction program, of which €4.5 million were included in cost of sales, €0.5 million in selling expenses, and €0.3 million in administrative expenses.
In 2023, net sales declined compared to 2022, which benefitted from a €58.4 million reduction in the order backlog accumulated through December 31, 2021, due to supply chain disruptions in 2021, which significantly constrained product deliveries in that year. As a result, part of such orders was recognised in 2022, thus contributing to increasing 2022 net sales.
The following table sets forth selected financial highlights of the Group for the years ended December 31, 2025, 2024 and 2023.
(millions of euro, except for percentages)
Consolidated Statement of Profit or Loss Data:
Revenue
308.2
318.8
328.6
YoY % change in Revenue
-3.3
-3.0
-29.9
Branded sales on main business*
94.9
92.7
92.5
* Sales of upholstered and other home furnishings products
Gross Profit
103.4
115.7
112.9
Gross Margin
33.6
36.3
34.3
Operating Profit/(Loss)
(18.8
(6.3
(9.5
Operating Margin
-6.1
-2.0
-2.9
0.8
13.5
Adjusted EBITDA margin
3.4
Group’s Cash and cash equivalents (as at Dec. 31)
20.3
For a description of how Adjusted EBITDA is computed, see “—Non-GAAP Financial Measures” above. Adjusted EBITDA margin is calculated as the ratio between Adjusted EBITDA and Revenue.
The Company intends to continue to pursue its strategy for the future by focusing on some key cornerstones including: i) a confirmed focus on branded and controlled distribution through single-brand stores, both owned and franchised, in priority markets, such as the U.S., China and Europe, primarily the UK and Italy; ii) a review of the Group’s production allocation, including the collaboration with external industrial partners located in low-cost countries to further enhance overall efficiency; iii) the disposal of certain assets no longer in line with the strategic development adopted by the Group to obtain proceeds to be reinvested in retail expansion and restructuring programs; and iv) a generalized streamlining of processes and costs.
The Consolidated Financial Statements have been prepared on a going concern basis, which assumes that the Group will be reasonably able to meet its obligations as they fall due within one year from the date of the approval of these consolidated financial statements. The board of directors believe that the One-Year Budget, combined with the cash and cash equivalents and unused credit facilities as of December 31, 2025, will be sufficient to allow the Group to meet its obligations. As of December 31, 2025, the Group’s cash and cash equivalents amounted to €20.3 million (€20.3 million as of December 31, 2024), while the unused portion of the credit facilities available to the Group (for further details, see Note 28 to the Consolidated Financial Statements) amounted to €4.4 million (€32.6 million as of December 31, 2024). The Annual Report shows that the Company’s liquidity condition raises substantial doubt about the Group’s ability to continue as a going concern for a reasonable period of time from the publication date of the Annual Report and, therefore, to continue realizing its assets and discharging its liabilities in the normal course of business. See Note 3(f) to the Consolidated Financial Statements.
In 2025, the Company’s financial performance was adversely affected by a combination of unfavorable macroeconomic conditions and structural challenges, particularly excess workforce capacity and high labor costs at its Italian operations. See “Item 3. Key Information—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position”. In particular, persistently high interest rates contributed to a slowdown in the real estate market by increasing mortgage costs, thereby reducing new construction and home improvement activity, particularly in the U.S., which represents approximately one-third of the Group’s annual turnover. In addition, adverse macroeconomic conditions in Europe and weakened consumer demand in China—exacerbated by a significant contraction in the local real estate market—further contributed to the overall decline in the Group’s revenue. Collectively, North America, China and Western Europe represent approximately 70% of the Group’s annual turnover. These factors had a direct negative impact on demand for the Company’s products, resulting in declining sales volumes. As a result, consolidated revenues in 2025 fell below expectations, limiting the Group’s ability to absorb fixed costs and placing pressure on margins and cash generation.
Revenue for 2025, including sales of leather and fabric-upholstered furniture, home furnishings accessories and other sales (mainly sales of leather and other raw materials sold to third parties), were €308.2 million, down 3.3% from €318.8 million in 2024.
Sales of upholstery furniture and home furnishing accessories (“main business”) were €298.7 million, down 3.8% from €310.5 million in 2024, as a result of a 1.5% decrease in sales of the Natuzzi branded products (Natuzzi Italia, Natuzzi Editions and Divani&Divani by Natuzzi) and a 33.2% decrease in sales in the unbranded products.
Other sales (comprising sales of polyurethane foam, other raw materials to third parties and services) were €9.6 million in 2025, compared to €8.3 million in 2024. This increase is primarily attributable to €0.8 million in design services rendered in connection with the Trade & Contract business and recognized in 2025, compared to nil in 2024.
To provide a better understanding of the different drivers of our operating model, invoiced sales from our main business (upholstered and other home furnishings sales) are hereafter described according to the main dimensions of the Group’s business:
• A. Branded/unbranded business• B. Distribution channels
A. Branded/unbranded business
The Group operates in the branded business (with the Natuzzi Italia, Natuzzi Editions and Divani&Divani by Natuzzi brands) and the unbranded business, the latter with collections dedicated to the large-scale distribution.
A1. Branded business.
Within the branded business, Natuzzi is pursuing a dual-brand strategy that focuses on the Natuzzi Italia and Natuzzi Editions brands. See “Item 4. Information on the Company—Strategy—The Brand Portfolio and Merchandising Strategy.”
In 2025, Natuzzi’s branded invoiced sales amounted to €283.5 million, a decrease of 1.5% compared to 2024. In 2025, invoiced branded sales represented 94.9% of our main business, compared to 92.7% in 2024. The following is the contribution of each brand to 2025 invoiced sales:
A2. Unbranded business.
Invoiced sales from our unbranded business amounted to €15.1 million, a decrease of 33.2% compared to 2024. The Group’s strategy is to focus on selected large accounts and serve them with a more efficient go-to-market model. In order to increase production flexibility and competitiveness, in 2020 the Company started to outsource in Vietnam part of its unbranded production for some key accounts in the U.S. In 2025, the Group opened a new proprietary facility in Vietnam to serve the Indian market and the American wholesale free-market. The Company expects to gradually serve most of its mass-merchant distributors located in North America through its Vietnamese operations.
As part of the general review of the Group’s manufacturing footprint, the Company continues to explore further external production capacity in low-cost countries to increase its production capacity and flexibility, particularly with regard to its unbranded production.
B. Distribution
As of December 31, 2025, the Group distributes its branded collections in approximately 100 countries, through a network comprising 51 DOS, three DOS in the U.S. managed in joint venture with a local partner, in addition to 15 DOS operated by our joint venture in China, 495 franchise mono-brand Natuzzi stores (“FOS”), and 1,043 wholesale points of sale, represented by 487 shop-in-shop Natuzzi galleries (including 12 concessions directly operated by the Group) and 556 smaller points of sale in multi-brand stores operated by third parties. See “Item 4. Information on the Company—Markets” for further information regarding our distribution network.
In 2025, sales generated by the points of sales directly operated by the Group (DOS and concessions) were €69.2 million, down 9.0% compared to 2024, also due to the closure of two DOS located in each of Spain and the U.K.
In 2025, invoiced sales from franchise mono-brand Natuzzi stores amounted to €125.3 million, an increase of 0.1% compared to 2024.
In 2025, the Group also invoiced net sales of €3.3 million through its newly established “Contract” division, which serves real estate developers. The Group began accounting for net sales from this channel starting from 2025.
The Group also sells its products through the wholesale channel, consisting primarily of Natuzzi-branded galleries in multi-brand stores as well as mass distributors selling unbranded products. In 2025, invoiced sales from the wholesale channel amounted to €100.8 million, a decrease of 7.7% compared to 2024.
Cost of Sales in 2025 was €204.8 million (or 66.4% as a percentage of revenue), as compared to €203.1 million (or 63.7% of revenue) in 2024. The decrease in sales between 2025 and 2024 resulted in a higher incidence of fixed costs on sales.
In 2025 and 2024, the Group continued to implement its program aimed at reducing its redundant workforce. See “Item 3. Key Information—Risk Factors— We have redundant workers at our Italian operations, which remains an unresolved issue, and have benefited in 2025 and in previous years from temporary work force reduction programs; if we continue to be unable to reduce our redundant workers and/or if such temporary work force reduction programs are not continued, our business, results of operations and liquidity may continue to be impacted or may be impacted at a greater extent.”
In 2025, within the cost of sales, the Group recognized impairment of non-financial assets of €2.3 million, in connection with some of its factories located in Italy.
In 2025, within the cost of sales, the Group also recognized labor-related costs of €1.1 million for its incentive program to reduce the redundant workforce at the Italian plants (€4.5 million in 2024). In addition, as in 2024, the Group experienced labor cost increases in Romania, as part of the government’s plan to increase the minimum wage, and in Italy, due to the renegotiation of national collective bargaining agreements.
Gross Profit. In 2025, the Group’s consolidated gross profit was €103.4 million, or 33.6% as a percentage of revenue (“gross margin”), compared to €115.7 million or 36.3% of revenue in 2024. Excluding the €1.1 million related to its incentive program to reduce the redundant workforce, and the €2.3 million impairment of non-financial assets, the gross margin for 2025 would have been 32.4%. Similarly, in 2024, the gross margin, net of the €4.5 million related to its incentive program to reduce the redundant workforce, would have been 37.7% (no impairment of non-financial assets was recognized in 2024).
In 2025, gross profit was adversely impacted by the decrease in revenue and by the planned reallocation of Natuzzi Editions production for the North American market from China to Italy, which resulted in higher labor costs and higher consumption of raw materials. In addition, lower sales from DOS contributed to margin pressure in 2025. These effects were partially offset by a more favorable sales mix compared to 2024, which helped mitigate the impact on gross margin.
Selling expenses, administrative expenses, impairment on trade receivables and other income/expenses in 2025 were €122.2 million (or 39.7% on revenue) compared to €122.0 million (or 38.3% on revenue) in 2024. The increase in the percentage on revenue is mainly due to the deleveraging of fixed costs due to the decrease in revenue.
In 2025, selling expenses amounted to €90.5 million, compared to €90.2 million in 2024. This increase was primarily attributable to: i) a €3.6 million increase in impairment losses recognized in 2025 on non-financial assets related to the Group's retail operations, principally in Europe and the U.S.; ii) a €1.0 million increase in customs duties resulting from trade tariffs imposed by the U.S. presidential administration since April 2025 on goods manufactured in Europe and delivered to the U.S.; iii) a €0.4 million increase in costs related to participation in trade fairs; and iv) a €0.3 million accrual in connection with the incentive program to reduce redundant employees. To counterbalance the negative effect of U.S. trade duties on Italian production, management implemented price list adjustments. These increases were partially offset by: i) a €1.2 million reduction in shipping and handling costs attributable to lower revenue; ii) a €1.4 million reduction in labor costs resulting from the closure of two non-performing DOS and a generalized
43
review of processes; iii) a €0.9 million reduction in depreciation and amortization following the decrease in the number of DOS; and iv) a €0.6 million decrease in sales representative commissions attributable to lower revenue, together with a generalized reduction in discretionary costs.
In 2025, administrative expenses were €40.8 million, compared to €36.0 million in 2024. This increase is primarily attributable to: i) a €0.5 million increase in labor costs; ii) a €0.6 million increase in software license costs; iii) a €0.5 million increase in indirect taxes; iv) a €1.3 million decrease in government grants compared to 2024, and v) a €1.9 million accrual for impairment of non-financial assets. However, in 2025 the Group reported a €0.8 million reduction in other administrative expenses (in particular, travel expenses, general maintenance and other costs).
In 2024, the Company also accounted for an accrual of €0.4 million for higher labor cost (€0.6 million in 2023), within selling and administrative expenses, based on an independent qualified third-party estimation of the fair value of the equity instruments granted under the stock option plan approved in July 2022 by the Company’s Board of Directors (the “SOP”). In 2025, no accrual was recorded as all beneficiaries of the SOP had left the Company.
In 2025, impairment on trade receivables was not material, whereas in 2024 the Group accrued €0.3 million on trade receivables. See Notes 15 and 33 to the Consolidated Financial Statements.
For further details, see Notes 37 and 38 to the Consolidated Financial Statements.
Operating Result. The Group reported an operating loss of €18.8 million in 2025 compared to an operating loss of €6.3 million in 2024 due to the factors described above.
Net finance income/(costs). The Group had net finance costs of €10.4 million in 2025 as compared to net finance costs of €8.8 million in 2024. The increase was primarily attributable to unfavorable currency movements, notwithstanding a partial decrease in interest rates during the period. See Notes 39 and 40 to the Consolidated Financial Statements.
Net finance costs of 2025 include:
The net exchange rate gains in 2025 primarily reflected the following factors:
The Group does not use hedge accounting and records all fair value changes of its domestic currency swaps in its statement of profit or loss.
Profit/(loss) before tax and income tax expense. In 2025, the Group reported a loss before tax of €29.6 million and income tax expense of €1.0 million, compared to a loss before tax of €14.7 million and income tax expense of €0.7 million. For additional information about the Group’s income tax expense, see Note 41 to the Consolidated Financial Statements.
44
Profit/(loss) for the year. As a result of the above-mentioned factors, the Group reported a loss of €30.6 million in 2025, as compared to a loss of €15.4 million in 2024. On a per-ordinary share basis, the Group had a loss of €0.54 in 2025, as compared to a loss of €0.28 in 2024 (see Note 42 to the Consolidated Financial Statements).
On December 16, 2025, following the approval of the Company’s unaudited financial statements for the nine months and third quarter ended September 30, 2025, the board of directors noted that the Company had incurred losses resulting in a reduction of its share capital by more than one-third, thereby triggering the obligations set forth in Article 2446 of the Civil Code, which requires the board of directors of Italian joint-stock companies (società per azioni) to promptly convene a shareholders’ meeting to take appropriate actions. Notwithstanding the foregoing, the Company continues to operate in the ordinary course of business and any nominal reduction of its share capital is not expected to affect the Company’s ability to pursue its objectives or implement its restructuring plan. Accordingly, at the shareholders’ meeting held on February 16, 2026, the Company’s shareholders resolved to postpone any decision regarding the reduction of share capital pursuant to Article 2446 of the Civil Code to the shareholders’ meeting to be called to approve the Company’s stand-alone financial statements for the year ended December 31, 2025.
Please refer to the Company’s annual report on Form 20-F filed with the SEC on April 30, 2025.
Our business has relied on cash flows from operations as well as borrowings under our credit facilities as our primary sources of liquidity. Our liquidity may be adversely affected by uncertain global macro-economic and political conditions. See “Item 3. Key Information—Risk Factors—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position”, “Item 3. Key Information—Risk Factors—Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations” and “Item 3. Key Information—Risk Factors—Our ability to generate the significant amount of cash needed to service our debt obligations and comply with our other financial obligations, and our ability to refinance all or a portion of our indebtedness or obtain additional financing, depend on multiple factors, many of which may be beyond our control.”
In the ordinary course of business, our use of funds is for the payment of operating expenses, working capital requirements and capital expenditures. The Group’s principal source of liquidity has historically been its existing cash and cash equivalents and cash flow from operations, supplemented to the extent needed to meet the Group’s short term cash requirements by accessing the Group’s existing lines of credit.
In 2025, the Group reported an operating loss of €18.8 million, compared to an operating loss of €6.3 million in 2024. See “Item 3. Key Information—Risk Factors—We have a history of operating losses and cannot assure you that we will be profitable in the future; our future profitability, financial condition and ability to maintain adequate levels of liquidity depend, to a large extent, on our ability to overcome operational challenges.”
As of December 31, 2025, the Group’s cash and cash equivalents amounted to €20.3 million, its long-term borrowings amounted to €30.3 million, including the current portion of €7.2 million, and its bank overdrafts and short-term borrowings amounted to €22.2 million. Furthermore, as of December 31, 2025, the unused portion of credit facilities available to the Group, for which no commitment fees are due, amounts to €4.4 million. Such unused portion is mainly related to a non-recourse factoring agreement for export-related trade receivables (€3.4 million) and bank overdrafts (€1.0 million). See Note 28 to the Consolidated Financial Statements.
As of December 31, 2025, the Group’s net financial position, which includes current and non-current lease liabilities, was negative at €81.7 million, compared to a negative net financial position of €79.5 million at the end of 2024. See Notes 18, 20, 21 and 28 to the Consolidated Financial Statements.
Although we had €20.3 million in cash and cash equivalents as at December 31, 2025, €4.9 million of this amount is located at our Asian subsidiaries, of which €2.2 million at our Chinese subsidiaries, €1.8 million at our Singapore subsidiary and €0.7 at our Vietnamese subsidiary. If management intends to move this cash from China by way of a dividend distribution, a withholding tax of 5% under the 2019 Italy-China tax treaty (assuming the Company holds directly at least 25% of the capital of the paying subsidiaries throughout the required 365-day holding period) and the income taxes in Italy (equal to 24.0% on 5% of the dividends distributed) would have to be paid, although the Chinese withholding tax may be credited against Italian income taxes in accordance with applicable law.
The Group’s management continues to apply and improve the stricter procedures introduced for some years to manage liquidity and working capital balances, to generate sufficient operating cash flows to meet its obligations as they fall due. The Group aims to
maintain the level of its cash and cash equivalents at an amount in excess of expected cash outflows for financial liabilities over the next 60 days. The Group also monitors the level of expected cash inflows from trade and other receivables together with expected cash outflows for trade and other payables.
Specifically, in its cash flow forecasts for the 18-month period through June 2027, management has taken into account the following factors:
─ Disposal of certain assets no longer in line with the Group’s current strategy, including a business unit comprising six photovoltaic plants, in respect of which the Company entered into a preliminary agreement for its disposal in late November 2025 with a company specialized in the sector. The disposal transaction was finalized in late January 2026 and, on the closing date, the Company received total consideration for the sale amounting to €7.1 million. See Note 46 to the Consolidated Financial Statements.
─ The collection, in March 2026, of capital grants and subsidized loans from public incentive programs amounting to €2.7 million, and the utilization of the unused portion of available credit facilities. See “Item 4. Incentive Programs and Tax Benefits.”
─ Utilization of certain social safety net measures provided by the Italian government (such as CIGS), enabling the Company and certain of its subsidiaries in Italy to pay reduced salaries to workers for a specified period.
─ The disposal of two underutilized factories in Italy.
─ The outsourcing of low value-added activities.
─ Expected cash inflows from the joint venture, Natuzzi Trading Shanghai, in China, resulting from dividend distributions by such joint venture.
─ The collection of the residual €5.0 million granted in November 2025 by INVEST 2003 S.r.l. to the Company as a credit facility (See Note 3(f) to the Consolidated Financial Statements).
─ Stricter overall control over discretionary selling and administrative expenses.
The actions outlined above delineate the strategies and executive plan that management intends to adopt to address the financial challenges and ensure the operational continuity of the Group, leveraging the strengths of the business, while maintaining a focus on improving profitability and protecting liquidity.
In a worst-case scenario, as prepared by management, cash flow forecasts indicate that, with further anticipated actions such as reduced investments, potential reduction in the share capital of the Chinese joint venture, further saving actions on discretionary costs, the Group expects to have adequate funds to meet liabilities within one year from the approval of the Consolidated Financial Statements.
Cash Flows — The Group’s cash and cash equivalents, net of bank overdraft repayable on demand, were €16.1 million as of December 31, 2025, compared to €17.0 million as of December 31, 2024. The most significant items in the Group’s cash flows in 2025 are described below.
In 2025, net cash used in operating activities was €4.5 million (in 2024, €1.7 million of net cash provided by operations) as a result of:
During 2025, €2.8 million of net cash was provided by investing activities, mainly as a result of:
See Notes 7, 17 and 45 to the Consolidated Financial Statements.
Cash provided by financing activities in 2025 was €1.4 million (compared to €12.8 million of cash used in financing activities in 2024), primarily attributable to €17.8 million of inflows received by the Group, comprising: i) a new financing of €4.6 million received by the Company’s Romanian subsidiary; ii) a new financing of €3.1 million received by the Company’s Brazilian subsidiary; and iii) €10.0 million received by the Company from the majority shareholder. These inflows were partially offset by: i) €4.7 million used for the repayment of long-term borrowings; ii) €9.5 million for lease repayments; iii) €2.0 million for short-term borrowing repayments; and iv) €0.4 million for the distribution of dividends to non-controlling interests. In addition, the Group received €0.1 million as a capital contribution from non-controlling interests.
Bank overdrafts repayable on demand were €4.2 million as of December 31, 2025, compared to €3.3 million as of December 31, 2024.
As a result, as of December 31, 2025, cash and cash equivalents in the statement of financial position was €20.3 million, the same as at December 31, 2024.
As of December 31, 2025, the Group’s long-term contractual cash obligations and commercial commitments (whose amounts are gross and undiscounted and include contractual interest payments) amounted to €112.0 million, of which €41.4 million comes due in 2026.
In particular, as of December 31, 2025, gross and undiscounted amounts related to the Group’s bank overdrafts and borrowings amounted to €56.1 million, of which €29.6 million comes due in 2026. The Group’s undiscounted value of total bank debt represented 244.3% of equity attributable to the owners of the Company as of December 31, 2025 (83.2% as of December 31, 2024). See Notes 19 and 33 to the Consolidated Financial Statements. As of March 2026, due to the Reclassification Agreement (as described below under “Contractual Obligations and Commitments”), the caption “Equity attributable to owners of the Company” will reflect the reclassification of €12.5 million in aggregate as an advance payment on account of a future capital increase (versamento in conto futuro aumento di capitale). See Note 46 to the Consolidated Financial Statements.
Furthermore, as of December 31, 2025, gross and undiscounted amount related to the Group’s lease liabilities amounted to €55.9 million, of which €11.8 million comes due in 2026. The Group’s undiscounted value of lease liabilities represented 243.2% of equity attributable to the owners of the Company as of December 31, 2025 (131.3% as of December 31, 2024). See Notes 19 and 33 to the Consolidated Financial Statements.
See “Contractual Obligations and Commitments” below.
The Group’s discounted value of long-term borrowings represented 132.1% of equity attributable to the owners of the Company as of December 31, 2025 (34.7% as of December 31, 2024). During 2025, the Company made all installment payments related to its long-term-borrowings. See Notes 19, 20 and 46 to the Consolidated Financial Statements.
See also “Item 3. Key Information—Risk Factors—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position” and “Item 3. Key Information—Risk Factors—Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations” for a discussion of the impact of supply chain disruptions, increases in the price of raw materials, transportation and labor costs and uncertainties resulting from the global macro-economic and political conditions on our capital expenditures.
Contractual Obligations and Commitments — The Group’s current policy is to fund its cash needs, accessing its cash on hand and existing lines of credit, consisting of short-term credit facilities and bank overdrafts, to cover any short-term shortfall. The Group’s policy is to procure financing and access to credit at the Company level, with the liquidity of certain Group companies managed through a cash-pooling zero-balancing arrangement with a centralized bank account at the Company level and sub-accounts for each subsidiary participating in the arrangement. Under this arrangement, cash is transferred to subsidiaries as needed on a daily basis to cover the subsidiaries’ cash requirements, but any positive cash balance at subsidiaries must be transferred back to the top account at the end of each day, thus centralizing coordination of the Group’s overall liquidity and optimizing the interest earned on cash held by the Group.
As of December 31, 2025, the undiscounted Group’s long-term borrowings consisted of €33.9 million (including €7.4 million of the current portion of such debt) and its short-term borrowings consisted of €22.2 million outstanding under its existing lines of credit,
47
comprised entirely of bank overdrafts and short-term borrowings. The undiscounted lease liabilities amounted to €55.9 million (including €11.8 million as current portion).
The Group maintains cash and cash equivalents in the currencies in which it conducts its operations, principally Euros, Chinese Yuan, U.S. dollars, New Romanian Leu, British pounds, Brazilian reais and Vietnamese dong. See “Item 3. Key Information—Risk Factors—Fluctuations in currency exchange rates and interest rates may adversely affect our results of operations”, “Item 4. Information on the Company—Management of Exchange Rate Risk” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”
The following table sets forth the contractual obligations and commercial commitments of the Group as of December 31, 2025 (the amounts are gross and undiscounted and include contractual interest payments):
Payments Due by Period (thousands of euro)
Contractual Obligations
Less than 1 year
1-2 years
2-5 years
After 5 years
Long-term borrowings
33,940
7,434
7,678
14,128
4,700
22,197
Total Debt
56,137
29,631
Leases liabilities (1)
55,897
11,788
10,639
21,437
12,033
Total Contractual Cash Obligations
112,034
41,419
18,317
35,565
16,733
Under Italian law, the Company and its Italian subsidiaries are required to pay a termination indemnity to their employees when these cease their employment with the Company or the relevant subsidiary. Likewise, the Company and its Italian subsidiaries are required to pay an indemnity to their sales agents upon termination of the sales agent’s agreement. As of December 31, 2025, the Group accrued an aggregate employee’s leaving entitlement of €11.5 million. In addition, as of December 31, 2025, the Company accrued an aggregate sales agent termination indemnity of €1.2 million. See Notes 24 and 26 to the Consolidated Financial Statements. These amounts are not reflected in the tables above.
In light of the extraordinary challenges imposed by COVID-19 on the Group, on February 28, 2020, the Company’s majority shareholder entered into an agreement with it setting forth its undertaking, should the Company so request, to make advance payments of up to €15.0 million to satisfy the subscription price of a future rights issue. On February 28, 2020, the Company requested an initial payment of €2.5 million which it received on March 2, 2020. Therefore, as at December 31, 2023, the amount of €2.5 million to be paid back to the majority shareholder has been included in the caption “Other payables” of the statement of financial position. On April 9, 2024, a new agreement was executed, terminating the previous agreement entered into on February 28, 2020 and converting the aforementioned €2.5 million into a loan agreement effective from March 31, 2024, with maturity on March 31, 2027, and subject to an interest rate of 2.5%. See Notes 20, 45 and 46 to the Consolidated Financial Statements.
On November 21, 2025, the Company entered into a credit facility agreement with INVEST 2003 S.r.l. (the “Credit Facility Agreement”) to support the Company’s financial needs in connection with the implementation of its industrial restructuring plan. Under the Credit Facility Agreement, INVEST 2003 S.r.l. committed to make available to the Company an interest-free loan of up to €15.0 million, in one or more tranches upon the Company’s request, until December 31, 2026. Any disbursed loan tranches may be converted into equity contributions in the event of a future capital increase resolved by the Company; in the absence of such a capital increase, any disbursed amounts shall be repayable by December 31, 2028. The Company requested and received two tranches of €5.0 million each—on November 27, 2025 and on December 18, 2025, respectively—for an aggregate amount of €10.0 million. On March 31, 2026, the Company and INVEST 2003 S.r.l. entered into a further agreement pursuant to which the total outstanding amount owed by the Company to INVEST 2003 S.r.l. as at that date, amounting to €12.5 million in aggregate (comprising the €2.5 face value million principal outstanding under the loan agreement entered into on April 9, 2024 and the €10.0 million disbursed under the Credit Facility Agreement), was irrevocably reclassified as an advance payment on account of a future capital increase (versamento in conto futuro aumento di capitale) (the “Reclassification Agreement”). See Notes 20, 45 and 46 to the Consolidated Financial Statements.
As at December 31, 2025, within the provision for legal claims, €1.4 million (€3.8 million as at December 31, 2024) refers to the probable contingent legal liability related to legal procedures initiated by certain workers against the Company for the misapplication of the social security procedure called CIGS (Cassa Integrazione Guadagni Straordinaria). According to the CIGS procedure, the Company pays a reduced salary to the workers for a certain period of time based on formal agreements signed with the trade unions and other public social parties. In particular, these workers are claiming in the legal procedures that the Company applied CIGS during the period from 2004 to 2016 without foreseeing any time rotation. In May 2017, the Company received from the Italian
48
Supreme Court of Justice (“Corte di Cassazione”) an adverse decision for the above litigation related to only two workers. See Note 26 to the Consolidated Financial Statements.
The Group is involved in a number of claims (including tax claims) and legal actions arising in the ordinary course of business. As of December 31, 2025, the Group had accrued total provisions relating to these contingent liabilities in the amount of €3.3 million. See “Item 8. Financial Information—Legal and Governmental Proceedings” and Note 26 to the Consolidated Financial Statements.
Off-Balance Sheet Arrangements — As of December 31, 2025, neither Natuzzi S.p.A. nor any of its subsidiaries was a party to any off-balance sheet arrangements.
For a description of the Company’s research and development policies, see “Item 4. Information on the Company—Products” and “Item 4. Information on the Company—Innovation.” See also “Item 4. Information on the Company—Incentive Programs and Tax Benefits” for a description of certain government programs and policies related to our operations.
The recovery of the global economy remains subject to a number of factors, many of which are uncertain and beyond the Company’s control.
Commodity markets experienced heightened volatility during 2025 and into 2026, driven by geopolitical tensions, supply chain disruptions and fluctuations in global demand, and such volatility is expected to remain elevated through 2026. Ongoing conflicts in the Middle East region (including the Israel-Hamas conflict and the recent military operations involving Iran), and the potential escalation thereof, have adversely affected the global economy, resulting in a sharp increase in energy and oil prices. Concerns regarding potential disruptions to shipments through the Strait of Hormuz—which accounts for approximately 20% of global oil supply—as well as potential adverse effects on Iran’s oil production and regional energy infrastructure, have contributed to a surge in oil prices above U.S.$100 per barrel and to significant price volatility. These developments have been partially mitigated by policy responses, including the announcement by OPEC+ of increased output starting in April 2026 and the partial release of strategic reserves by OECD countries under the coordination of the International Energy Agency.
Geopolitical risks have also materially affected natural gas markets. European gas prices have risen by 98%, reflecting both the vulnerability of supply routes—as approximately 20% of global liquefied natural gas, primarily from Qatar, transits through the Strait of Hormuz—and historically low storage levels in Europe, which have increased exposure to potential supply disruptions.
At the same time, disruptions to key maritime routes have affected global logistics. High-frequency shipping data indicate a decline in tanker traffic through the Strait of Hormuz and increased rerouting of vessels via the Cape of Good Hope, following disruptions in the Suez Canal. These developments have contributed to higher global shipping costs and longer transit times.
These developments, together with tighter financial conditions and increased geopolitical and trade policy uncertainty, have weighed on the global economy, partially offsetting the positive effects of prior investment growth—particularly in artificial intelligence—and accommodative economic policies.
Current estimates suggest that the ongoing conflicts in the Middle East region will reduce global real GDP growth by approximately 0.4 percentage points over the next two years, reflecting the expected trajectory of energy commodity prices. This negative effect is expected to partially offset the positive carry-over from stronger-than-anticipated growth in late 2025, as well as the moderate boost from lower U.S. tariffs. In addition, according to the European Central Bank (“ECB”), the associated energy price shock has led to upward revisions in headline consumer price index (CPI) inflation projections over the same period.
In the United States, real GDP growth slowed sharply to 0.2% in the fourth quarter of 2025, compared to 1.1% in the third quarter. The U.S. government shutdown in October and November, which lasted 43 days, dampened economic activity through a marked decline in government spending. However, consumer spending remained relatively resilient and continued to support domestic demand in the fourth quarter, notwithstanding a slight slowdown compared with the third quarter. The savings rate declined further to 3.6% in the fourth quarter, its lowest level in the past four years. Growth is expected to have strengthened in the first quarter of 2026, primarily reflecting increased government spending related to back pay for federal workers following the shutdown. Headline personal consumption expenditures (PCE) inflation—the Federal Reserve System’s preferred measure—has shown a modest upward trend since early 2025.
In China, household demand remains subdued amid elevated precautionary savings. Real GDP growth exceeded expectations at 1.2% in the fourth quarter of 2025, broadly in line with the 1.1% recorded in the previous quarter, and was primarily supported by
resilient exports, which are also expected to have sustained growth in the first quarter of 2026. However, more recent data suggest some softening in consumption, as consumer confidence remains low—well below pre-COVID-19 levels—and retail sales continue to underperform. The Chinese authorities have set a relatively modest growth target of 4.5–5% for 2026 under the new five-year plan (2026–2030) and continue to prioritize supply-side policies. While they have reiterated their intention to rebalance growth towards consumption, concrete measures remain limited. Fiscal support for investment is expected to remain significant, particularly in high-tech and strategic sectors such as artificial intelligence, microchips, advanced manufacturing, biotechnology and the digital economy. At the same time, China remains exposed to rising energy commodity prices.
In the United Kingdom, economic growth remained subdued in the fourth quarter of 2025, with real GDP increasing marginally by 0.1%, while inflation eased significantly in early 2026. Private demand was weak, reflecting softer consumption and lower private investment, while net exports made a negative contribution, as exports declined and imports rose. Public spending, particularly public investment, provided some support. Although economic activity is expected to have strengthened moderately in the first quarter of 2026, rising energy prices may weigh on growth momentum in subsequent quarters.
In the Eurozone, economic activity strengthened during 2025, with real GDP growing on average by 1.5%, compared to 0.9% in 2024. However, short-term indicators, including monthly production data, weakened towards the end of 2025 and into early 2026, pointing to only modest growth in the first quarter of 2026. The evolving situation in the Middle East region has increased uncertainty, particularly from the second quarter onwards. Past energy-related shocks suggest that rising prices may erode real incomes and weaken consumer confidence, thereby weighing on private consumption, although the magnitude of these effects will depend on the duration and intensity of the conflicts. At the same time, several mitigating factors—such as solid household balance sheets, relatively high savings levels, fiscal support (including the Next Generation EU program), ongoing digital investment and the impact of prior interest rate cuts—may help cushion these effects.
According to the ECB, Eurozone growth projections have been revised downward, particularly for 2026, reflecting the effects of geopolitical tensions on commodity markets, real incomes and confidence. These headwinds may be partially offset by resilient private sector balance sheets and increased public spending, including on defence and infrastructure.
The escalation of conflicts in the Middle East region has significantly increased uncertainty in the global outlook, creating upside risks for inflation and downside risks for growth, with the ultimate impact depending on the duration and severity of such conflicts.
Considering the uncertainties surrounding the ongoing war in Ukraine, the recent escalation of conflicts in the Middle East region, the associated increase in energy prices and inflationary pressures on raw materials, and the consequent repercussions on household purchasing power, as well as continuing trade policy uncertainty, it is difficult to determine the likely extent of the economic and social effects of these factors on international markets and, consequently, on the Group’s results for the remainder of 2026.
Total Group’s order flow through the first 18 weeks of 2026 — The robust trend of orders that characterized the post-pandemic period through the first quarter of 2022 gave way to a period of sustained weakness throughout 2023, 2024, 2025 and the first 18 weeks of 2026, primarily attributable to a confluence of adverse geopolitical and macroeconomic developments—including the war in Ukraine, the escalation of the ongoing conflicts in the Middle East region, elevated energy prices, reduced consumer disposable income and stock market volatility—that have adversely affected the overall economies of the principal regions in which the Group operates. In addition, the furniture sector continued to be adversely affected by sector-specific factors, including the continued weakness in the housing market and increased consumer caution with respect to expenditure on durable goods.
In the first 18 weeks of 2026, the sell-in order flow of our branded business (i.e., Natuzzi Italia, Natuzzi Editions and Divani&Divani by Natuzzi) decreased by 17% compared to the same period in 2025. During the first 18 weeks of 2026, the sell-in order flow of our direct retail network (DOS and concessions) decreased by 24% compared to the same period in 2025, also due to the closure of two DOS.
During the same period, the sell-in order flow from our contract business (dealing with real estate developers) is up 2%, and represented less than 4% of total sell-in order flow in the first 18 weeks of 2026.
The Group’s unbranded business, which represented 4% of our total sell-in in the first 18 weeks of 2026, compared to 6% in the same period in 2025, was down by 51% compared to the same period in 2025, mainly due to the progressive refocusing of the Company on its branded business.
As a result of the above, the total sell-in order flow in the first 18 weeks of 2026 decreased by 19% compared to the first 18 weeks of 2025, as well as high-single digit lower than our internal estimates, due to the factors mentioned above.
We have implemented and continue to implement a number of initiatives to support our sales, including revamping our merchandising, advertising, in-store communication, sale-staff training, strengthening our commercial organization of both retail and wholesale channels, as well as the Project division. The Company remains firmly committed to developing new projects and
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collections and to engaging in promotional events—including international trade fairs and design shows, Natuzzi Congresses and targeted initiatives with real estate developers and designers—in order to consolidate the Natuzzi brand’s positioning and support commercial performance.
However, if the current negative trend persists, global trade relations worsen as a result of any development regarding the actual or potential imposition of new or increased import tariffs by the U.S. administration, and our order levels remain low, it might adversely impact our margin and other results of operations in 2026.
Use of Estimates — The accounting policies used by the Group to prepare its financial statements are described in Note 4 to the Consolidated Financial Statements. The application of certain significant accounting policies requires management to make estimates, judgments and assumptions that are subjective and complex, and which affect the reported amounts of assets and liabilities as of any reporting date and the reported amounts of revenues and expenses during any reporting period. The Group’s financial results could be materially different if different estimates, judgments or assumptions were used. The following discussion addresses the estimates, judgments and assumptions that the Group considers most material based on the degree of uncertainty and the likelihood of a material impact if a different estimate, judgment or assumption were used. Actual results could differ from such estimates, due to, among other things, uncertainty, lack or limited availability of information, variations in economic inputs such as prices, costs, and other significant factors including the matters described under “Risk Factors.”
Impairment of property, plant and equipment right-of-use assets, goodwill and interest in joint ventures — Management reviews property, plant and equipment and right-of use assets (herewith also “non-financial assets” or “assets”) for impairment whenever changes in circumstances indicate that the carrying amount of the assets may not be recoverable and would record an impairment charge, if necessary. The Company analyzes its overall valuation and performs an impairment analysis of its non-financial assets in accordance with IAS 36 “Impairment of Assets”.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (“CGUs”). Recoverability of assets or CGUs to be held and used is measured by a comparison of the carrying amount of an asset or a CGU to the recoverable amount, which is the higher of its value in use, determined using a discounted cash flow method, and its fair value less cost to sell. Discounted cash flow is significantly impacted by the estimates of the annual sales growth rate, the weighted average cost of capital rate and the long-term growth rate. If the carrying value of an asset or CGU is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the asset or CGU exceeds its estimated recoverable amount.
The identified CGUs are the sofa manufacturing facilities located in Italy, Brazil, Romania, China and Vietnam, as well as each of the retail stores directly operated by the Group. In addition, the Group performed an impairment test on its interest in the joint venture located in China, Natuzzi Trading Shanghai.
In particular, with respect to the Italian plant, the Company determined the recoverable amount of property, plant and equipment on the basis of fair value less costs of disposal, as supported by appraisals performed by independent third-party valuation specialists. Such specialists assessed the fair value of land and buildings using the market comparable approach, and the fair value of plant and machinery using the depreciated replacement cost method, adjusted for obsolescence and marketability factors.
With reference to directly operated stores CGUs, in 2025 the Company performed an impairment assessment of property, plant and equipment, right-of-use assets and goodwill included in certain directly operated retail stores that presented indicators of impairment. The Company performed the impairment assessment in accordance with its accounting policy discussed above and described in further detail in Note 4(i) to the Consolidated Financial Statements. Further, the significant assumptions used by the Company in estimating the value in use for such CGUs were the annual sales growth rates used to estimate the forecasted revenue for the years 2026–2028, with 2029 and 2030 held equal to 2028, the weighted average cost of capital rates and the long-term growth rates, all of which were determined at CGU level, including the effects of the duration of the current economic uncertainty. Such significant assumptions involved a high degree of subjectivity by management and reasonably possible changes to these assumptions could have a significant effect on the value in use. Specifically, such assumptions are based on the Group’s future business performance and other forward-looking assumptions that entail significant judgments by management and are heavily impacted by several external events. Finally, cash flow projections for the years 2026–2028 have been derived from business forecasts determined by the Board of Directors, which were developed taking into account the actual results achieved by the Group.
The significant assumptions that were used in performing the impairment test for the Italian upholstered furniture plant CGU and certain directly operated retail stores CGUs are as follows:
— Italian upholstered furniture plant CGU: weighted average cost of capital rate 9.79%, long-term growth rate 1.98%, annual sales growth rate for 2026 equal to -13.03% and annual sales growth rate (average of 2027-2030 period) equal to +6.30%.
— Directly operated retail stores CGUs located in the U.S.: weighted average cost of capital rate 9.39%, long-term growth rate 2.56%, annual sales growth rate for 2026 equal to -7.71% and annual sales growth rate (average of 2027-2030 period) equal to +3.55%.
— Directly operated retail stores CGUs located in Italy: weighted average cost of capital rate 9.79%, long-term growth rate 1.98%, annual sales growth rate for 2026 equal to -0.31% and annual sales growth rate (average of 2027-2030 period) equal to +2.43%.
— Directly operated retail stores CGUs located in Spain: weighted average cost of capital rate 9.09%, long-term growth rate 2.13%, annual sales growth rate for 2026 equal to -0.33% and annual sales growth rate (average of 2027-2030 period) equal to +1.36%.
— Directly operated retail stores CGUs located in the UK: weighted average cost of capital rate 9.05%, long-term growth rate 2.87%, annual sales growth rate for 2026 equal to +3.45% and annual sales growth rate (average of 2027-2030 period) equal to +4.16%.
The significant assumptions that were used in performing the impairment test for the interest in Natuzzi Trading Shanghai are as follows: weighted average cost of capital rate of 10.35%, long-term growth rate of 1.74%, annual sales growth rate for 2026 equal to -5.40% and annual sales growth rate (average of 2027-2030 period) equal to +% 8.97%.
As of December 31, 2025, the Company recorded an impairment loss for its property, plant and equipment, right-of-use assets and goodwill of €8.9 million, partially offset by an impairment reversal of €0.7 million in the same year. No impairment loss arose for the Group's interest in the joint venture, Natuzzi Trading Shanghai. See Notes 8, 9, 10 and 11 to the Consolidated Financial Statements.
The following tables show a breakdown of property, plant and equipment based on the cash generating units in which they are included (amounts in thousands of Euro).
31/12/25
31/12/24
Italian upholstered furniture plant
25,631
29,279
Romanian upholstered furniture plant
16,879
17,856
Brazilian upholstered furniture plant
2,782
2,862
Chinese upholstered furniture plant
1,409
2,353
Vietnamese upholstered furniture plant
262
Others
17,151
21,839
64,114
74,189
Instead, the following tables show a breakdown of right-of-use assets based on geographical location of the cash generating units (mainly directly operated retail stores) in which they are included (amounts in thousands of Euro).
United States of America
17,019
21,810
10,628
12,008
Spain
823
1,424
United Kingdom
914
4,591
2,665
2,923
1,592
1,622
33,641
44,378
The deterioration of the macroeconomic environment, the upward pressure on inflation and the reduced household spending power, the ongoing conflict in Ukraine, the extension of conflicts in the Middle East region, any development regarding the actual or potential imposition of new or increased import tariffs by the U.S. administration, could affect our Italian upholstered furniture plant CGU and certain directly operated retail stores CGUs.
Recoverability of Deferred Tax Assets — Deferred tax assets and liabilities are recognised for the future tax consequences attributable to differences between the accounting in the consolidated financial statements of existing assets and liabilities and their respective tax bases, as well as for losses available for carrying forward in the various tax jurisdictions. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available. Deferred tax assets and liabilities are calculated using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
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recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment date.
In assessing the feasibility of the realization of deferred tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and the tax loss carried-forward are utilized. Estimating future taxable income requires estimates about matters that are inherently uncertain and requires significant management judgment, and different estimates can have a significant impact on the outcome of the analysis.
In 2025, because some domestic companies and some of foreign subsidiaries realized significant pre-tax losses and were in a cumulative loss position, management did not consider it probable that the deferred tax assets of those companies would be realized in the scheduled reversal periods (see Note 41 to the Consolidated Financial Statements). In making its determination that a deferred tax asset was required, management considered the scheduled reversal of deferred tax liabilities and tax planning strategies but was unable to identify any relevant tax planning strategies available to recognise the deferred tax assets.
Changes in the assumptions and estimates related to future taxable income, tax planning strategies and scheduled reversal of deferred tax liabilities could affect the recoverability of the deferred tax assets. If actual results differ from such estimates and assumptions the Group financial position and results of operation may be affected.
Provisions — The Group makes estimates and judgements in relation to the provisions for legal claims, service warranties and one time termination benefits for certain employees. Provisions for legal claims, service warranties and one-time termination benefits for certain employees are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any item included in the same class of obligations is small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Actual results related to such provisions may differ significantly from the estimates, due to, among other things, uncertainty, lack or limited availability of information and variation in economic inputs.
The standards, amendments and interpretations issued by the International Accounting Standards Board (“IASB”) that will have mandatory application in 2026 or subsequent years are listed below.
In April 2024, the IASB issued IFRS 18 “Presentation and Disclosure in Financial Statements” which replaces IAS 1. The new principle establishes the structure for the statements of profit or loss, requires disclosures in the financial statements for some profit or loss performance measures that are reported (Management performance measures), introduces limited changes to the statement of cash flows and to the balance sheet, introduces new criteria for aggregation and disaggregation of information presented in the primary financial statements or disclosed in the notes. IFRS 18 is effective on or after January 1, 2027, with early adoption.
In May 2024 the IASB issued IFRS 19 “Subsidiaries without Public Accountability: Disclosures” which simplifies the preparation for the subsidiary’s financial statements by allowing it to apply group accounting principles in the preparation of its local financial statements. Further, in August 2025, the IASB issued the amendments to IFRS 19. IFRS 19 is effective on or after January 1, 2027, with early adoption.
In May 2024 the IASB issued the Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7. These amendments are effective on or after January 1, 2026.
In July 2024, the IASB published the document “Annual Improvements to IFRS – Volume 11”, which mainly includes technical and editorial amendments to existing standards. The amendments are effective from January 1, 2026.
In November 2025 the IASB issued the Amendments to IAS 21: The Effects of Changes in Foreign Exchange Rates: Translation to a Hyperinflationary Presentation Currency. These amendments are effective on or after January 1, 2027.
On December 18, 2024, the IASB issued amendments to enhance companies’ reporting of the financial effects of contracts for the purchase of electricity from natural sources, often structured as Power Purchase Agreements (PPAs). The IASB made targeted changes to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures in order to improve the information provided in financial statements regarding these contracts. The amendments are effective from January 1, 2026.
The Group is currently reviewing the IFRSs not yet effective in order to determine the likely impact on the consolidated Financial Statements.
As of the date of this Annual Report, the board of directors of Natuzzi consists of eight members, elected at the Company’s annual general shareholders’ meeting held on May 30, 2024, for the three-year term 2024-2026.
Mr. Antonio Achille, who had served as the Company’s Chief Executive Officer and executive director since 2021, stepped down from his roles effective as of July 30, 2025, to pursue new professional opportunities. Pending the appointment of a successor, the board of directors has temporarily delegated the Chief Executive Officer’s powers and responsibilities to the Executive Chairman of the board of directors, Mr. Pasquale Natuzzi, who serves in an interim capacity.
On July 29, 2025, the board of directors appointed Mr. Pietro Labriola by way of co-optation as a non-executive director of the Company, effective as of August 6, 2025. On February 16, 2026, the Company’s shareholders’ meeting ratified the appointment of Mr. Pietro Labriola as non‑executive director. Mr. Labriola will remain in office until the expiration of the term of the current board of directors, which will occur upon approval of the Company’s financial statements as of December 31, 2026.
As of the date of this Annual Report, the directors and senior executive officers of the Company are as follows:
Age
Position within the Company
Pasquale Natuzzi
86
Executive Chairman of the Board of Directors; Chief Executive Officer ad interim
Antonia Isabella Perrone
56
Non-executive Director
Marco Caneva
57
Giuseppe Antonio D’Angelo
Alessandro Musella
Gilles Bonan
Pietro Labriola
Pasquale Junior Natuzzi
Chief Commercial Officer, Chief Project Division Officer, President & CEO North Americas ad interim, Executive Director
Daniele Tranchini
Chief Marketing & Communication Officer
Diego Babbo
Chief Retail Officer; Vice President of Retail North America ad interim
Codrin Coroama
Chief Wholesale Officer
Cosimina Ciccarone
Regional Manager Europe and UK
Raffaele Pasqualicchio
Regional Manager APAC
Francesco Amendola
Regional Manager Emerging Markets
Rocco Rella
Country Manager Italy
Carlo Silvestri
Chief Financial Officer
Pierluigi Binetti
Chief Internal Audit Officer
Pierangelo Colacicco
Chief Technology & Digital Innovation Officer, Chief Front Office Customer Care Officer
Nicola Internullo
Chief HR, Organization & Legal Officer
Domenico Ricchiuti
Chief Operations Officer
Pasquale Natuzzi is the Executive Chairman of the Board of Directors. He founded the Company in 1959. He held the title of sole director of the Company from its incorporation in 1972 until 1991, when he became the Chairman of the Board of Directors. He has creative skills and is directly involved in brand development and product styling. He takes care of strategic partnerships with existing and new accounts. As of the date of this Annual Report, he also serves as Chief Executive Officer in an interim capacity.
Antonia Isabella Perrone is a non-executive director of the Company. In 1998, she was appointed sole director of a company in the agricultural-food sector, wholly owned by the Natuzzi Family. She joined the Group in 1994, dealing with marketing and communication for the Italian market under the scope of retail development management until 1997. She has been married to Pasquale Natuzzi since 1997.
Marco Caneva is a non-executive director of the Company. Since 2010, he has been a director at large IT-focused companies, such as Phase Motion Control, FOS Group, BaoSteel Italia, an Italy-based joint venture controlled by Chinese giant BaoSteel, and Aurora Imaging Technology. He also served as director on the boards of several other companies, including, Italmatch Chemicals and Gruppo Partecipazioni Industriali S.p.A, the holding company of Pirelli & C. S.p.A., as well as Chairman of the board of Paramed, an Italy-based MRI manufacturer, and its U.S. subsidiary. He started his professional career working in the investment banking
department of Goldman Sachs and, from 2009 to 2017, he served as Chief Investment Officer of Hofima S.p.A. In 2017, he founded Calit Advisors, a financial advisory and investment firm based in Italy, Ireland and California.
Giuseppe Antonio D’Angelo is a non-executive director of the Company. He is also Chief Business Officer Europe with Ferrero International SA. Before joining Ferrero in 2009, he acquired significant international experience in general management of multinational companies such as General Mills (from 1997 to 2009), S.C. Johnson & Son (from 1991 to 1997) and Procter & Gamble (from 1989 to 1991). He earned his Bachelor of Arts degree in Economics from LUISS University of Rome in 1988. He received certification from Harvard Business School in the Advanced Management Program in 2004.
Alessandro Musella is a non-executive director of the Company. He is the founder and Chairman of VECTIS, established in 2024, with the aim of guiding law firms and businesses through transformation projects related to generative artificial intelligence. From 2002 to 2024, he served as a lawyer at the law firm Bonelli Erede, where he became partner in 2006. At Bonelli Erede, he focused on corporate compliance, corporate governance and digital innovation. He is also a non-executive director of Global Assistance S.p.A. and a former member of the Supervisory Board of Equens Worldline SE. He is a member of the Italian bar and holds a law degree from the University of Genoa.
Gilles Bonan is a non-executive director of the Company. He is a strategy consultant for lifestyle companies and private equity funds in France, Italy and Switzerland. He is also an entrepreneur in three start-up companies. He gained significant experience at Roche Bobois SA., where he first served as CFO and International Development Director (1999-2001), and later as Executive Vice President (2001-2008) and as CEO – Chairman of the Executive Board (2008- July 2019). He started his career at the audit firm Mazars before joining General Motors head office in France. He holds a degree from HEC Paris business school and a master’s degree in business law.
Pietro Labriola is a non-executive director of the Company. He has been Chief Executive Officer and General Manager of TIM S.p.A. since January 21, 2022. He has been involved in the telecommunications sector since the beginning of his career: from 1993 to 1994, he worked as assistant to the CEO of France Telecom at its Milan office. In 1995, he took on the role of Marketing Manager at Cable & Wireless Italia, while in 1996 he joined Infostrada S.p.A. as Head of Business Development, where he returned in 1998 to take up the position of Marketing Director, after a year’s experience at the Boston Consulting Group.
Pasquale Junior Natuzzi is the Chief Project Division Officer. He is responsible for the development of the Natuzzi’s Contract & Trade division, which offers tailor-made solutions for private clients and prestigious developers, enhancing residential architecture and interiors worldwide. Previously, he served as Chief Brand Officer of Natuzzi Italia and Chief Creative Officer of the Group, launching a new brand strategy that led to the development of new products (also as a result of collaborations with internationally renowned designers) aimed at transforming the Company from a furniture player to a lifestyle brand. He is a member of the National Council of Assarredo, the Italian Association representing furniture companies, and oversees the FederLegnoArredo Sustainability Task Force (design, sustainability, and synergies for the leadership of the Italian wood/furniture sector). He is the son of Pasquale Natuzzi. Since April 11, 2026, he also serves as Chief Commercial Officer of the Group and, since May 1, 2026, also President & CEO North Americas ad interim.
Daniele Tranchini is the Chief Marketing & Communication Officer of the Group. He started his professional career at JWT, where he worked for the agency’s major clients and gained significant experience in the consumer goods, services and retail sectors. From 2004 to 2007, he held the position of Chief Global Sales & Marketing Officer at Natuzzi, before taking on external roles in the management of multinational marketing and communication agencies, first at the WPP Group and then at Publicis Groupe Moment. More recently, together with two partners, he founded Essential Brand Advisory, a consultancy specializing in marketing and communications consultancy, with a particular focus on innovation and sustainability strategies for brands.
Diego Babbo is the Chief Retail Officer of the Group. He started his professional career at McKinsey in 1999 as a Junior Consultant. From 2000 to 2002, he held the position of Retail Senior Buyer, responsible for the purchase of construction and maintenance materials for Kuwait Petroleum Italia S.p.A. In 2002, he joined Natuzzi and took part in the creation of the Retail project, with increasing responsibilities, first as Head of the Retail Design Team, then as Head of the Retail Development department and finally as Head of the Global Retail Division, in charge of the annual store opening plans of the Group’s brands (Natuzzi Italia, Natuzzi Editions and Divani&Divani by Natuzzi) and of the management of the retail operations at a worldwide level. Since May 1, 2026, he also serves as Vice President of Retail North America ad interim.
Codrin Coroama is the Chief Wholesale Officer of the Group. He is responsible for implementing the global sales strategy, managing the gallery network and ensuring the highest standards of customer experience and satisfaction. He is also responsible for overseeing the Grand Distribution business. The first important professional experience started in 2014 as co-founder of LaPizzeria, a successful restaurant chain in Romania, where he worked for 9 years. In 2015, he assumed the role of General Manager at FurnitureDivano in San Diego until 2017. In 2017, he joined the Natuzzi Group as Sales Manager in California & Hawaii. From 2020 to 2022, he served as the Natuzzi Italia Brand Sales manager for the North American Region. In 2022 he became Natuzzi UK
country manager, until the end of that year. He returned to Natuzzi Group in May 2023 as the Global Gallery manager. In April 2024, he assumed the role of Chief Wholesale Officer.
Cosimina Ciccarone is the Regional Manager Europe (including the UK) of the Group. She joined the Group in 1997 starting from the Customer Service department. She took on roles of increasing responsibility in the commercial department, becoming Regional Manager APAC in 2019 up to March 2024.
Raffaele Pasqualicchio is the Regional Manager APAC of the Group. He graduated in Business Administration from Bocconi University in 2007 and joined the Group in 2009 as Product Manager. Over the years, he has held positions of increasing responsibility in merchandising and sales, particularly in key account management. In May 2024, he joined the APAC team as Commercial and Operational Planning Manager. In April 2025, he was appointed Regional Manager APAC.
Francesco Amendola is the Regional Manager Emerging Markets of the Group. He is a qualified interpreter and translator. He started his career with the Natuzzi Group in 2001 in the customer service department. Over time, he took on roles of increasing responsibility, becoming Manager of the Eastern Europe Area in 2012, Country Manager Eastern Europe, Russia, Nordics & Baltic and Benelux in 2016, until becoming Regional Manager Emerging Markets in 2023.
Rocco Rella is the Country Manager Italy and he joined the Group in September 2024, after five years at Original Marines S.p.A., where he held the position of International Sales, Marketing & E-Commerce Director. During his previous tenure at Natuzzi, Rocco held positions of increasing responsibility in the Retail and Marketing sectors. In particular, he served as Area Manager and Regional Marketing Manager for the Italian market, and in 2017 he was appointed Marketing Director for the Natuzzi Italia brand, a role in which he led global marketing initiatives until 2019.
Carlo Silvestri is the Chief Financial Officer of the Company, having joined the Group in 2022. With 20 years of experience, he has extensive international experience in luxury brands and is an expert in retail and wholesale logics. He started his career as Internal Auditor at Pirelli & C. S.p.A., where he gained experience in compliance audits in different countries and contexts. He then joined Dolce & Gabbana, first as Group Internal Auditor and then as Asia Pacific Finance & Admin Director at Dolce & Gabbana Hong Kong Ltd. In 2013, he joined the Ferragamo Group as Chief Financial Officer & Retail Excellence Director for Ferragamo Asia, with full responsibility for finance and administration, legal, logistics and IT functions. From 2020, he also took on the responsibility of General Manager for Ferragamo Retail in Hong Kong & Macao, which allowed him to directly influence the retail excellence of the store network in Asia. He holds a degree from Bocconi University and a master’s degree in management and risk control from ISTUD.
Pierluigi Binetti is the Chief Internal Audit Officer of the Group. He joined the Group in June 2020 and is responsible for providing assurance to the Board of Directors and the Audit Committee, through the performance of specific audits, that the Group’s processes and internal controls are effective and properly designed to mitigate key business risks. In addition, he is responsible for providing assurance over design and effectiveness of key controls relevant for SOX. During his professional career, he has covered different roles in providing assurance services in primary audit firms, mainly in KPMG S.p.A.
Pierangelo Colacicco is the Chief Technology & Digital Innovation Officer and Chief Front Office Customer Officer of the Group. He is responsible for upgrading the Group’s mindset from traditional to digital through the discovery, adoption and implementation of innovative technologies that make processes simpler while improving customer satisfaction and making the brand more competitive. From 2014 to 2018, he was Chief Information Officer (CIO), Process and Organization Director, and from 2007 to 2014 he was CIO of the Group. He joined the Company’s HR & Organization department in 1994. In 1996, he served as a software specialist in the IT department. From 2000 to 2007, he was the IT manager for all sales and distribution processes.
Nicola Internullo is the Chief HR, Organization & Legal Officer of the Group. He joined the Company in September 2024 as HR Head for Commercial Department and, since January 2026, has served as Chief HR, Organization & Legal Officer in Natuzzi. Previously, he held several leadership roles in multinational companies. He started his career at L’Oréal Italia S.p.A. in 2006 as HR Talent Acquisition & Employer Branding Manager. He later joined Prada Group and Loro Piana S.p.A. (LVMH), where he led key HR initiatives and strategic projects as VP HR Americas. After leaving Loro Piana S.p.A., he joined O’Gara Coach as Chief People Officer and subsequently Burberry Group plc, where he served as VP HR Americas.
Domenico Ricchiuti has been the Chief Operations Officer of the Group since August 2022. He joined the Group in 2009 as Total Quality and Lean Manager, where he built his professional career by taking on roles of increasing responsibility in lean process and product improvement projects and functions. In 2018, he was promoted to Product Development and Process Innovation Director for all product categories. In this role, he was responsible for coordinating all processes and activities related to product innovation, development, and industrialization, as well as overseeing continuous process improvement on a global scale across all manufacturing sites.
As a matter of Italian law and under our By-laws, the compensation of executive directors, including the CEO, is determined by the board of directors, after consultation with the board of statutory auditors, within a maximum amount established by the Company’s shareholders. The Company’s shareholders determine the base compensation for all members of the board of directors, including non-executive directors. Compensation of the Company’s executive officers (for performing their role as such) is determined by the CEO. None of our directors or senior executive officers is party to a contract with the Company that would entitle such persons to benefits upon the termination of service as a director or employee.
Aggregate compensation paid by the Group to the directors and senior executive officers was approximately €4.0 million in 2025.
The base compensation recognised in 2025 to each member of the Board of Directors as member of the Board of Directors is set forth below:
Yearly BaseCompensation
€
-
25,000.00
37,500.00
35,000.00
27,500.00
Mr. Antonio Achille, in his capacity as a member of the board of directors, received a pro-rata base compensation of €215,833.00 in respect of the first seven months of service during the financial year ended December 31, 2025.
At the meeting of the Company’s Board of Directors held on July 29, 2025, Mr. Pasquale Natuzzi declared that he would waive any compensation until the end of his term of office.
As in 2024, the Company has decided to suspend the payment of any form of bonus linked to the management by objectives (MBO) incentive system for the year 2025, due to economic and business conditions.
Natuzzi 2022-2026 Stock Option Plan
In 2022, we adopted the Natuzzi 2022-2026 Stock Option Plan (the “SOP”) to enhance the Company’s ability to attract, retain and motivate persons who are expected to contribute to the Company and its subsidiaries’ success, and align the interests of the Company’s shareholders with those of the beneficiaries under the SOP. The SOP was approved by the Company’s shareholders at an extraordinary shareholders’ meeting held on July 1, 2022. Subject to certain adjustments, the maximum number of Ordinary Shares available to be purchased under the SOP is 5,485,304 Ordinary Shares.
The following paragraphs describe the principal terms of the SOP:
•Types of awards. The SOP permits the awards of options to purchase Ordinary Shares.
•Award agreements. Awards granted under the SOP are evidenced by an award agreement that sets forth terms, conditions and limitations for each award.
•Eligible participants. The SOP provides for the grant of options to all key employees and directors of the Company and its subsidiaries during the 2022-2026 period.
•Exercise of options. Options granted under the SOP will be exercisable in whole or in part at the terms and conditions set forth in the relevant award agreement, provided that the term of any option granted under the SOP will not exceed May 31, 2028. Pursuant to the relevant award agreement, options may be exercisable subject to the continuation of the relevant working relationship and/or the achievement of performance targets as determined by the Company’s board of directors.
•Exercise price. The exercise price per share subject to an option will be determined by the SOP administrator and set forth in the award agreement.
•Administration. The SOP is administered by the Company’s board of directors, which may delegate some or all of its powers under the SOP to a committee or any director of the Company.
•Transfer restrictions. Unless otherwise agreed upon by the SOP administrator, awards may not be sold, pledged, transferred or disposed of in any manner other than by will or by the laws of descent or distribution.
•Amendment and termination. The Board may at any time amend or terminate the SOP, but, subject to certain exceptions, no amendment or termination can be made that would materially and adversely affect the rights of any beneficiary under any outstanding award, without his or her consent. The SOP will expire on December 31, 2026. No award will be granted pursuant to the SOP after such termination date, but awards theretofore granted may extend beyond that date.
For further information on the terms of the SOP see the Natuzzi 2022-2026 Stock Option Plan filed as Exhibit 4.12 to this Annual Report.
In July 2022, the Company granted stock options to certain key employees of the Group for the purchase of a total of 2,812,560 Ordinary Shares (equivalent to 562,512 ADSs) and increased its share capital from €54,853,045 to €55,073,045. As at December 31, 2022, one beneficiary exercised the vested portion of its options by subscribing for 220,000 Ordinary Shares (equal to 44,000 ADSs) at the exercise price of €1.00 per Ordinary Share (equal to €5.00 per ADS), and paying the applicable purchase price partly in 2022 and partly in 2023.
During 2023, no beneficiary exercised the vested portion of its options. The options that were forfeited during 2023 related to one of the 3 beneficiaries of the SOP, as such beneficiary left the Company at the end of February 2024 and was granted a bonus of €0.1 million. See Note 22 to the Consolidated Financial Statements for further details.
During 2024, no beneficiary exercised the vested portion of its options.
During 2025, the remaining two beneficiaries forfeited their vested stock options upon resigning from the Company. Consequently, as at December 31, 2025, no beneficiary held any outstanding stock options under the SOP.
During 2025, the Company’s statutory auditors received approximately €0.2 million in compensation in the aggregate for their services to the Company and its Italian subsidiaries.
At the Company’s annual general shareholders’ meeting on May 28, 2025, the following individuals were elected to the Company’s board of statutory auditors for a three-year term. The board consists of three members, one of which is the chairman, and two alternates. None of our statutory auditors is party to a contract with the Company that would entitle such person to benefits upon the termination of service as a statutory auditor.
Position
Ferdinando Parente
Chairman
Francesco Campobasso
Member
Alberto Longo
Michele Loizzo
Alternate
Vito Plantone
We are subject to Rule 10A-3 (“Rule 10A-3”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which requires, absent an exemption, that a listed company maintain an audit committee composed of members of the issuer’s board of directors that meet certain independence requirements.
The Company relies on an exemption from the Rule 10A-3 requirements provided by Rule 10A-3(c)(3) of the Exchange Act for foreign private issuers with a board of statutory auditors established in accordance with local law or listing requirements and subject to independence requirements under local law or listing requirements. See “Item 16D. Exemption from Listing Standards for Audit Committees” for more information.
The following table illustrates the breakdown of the Group’s employees by qualification and location for the periods indicated:
As of December 31
Change
Qualification
2025/2024
2024/2023
Top managers
(6
Middle managers
187
201
(16
Clerks
672
674
733
(2
(59
Laborers
2,301
2,315
2,616
(14
(301
3,193
3,205
3,587
(12
(382
1,935
1,974
2,008
(39
(34
Outside Italy
1,258
1,231
1,579
(348
The figures set forth above include employees of Natuzzi Vietnam JSC, which came under the control of the Group in 2025.
In 2025, 47 workers left the Company, of whom 45 departed voluntarily.
In July 2023, the Company, the relevant trade unions and Italian authorities signed the Early Retirement Agreement, allowing the Company, among other things, to benefit from CIGS for up to 875 workers employed at various plants of the Group until June 30, 2025. In January 2025, the 2015 Solidarity Facility was further extended until October 31, 2025, and in June 2025 the Company, the relevant trade unions and Italian authorities signed the 2025 Solidarity Facility until April 30, 2026. In November 2025, the Company, the relevant trade unions and Italian authorities agreed to i) terminate the 2025 Solidarity Facility effective as of October 31, 2025 and ii) enter into the 2025 CIGS Agreement, allowing the Company to access CIGS for up to 805 workers until December 31, 2025. The 2025 CIGS Agreement has been extended until December 31, 2026, allowing the Company to access CIGS for up to 794 workers.
Mr. Pasquale Natuzzi, founder of the Company, Executive Chairman of the Board of Directors and Chief Executive Officer ad interim, as of the date of this Annual Report, beneficially owns an aggregate amount of 30,967,521 Ordinary Shares, representing 56.2% of the Ordinary Shares outstanding (61.3% of the Ordinary Shares outstanding if the 5.1% of the Ordinary Shares owned by the Natuzzi Family are aggregated).
As a result, Mr. Natuzzi controls Natuzzi S.p.A., including its management and the selection of the members of its board of directors. Since December 16, 2003, Mr. Natuzzi has held his entire beneficial ownership of Natuzzi S.p.A. shares through INVEST 2003 S.r.l., an Italian holding company wholly-owned by Mr. Natuzzi and having its registered office at Via Gobetti 8, Taranto, Italy.
On November 6, 2014, INVEST 2003 S.r.l. completed the purchase of 250,000 ADSs, each representing one Ordinary Share at the time of purchase, at a price of U.S.$2.00 per ADS. The purchase was privately negotiated with a single individual and was effected through an escrow arrangement with BNY Mellon.
On July 30, 2014, INVEST 2003 S.r.l. completed the purchase of 500,000 ADSs, each representing one Ordinary Share at the time of purchase, at a price of U.S. $2.75 per ADS. The purchase was privately negotiated with a single individual and was effected through an escrow arrangement with BNY Mellon. For more information, refer to Schedule 13D (Amendment No. 2), filed with the SEC on September 14, 2014, that amends and supplements the Schedule 13D, filed with the SEC on April 24, 2008 (as amended by Amendment No. 1 filed on April 8, 2013 (“Amendment No. 1”).
These two purchases, carried out for investment purposes, brought the number of Ordinary Shares beneficially owned by each of Mr. Natuzzi and INVEST 2003 S.r.l. to 30,967,521 (representing 56.2% of the Ordinary Shares outstanding).
Between September 27, 2011 and April 30, 2013, INVEST 2003 S.r.l. completed the purchase of a total of 859,628 Natuzzi S.p.A. ADSs (each representing one Ordinary Share at the time of purchase, for a total of approximately 1.6% of the Company’s total shares then outstanding), at an average price of U.S.$ 2.37 per ADS. These purchases were made in accordance with a purchase plan undertaken pursuant to Rule 10b-18 (“Purchases of Certain Equity Securities by the Issuer and Others”) promulgated under the Securities Exchange Act of 1934 (the “Rule 10b-18 Plan”).
On April 18, 2008, INVEST 2003 S.r.l. purchased 3,293,183 ADSs, each representing one Ordinary Share at the time of purchase, at the price of U.S.$ 3.61 per ADS. For more information, refer to Schedule 13D, filed with the SEC on April 24, 2008, and related Amendment No. 1 to Schedule 13D, filed with the SEC on April 8, 2013.
On February 8, 2019, the Board of Directors approved a change in the ratio of its ADSs to Ordinary Shares, from one ADS representing one Ordinary Share, to one ADS representing five Ordinary Shares. The effective date of the ratio change was February 21, 2019. There were 4,361,981 ADSs (equivalent to 21,809,905 Ordinary Shares) outstanding as of February 21, 2019.
The following table sets forth information regarding the beneficial ownership of our Ordinary Shares by our directors and senior executive officers as of the date of this Annual Report.
Name and Address of Directors and Senior Executive Directors*
No. of Ordinary Shares
% of Ordinary Shares
Pasquale Natuzzi(1)
30,967,521
56.2
Giuseppe Antonio D’Angelo(2)
0.0
Pierangelo Colacicco(3)
560
* The business address of our directors and senior executive officers is Via Iazzitiello 47, 70029, Santeramo in Colle, Bari, Italy.
(1) Represents 30,217,521 Ordinary Shares held directly and the residual 750,000 Ordinary Shares held in the form of 150,000 ADSs.
(2) Represents 20 Ordinary Shares held in the form of 4 ADSs.
(3) Represents 560 Ordinary Shares held in the form of 112 ADSs.
For information on the Natuzzi 2022-2026 Stock Option Plan, see “Item 6. Directors, Senior Management and Employees—Compensation of Directors and Officers—Natuzzi 2022-2026 Stock Option Plan.”
The following table sets forth information, as of the date of this Annual Report, with respect to each person who beneficially owns 5% or more of the Company’s Ordinary Shares or ADSs:
Number ofOrdinary Shares owned
Percentowned
Pasquale Natuzzi (1)
Mr. David L. Kanen (2)
10,810,680
19.6
As indicated in “Item 6. — Share Ownership,” Mr. Natuzzi controls Natuzzi S.p.A., including its management and the selection of the members of its board of directors. Since December 16, 2003, Mr. Natuzzi has held his entire beneficial ownership of Natuzzi S.p.A. shares through INVEST 2003 S.r.l., an Italian holding company wholly-owned by Mr. Natuzzi and having its registered office at Via Gobetti 8, Taranto, Italy.
In addition, the Natuzzi Family has a right of first refusal to purchase all the rights, warrants or other instruments which BNY, as Depositary under the Deposit Agreement, determines may not lawfully or feasibly be made available to owners of ADSs in connection with each right offering, if any, made to holders of Ordinary Shares. None of the shares held by the above shareholders has any special voting rights.
As of December 31, 2025, the Company’s share capital, which is totally authorized and issued, is composed of 55,073,045 ordinary shares with par value of Euro 1 each, for a total of Euro 55,073 thousand.
As of March 31, 2026, there were 4,406,652 ADSs (equivalent to 22,033,260 Ordinary Shares) outstanding. The ADSs represented 40.0% of the total number of Natuzzi Ordinary Shares issued and outstanding.
On February 8, 2019, the Board of Directors approved the Ratio Change, which became effective on February 21, 2019. There were 4,361,981 ADSs (equivalent to 21,809,905 Ordinary Shares) outstanding as of February 21, 2019.
For ADS holders, the Ratio Change had the same effect as a one-for-five reverse ADS split. No new shares were issued in connection with the Ratio Change. As a result of the Ratio Change, the price of the Company’s ADSs automatically increased proportionally.
Since certain Ordinary Shares and ADSs are held by brokers or other nominees, the number of direct record holders in the U.S. may not be fully indicative of the number of direct beneficial owners in the U.S. or of where the direct beneficial owners of such shares are resident.
The table below sets forth, in millions of Euro, information about transactions entered into with associates, joint ventures and other related parties as at December 31, 2025 and 2024. See Note 45 to the Consolidated Financial Statements for further details.
Income
33.2
34.6
Cost
Dividends received
2.0
Amount owned by related parties
8.0
8.5
Amount due to related parties
The table below sets forth, in millions of Euro, information about transactions entered into with directors of the Group as at December 31, 2025 and 2024. See Note 45 to the Consolidated Financial Statements for further details.
3.5
3.1
4.4
4.8
0.9
In light of the extraordinary challenges imposed by COVID-19 on the Group, on February 28, 2020, the Company’s majority shareholder entered into an agreement with it setting forth its undertaking, should the Company so request, to make advance payments of up to €15.0 million to satisfy the subscription price of a future rights issue. On February 28, 2020, the Company requested an initial payment of €2.5 million which it received on March 2, 2020. Therefore, as at December 31, 2023, the amount of €2.5 million to be paid back to the majority shareholder has been included in the caption “Other payables” of the statement of financial position. On April 9, 2024, a new agreement was executed, terminating the previous agreement entered into on February 28, 2020 and converting the aforementioned €2.5 million into a loan agreement effective from March 31, 2024, with maturity on March 31, 2027, and subject to an interest rate of 2.5%. As at December 31, 2025, the outstanding debt amounts to €2.4 million. See Notes 20 and 45 to the Consolidated Financial Statements.
On November 21, 2025, the Company entered into a Credit Facility Agreement with INVEST 2003 S.r.l. to support the Company’s financial needs in connection with the implementation of its industrial restructuring plan. Under the Credit Facility Agreement, INVEST 2003 S.r.l. committed to make available to the Company an interest-free loan of up to €15.0 million, in one or more tranches upon the Company’s request, until December 31, 2026. Any disbursed loan tranches may be converted into equity contributions in the event of a future capital increase resolved by the Company; in the absence of such a capital increase, any disbursed amounts shall be repayable by December 31, 2028. The Company requested and received two tranches of €5.0 million each—on November 27, 2025 and on December 18, 2025, respectively—for an aggregate amount of €10.0 million. On March 31, 2026, the Company and INVEST 2003 S.r.l. entered into a further agreement pursuant to which the total outstanding amount owed by the Company to INVEST 2003 S.r.l. as at that date, amounting to €12.5 million in aggregate (comprising the €2.5 face value million principal outstanding under the loan agreement entered into on April 9, 2024 and the €10.0 million disbursed under the Credit Facility Agreement), was irrevocably reclassified as an advance payment on account of a future capital increase (versamento in conto futuro aumento di capitale) (the “Reclassification Agreement”). See Notes 20 and 45 to the Consolidated Financial Statements. A copy of the Credit Facility Agreement and a copy of the Reclassification Agreement are attached as Exhibit 4.7 and Exhibit 4.8, respectively, to this Annual Report.
Additionally, on March 25, 2025, Natuzzi Americas, a wholly-owned U.S. subsidiary of the Company, entered into a sale and purchase agreement with The Steel Vessel Corporation, a Delaware corporation affiliated with the Company’s majority shareholder, pursuant to which Natuzzi Americas transferred the ownership of the property located in High Point, North Carolina, USA (including, without limitation, the land, all buildings, structures and improvements thereon, all rights, privileges and easements appurtenant thereto, all mechanical systems, business records, advertisements and equipment, and other related intangible assets) to The Steel Vessel Corporation, for a total consideration of U.S.$12.1 million (€11.6 million). A preliminary agreement was entered into between the same parties on October 17, 2024, pursuant to which U.S.$3.8 million (€3.5 million) was deposited by The Steel Vessel Corporation with Natuzzi Americas as earnest money. The remaining balance of U.S.$8.3 million (€8.1 million) was collected by Natuzzi Americas on the date of the closing agreement, March 25, 2025. Subsequent to the sale of the High Point property, on the same date of March 25, 2025, the same parties entered into a lease agreement pursuant to which The Steel Vessel Corporation, as lessor, leased the High Point property to Natuzzi Americas, as lessee. The lease has a term of 9 years and 9 months, expiring on December 31, 2034, and an annual rent of U.S.$0.7 million (€0.7 million). Natuzzi Americas will continue to sublease portions of the High Point building that it does not intend to use for the Group’s needs. The transaction was reviewed by the Company’s Related
Parties Committee, in compliance with the Group’s Related Parties Policy, which determined that the sale price offered by The Steel Vessel Corporation represented fair value, based on a third-party appraisal carried out in October 2024. See Notes 7, 45 and 46 to the Consolidated Financial Statements included in this Annual Report. A copy of the sale and purchase agreement and a copy of the lease agreement are attached as Exhibit 4.9 and Exhibit 4.10, respectively, to this Annual Report.
In June 2024, Natuzzi Singapore granted a loan of U.S.$ 1.4 million to TTF, a minority shareholder of Natuzzi Singapore, for a 12-month term, renewable for an additional 12 months. The agreed interest rate, set at U.S.$ 1-Month Libor minus 0.25%, matches the interest rate Natuzzi Singapore would have obtained from a bank deposit. In August 2025, such loan was renewed for an additional 12-month term. See Notes 17 and 45 to the Consolidated Financial Statements included in this Annual Report.
Other than the foregoing transactions, neither the Company nor any of its subsidiaries was a party to a transaction, nor have granted, or have been granted, any loans, with a related party that was material to the Company or the related party, or any transaction that was unusual in its nature or conditions, involving goods, services, or tangible or intangible assets, nor is any such transaction presently proposed. For further details on related party transactions, see Note 45 to the Consolidated Financial Statements.
Please refer to “Item 18. Financial Statements” of this Annual Report.
Sales of upholstery products manufactured in Italy and sold outside Italy totaled €123.1 million in 2025, up 35.8% from €90.6 million in 2024, primarily due to the shift of production from the Group’s Chinese operations to Italy. See “Item 4. Information on the Company—Manufacturing.” This figure represents 47.2% of the Group’s 2025 net leather and fabric-upholstered furniture sales (33.2% in 2024).
The Group is involved in legal and tax proceedings, including several minor claims and legal actions, arising in the ordinary course of business. The provision recorded against these claims is €3.3 million as of December 31, 2025 (€5.9 million as of December 31, 2024). See “Item 3. Key Information—Risk factors” and Note 26 to the Consolidated Financial Statements.
Apart from the proceedings described above, neither the Company nor any of its subsidiaries is a party to any legal or governmental proceeding that is pending or, to the Company’s knowledge, threatened or contemplated against the Company or any such subsidiary that, if determined adversely to the Company or any such subsidiary, would have a materially adverse effect, either individually or in the aggregate, on the business, financial condition or results of the Group’s operations.
Since the result attributable to the owners of the Company for the financial year ended December 31, 2025 was negative, the Company has decided not to distribute any dividend for the year ended December 31, 2025. The Group has also not paid dividends in any of the prior three fiscal years.
The payment of future dividends will depend on the Company’s earnings and financial condition, capital requirements, governmental regulations and policies and other factors. Accordingly, there can be no assurance that dividends in future years will be paid at a rate similar to dividends paid in past years or at all.
Dividends paid to owners of ADSs or Ordinary Shares who are U.S. residents qualifying under the Income Tax Convention will generally be subject to Italian withholding tax at a maximum rate of 15%, provided that certain certifications are given timely. As a result of changes to the foreign tax credit rules for taxable years beginning after December 28, 2021, any Italian income tax withheld from dividends on our ordinary shares or ADSs is unlikely to be treated as creditable unless U.S. owners are either eligible for and elect benefits under the current income tax convention between the United States and Italy (the “Income Tax Convention”) or consistently elect to apply a modified version of these rules under recently issued temporary guidance and comply with specific requirements set forth in such guidance. See “Item 10. Additional Information—Taxation—Taxation of Dividends.”
Natuzzi’s Ordinary Shares are listed on the NYSE in the form of ADSs under the symbol “NTZ”. Neither the Company’s Ordinary Shares nor its ADSs are listed on a securities exchange outside the United States. BNY Mellon is the Company’s Depositary for purposes of issuing the American Depositary Shares evidencing ADSs. Trading in the ADSs on the NYSE commenced on May 13, 1993.
On December 26, 2018 the Company received notice from the NYSE that the Company was no longer in compliance with one of the NYSE’s continued listing standards for a listed company, particularly, the average closing price of the Company’s ADSs was less than U.S.$1.00 over a consecutive 30-trading day-period. The Company notified the NYSE on December 27, 2018 of its intention to cure this deficiency within the prescribed timeframe.
On February 8, 2019, the Company’s Board of Directors approved a change in the ratio of its ADSs to Ordinary Shares, par value €1.00 per Ordinary Share, from one ADS representing one Ordinary Share, to one ADS representing five Ordinary Shares (the “Ratio Change”). The effective date of the Ratio Change was February 21, 2019. There were 4,361,981 ADSs (equivalent to 21,809,905 Ordinary Shares) outstanding as of February 21, 2019.
For ADS holders, the Ratio Change had the same effect as a one-for-five reverse ADS split. No new shares were issued in connection with the Ratio Change and Natuzzi’s ADSs continue to be traded on the NYSE under the same symbol “NTZ.” As a result of the Ratio Change, the price of the Company’s ADSs automatically increased proportionally.
On March 1, 2019, the Company received confirmation from the NYSE that it had regained compliance with continued listing standards.
On April 7, 2020 the Company received notice from the NYSE that the Company was no longer in compliance with one of the NYSE’s continued listing standards for a listed company because the average closing price of the Company’s ADSs was less than U.S.$1.00 over a consecutive 30-trading day-period (the “Dollar Price Standard”). The NYSE notified the Company that its ADSs would be delisted if it was not able to comply with the Dollar Price Standard within the applicable period. The Company regained compliance with the Dollar Price Standard on July 2, 2020.
In addition, from March 17, 2020 to August 12, 2020, the Company was not in compliance with the NYSE’s continued listing standard set forth in Section 802.01(b) of the NYSE Listed Company Manual, which requires the Company to maintain an average global market capitalization of not less than U.S.$15 million over a consecutive 30-trading day period (the “Capitalization Standard”). On August 12, 2020, the Company was notified by the NYSE that, since the Company’s average market capitalization was above U.S.$15 million over a consecutive 30-trading day period, the Company was no longer at an immediate risk of suspension and delisting. The NYSE will continue to monitor the average market capitalization daily to ensure compliance with Capitalization Standard. As of May 6, 2026, the Company’s market capitalization was U.S.$ 32.1 million.
Furthermore, on January 6, 2026, the Company received notice from the NYSE that the Company was no longer in compliance with one of the NYSE’s continued listing standards for a listed company because its 30 trading-day average market capitalization and its last reported stockholders’ equity as of September 30, 2025 were each below $50 million. As of January 5, 2026, the Company’s 30 trading-day average market capitalization was approximately U.S.$27.3 million and its last reported stockholders’ equity as of September 30, 2025 was approximately €39.3 million (or U.S.$46.1 million at an exchange rate of U.S.$1.1734 per €1.00). Following receipt of the notice, on February 5, 2026, the Company disclosed to the market that it was considering available alternatives to cure the deficiency and regain compliance with the applicable continued listing standards and, on February 18, 2026, notified the NYSE accordingly. On April 6, 2026, the Company submitted a plan of compliance to the NYSE demonstrating how the Company intends to regain compliance with the NYSE’s continued listing standards within 18 months of receipt of the notice. The plan of compliance is currently under review by the NYSE. Within 45 days of receipt of the plan of compliance, the NYSE will either accept the plan, in which case the Company will be subject to semi-annual monitoring for compliance with such plan, or reject the plan, in which case the Company will be subject to suspension and delisting proceedings by the NYSE.
The following is a summary of (i) certain information concerning the Company’s shares and By-laws (statuto) and (ii) the relevant provisions of Italian stock corporations. In particular, Italian issuers of shares that are not listed on a regulated market of the European Union are governed by the rules of the Italian civil code (the “Civil Code”). This summary contains all the information that the Company considers to be material regarding its shares, but does not purport to be complete and is qualified in its entirety by reference to the By-laws or the relevant provisions of Italian law, as the case may be.
General — The issued share capital of the Company consists of 55,073,045 Ordinary Shares, with a par value of €1.00 per share. All the issued shares are fully-paid, non-assessable and in registered form.
The Company is registered with the Companies’ Registry of Bari at No. 03513760722, with its registered office in Santeramo in Colle (Bari), Italy.
As set forth in Article 3 of the By-laws, the Company’s corporate purpose is the production, marketing and sale of sofas, armchairs, furniture in general and raw materials used for their production. The Company is generally authorized to take any actions necessary or useful to achieve its corporate purpose.
Authorization of Shares — At the extraordinary shareholders’ meeting of the Company held on July 23, 2004, the shareholders authorized the Company’s board of directors to carry out, within five years from the registration of the aforementioned resolution in the Companies’ Registry, a free capital increase of up to €500,000, and a capital increase with consideration (“a titolo oneroso”) of up to €3.0 million, to be issued in connection with the grant of stock options to employees of the Company and of other Group companies. On January 24, 2006 the Company’s board of directors, in accordance with the Regulations of the “Natuzzi Stock Incentive Plan 2004-2009” (which was approved by the board of directors in a meeting held on July 23, 2004), decided to issue without consideration 56,910 new Ordinary Shares in favor of the beneficiary employees. Consequently, the number of Ordinary Shares increased on the same date from 54,681,628 to 54,738,538. On January 23, 2007, the Company’s board of directors, in accordance with the Regulations of the “Natuzzi Stock Incentive Plan 2004-2009,” decided to issue without consideration 85,689 new Ordinary Shares in favor of beneficiary employees. Consequently, the number of Ordinary Shares increased on the same date from 54,738,538 to 54,824,227. On January 24, 2008 the Company’s board of directors, in accordance with the Regulations of the “Natuzzi Stock Incentive Plan 2004-2009,” decided to issue without consideration 28,818 new Ordinary Shares in favor of the beneficiary employees. Consequently, the number of Ordinary Shares increased on the same date from 54,824,227 to 54,853,045.
At the extraordinary shareholders’ meeting of the Company held on July 1, 2022, the shareholders, among other things and pursuant to Article 2443 of the Civil Code, granted to the Company’s board of directors the right to carry out, within five years from the registration of the aforementioned resolution in the Companies’ Registry, an increase in the share capital of the Company with consideration (“a titolo oneroso”), in one or more tranches, up to a maximum amount of €5,485,304, with the exclusion of pre-emption rights pursuant to Article 2441, paragraph eight, of the Civil Code, to be carried out in connection with the stock option plan named “Natuzzi 2022-2026 Stock Option Plan” for the benefit of the employees of the Company and other Group companies. As at December 31, 2025, the Company’s share capital, which is totally authorized and issued, is composed of 55,073,045 ordinary shares with par value of Euro 1 each, for a total of Euro 55,073 thousand. The share capital increase derives from the subscription of 220,000 shares by one of the beneficiaries of the stock option plan approved by the Company in July 2022. For further information regarding the stock option plan, see Notes 19 and 24 to the Consolidated Financial Statements.
Form and Transfer of Shares — The Company’s Ordinary Shares are in certificated form and are freely transferable by endorsement of the share certificate by or on behalf of the registered holder, with such endorsement either authenticated by a notary, in Italy or elsewhere, or by a broker-dealer or a bank in Italy. The transferee must request that the Company enters his name in the register of shareholders in order to exercise his rights as a shareholder of the Company.
Dividend Rights — Payment by the Company of any annual dividend is proposed by the board of directors and is subject to the approval of the shareholders at the annual shareholders’ meeting. Before dividends may be paid out of the Company’s unconsolidated net income in any year, an amount at least equal to 5% of such net income must be allocated to the Company’s legal reserve until such reserve is at least equal to one-fifth of the par value of the Company’s issued share capital. If the Company’s share capital is reduced as a result of accumulated losses, no dividends may be paid until the capital is reconstituted or reduced by the amount of such losses. The Company may pay dividends out of available retained earnings from prior years, provided that, after such payment, the Company will have a legal reserve at least equal to the legally required minimum. No interim dividends may be approved or paid.
Dividends will be paid in the manner and on the date specified in the shareholders’ resolution approving their payment (usually within 30 days from their annual general meeting). Dividends that are not collected within five years of the date on which they become payable are forfeited to the benefit of the Company. Holders of ADSs will be entitled to receive payments in respect of dividends on the underlying shares through BNY, as ADR Depositary, in accordance with the Deposit Agreement.
Voting Rights — Registered holders of the Company’s Ordinary Shares are entitled to one vote per Ordinary Share.
As a registered shareholder, the Depositary (or its nominee) will be entitled to vote the Ordinary Shares underlying the ADSs. The Deposit Agreement requires the Depositary (or its nominee) to accept voting instructions from holders of ADSs and to execute such instructions to the extent permitted by law. Neither Italian law nor the Company’s By-laws limit the right of non-resident or foreign owners of the Company’s Ordinary Shares to hold or vote shares of the Company.
Board of directors — Under Italian law and pursuant to the Company’s By-laws, the Company may be run by a sole director or by a board of directors, consisting of seven to eleven individuals. The Company is currently run by a board of directors composed of eight individuals (see “Item 6. Directors, Senior Management and Employees”). The board of directors is elected by the ordinary shareholders’ meeting of the Company, for the period established at the time of election but in no case for longer than three fiscal years. A director, who may, but is not required to be, a shareholder of the Company, may be reappointed for successive terms. The board of directors has the full power of ordinary and extraordinary management of the Company and in particular may perform all acts it deems advisable for the achievement of the Company’s corporate purposes, except for the actions reserved by the applicable law or the By-laws to a vote of the ordinary or extraordinary shareholders’ meeting. See also “Item 10. Additional Information—Meetings of Shareholders.”
The board of directors must appoint a chairman (presidente) and may appoint a vice-chairman, in the event they have not been appointed by the shareholders at the ordinary shareholders’ meeting. The chairman of the board of directors is the legal representative of the Company. The board of directors may delegate certain powers to one or more managing directors (organi delegati), determine the nature and scope of the powers delegated to each director and revoke such delegation at any time. The managing directors must report to the board of directors and the board of statutory auditors at least every 180 days on the Company’s business and the main transactions carried out by the Company or by its subsidiaries.
The board of directors may not delegate certain responsibilities, including the preparation and approval of the draft financial statements, the approval of merger and de-merger plans to be submitted to shareholders’ meetings, increases in the amount of the Company’s share capital or the issuance of convertible debentures (if any such power has been delegated to the board of directors by vote of the extraordinary shareholders’ meeting) and the fulfilment of the formalities required when the Company’s capital has to be reduced as a result of accumulated losses that reduce the Company’s stated capital by more than one-third. See also “Item 10. Additional Information—Meetings of Shareholders.”
The board of directors may also appoint one or more general managers (direttori generali), who must report directly to the board of directors and confer powers for single acts or categories of acts to employees of the Company or persons unaffiliated with the Company.
Meetings of the board of directors are called no less than five days in advance by letter sent via fax, telegram or e-mail by the chairman on his own initiative. Meetings may be held in person, by video-conference or tele-conference, in the location indicated in the notice convening the meeting, or in any other destination, each time that the chairman may consider necessary. The quorum for meetings of the board of directors is a majority of the directors in office. Resolutions are adopted by the vote of a majority of the directors present at the meeting. In case of a tie, the chairman has the deciding vote.
Directors having any interest in a proposed transaction must disclose their interest to the board of directors and to the board of statutory auditors, even if such interest is not in conflict with the interest of the Company in the same transaction. The interested director is not required to abstain from voting on the resolution approving the transaction, but the resolution must state explicitly the reasons for, and the benefit to the Company of, the approved transaction. In the event that these provisions are not complied with, or that the transaction would not have been approved without the vote of the interested director, the resolution may be challenged by a director or by the board of statutory auditors if the approved transaction may be prejudicial to the Company. A managing director
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must solicit prior board approval of any proposed transaction in which he has any interest and that is within the scope of his powers. The interested director may be held liable for damages to the Company resulting from a resolution adopted in breach of the above rules. Finally, directors may be held liable for damages to the Company if they illicitly profit from insider information or corporate opportunities.
The board of directors may transfer the Company’s registered office within Italy, set up and eliminate secondary offices and approve mergers by absorption into the Company of any subsidiary in which the Company holds at least 90% of the issued share capital. The board of directors may also approve the issuance of shares or convertible debentures and reductions of the Company’s share capital in the case of withdrawal of a shareholder if so authorized by the Company’s extraordinary shareholders’ meeting.
Under Italian law and pursuant to the Company’s By-laws, directors may be removed from their office at any time by the vote of shareholders at an ordinary shareholders’ meeting. However, if removed in circumstances where there was no just cause, such directors may have a claim for damages against the Company. Directors may resign at any time by written notice to the board of directors and to the chairman of the board of statutory auditors. The board of directors, subject to the approval of the board of statutory auditors, must appoint substitute directors to fill vacancies arising from removals or resignations to serve until the next ordinary shareholders’ meeting. If at any time more than half of the members of the board of directors appointed by the shareholders’ meeting of the Company resign, such resignation is ineffective until the majority of the new board of directors has been appointed. In such a case, the remaining members of the board of directors (or the board of statutory auditors if all the members of the board of directors have resigned or ceased to be directors) must promptly call an ordinary shareholders’ meeting to appoint the new directors.
The compensation of executive directors, including the CEO, is determined by the board of directors, after consultation with the board of statutory auditors, within a maximum amount established by the Company’s shareholders meeting. The Company’s shareholders meeting determines the base compensation for all board members, including non-executive directors. Directors are entitled to reimbursement for expenses reasonably incurred in connection with their functions.
Statutory Auditors — In addition to appointing the board of directors, the ordinary shareholders’ meeting of the Company, appoints a board of statutory auditors (collegio sindacale) and its chairman, and sets the compensation of its members. The statutory auditors are elected for a term of three fiscal years, may be re-elected for successive terms and may be removed only for cause and with the approval of a competent court. Expiration of their office will have no effect until a new board is appointed. Membership of the board of statutory auditors is subject to certain good standing, independence and professional requirements, and shareholders must be informed as to the offices the proposed candidates hold in other companies prior to or at the time of their election. In particular, at least one standing and one alternate member must be a chartered public accountant.
The Company’s By-laws provide that the board of statutory auditors shall consist of three statutory auditors and two alternate auditors (who are automatically substituted for a statutory auditor who resigns or is otherwise unable to serve).
The Company’s board of statutory auditors is required, among other things, to verify that the Company (i) complies with applicable laws and the By-laws, (ii) complies with applicable principles of good governance, and (iii) maintains adequate organizational structure and administrative and accounting systems. The Company’s board of statutory auditors must be convened at least once every 90 days. The board of statutory auditors reports to the annual shareholders’ meeting on the results of its activity and the results of the Company’s operations. In addition, the statutory auditors of the Company must attend the meetings of the Company’s board of directors and shareholders’ meetings.
The statutory auditors may decide to call a shareholders’ meeting, ask information about the management of the Company to the members of the board of directors, carry out inspections and verifications at the Company and exchange information with the Company’s external auditors. Additionally, the statutory auditors have the power to initiate a liability action against one or more directors after adopting a resolution with an affirmative vote by two thirds of the auditors in office. Any shareholder may submit a complaint to the board of statutory auditors regarding facts that such shareholder believes should be subject to scrutiny by the board of statutory auditors, which must take any complaint into account in its report to the shareholders’ meeting. If shareholders collectively representing 5% of the Company’s share capital submit such a complaint, the board of statutory auditors must promptly undertake an investigation and present its findings and any recommendations to a shareholders’ meeting of the Company (which must be convened immediately if the complaint appears to have a reasonable basis and there is an urgent need to take action). The board of statutory auditors may report to a competent court serious breaches of directors’ duties.
External Auditor — The audit of the Company’s accounts is entrusted, as per current legislation, to an independent audit firm whose appointment falls under the competence of the shareholders’ meeting, upon the board of statutory auditors’ proposal. In addition to the obligations set forth in national auditing regulations, Natuzzi’s listing on the NYSE requires that the audit firm issues an audit report on the consolidated financial statements included in the annual report on Form 20-F, in compliance with the auditing standards issued by the Public Company Accounting Oversight Board (United States) (PCAOB). Moreover, the independent audit firm is required, if applicable, to issue an opinion on the effectiveness of the internal control system applied to financial reporting.
The external auditor or the firm of external auditors is appointed for a three-year term, may be re-elected for successive terms, and its compensation is determined by a vote at an ordinary shareholders’ meeting of the Company and may be removed only for just cause by a vote of the shareholders’ meeting.
Meetings of Shareholders — Shareholders are entitled to attend and vote at ordinary and extraordinary shareholders’ meetings. Votes may be cast personally or by proxy. Shareholders’ meetings may be called by the Company’s board of directors (or the board of statutory auditors) and must be called if requested by holders of at least 10% of the issued shares. If a shareholders’ meeting is not called despite the request by shareholders and such refusal is unjustified, a competent court may call the meeting. Shareholders are not entitled to request that a meeting of shareholders be convened to vote on matters which, as a matter of law, shall be resolved on the basis of a proposal, plan or report by the Company’s board of directors.
The Company may hold general meetings of shareholders at its registered office in Santeramo in Colle, or elsewhere in Italy or at locations outside Italy, following publication of notice of the meeting in any of the following Italian newspapers: “Il Sole 24 Ore,” “Corriere della Sera” or “La Repubblica” at least 15 days before the date fixed for the meeting.
The ordinary shareholders’ meeting of the Company must be convened at least once a year. The Company’s annual stand-alone financial statements are prepared by the board of directors and submitted for approval to the ordinary shareholders’ meeting, which must be convened within 120 days after the end of the fiscal year to which such financial statements relate. This term may be extended by up to 180 days after the end of the fiscal year, as long as the Company continues to be bound by law to draw up consolidated financial statements or if particular circumstances concerning its structure or its purposes so require. At ordinary shareholders’ meetings, shareholders also appoint the external auditors, approve the distribution of dividends, appoint the members of the board of directors and of the board of statutory auditors, determine their remuneration and vote on any matter the resolution or authorization of which is entrusted to them by law.
Extraordinary shareholders’ meetings may be called to vote on proposed amendments to the By-laws, issuance of convertible debentures, mergers and de-mergers, capital increases and reductions, when such resolutions may not be taken by the board of directors and any matter the resolution or authorization of which is entrusted to them by law or the By-laws. Liquidation of the Company must be resolved by an extraordinary shareholders’ meeting.
The notice of a shareholders’ meeting of the Company may specify two or more meeting dates for an ordinary or extraordinary shareholders’ meeting; such meeting dates are generally referred to as “calls.”
The quorum for an ordinary shareholders’ meeting of the Company is 50% of the Ordinary Shares, and resolutions are adopted by the majority of Ordinary Shares present or represented. At an adjourned ordinary meeting, no quorum is required, and the resolutions are carried by the majority of Ordinary Shares present or represented. Certain matters, such as amendments to the By-laws, the issuance of shares, the issuance of convertible debentures, mergers and de-mergers, may only be resolved upon at an extraordinary meeting, at which special voting rules apply. Resolutions at an extraordinary meeting of the Company are adopted, on first call, by more than half of the Ordinary Shares. An adjourned extraordinary meeting is validly held with a quorum of one-third of the issued shares and its resolutions are carried by a majority of at least two-thirds of the holders of shares present or represented at such meeting. In addition, certain matters (such as a change in purpose or corporate form of the company, de-mergers, mergers, the transfer of its registered office outside Italy, its liquidation prior to the term set forth in its By-laws, the extension of the term, the revocation of liquidation and the issuance of preference shares) are approved by the holders of more than two-thirds of the shares present and represented at such meeting that must also represent more than one-third of the issued shares.
According to the By-laws, in order to attend any shareholders’ meeting, each shareholder of the Company, at least five days prior to the date fixed for the meeting, must deposit its share certificates at the offices of the Company or with such banks as may be specified in the notice of call of the relevant meeting, in exchange for an admission ticket. Owners of ADRs may make special arrangements with the Depositary for the beneficial owners of such ADRs to attend shareholders’ meetings, but not to vote at or formally address such meetings. The procedures for making such arrangements will be specified in the notice of such meeting to be mailed by the Depositary to the owners of ADRs.
Shareholders may appoint proxies by delivering in writing an appropriate power of attorney to the Company. Directors, auditors and employees of the Company or of any of its subsidiaries may not be proxies and any one proxy cannot represent more than 20 shareholders.
Pre-emptive Rights — Pursuant to Italian law, holders of Ordinary Shares or of debentures convertible into shares, if any exist, are entitled to subscribe for the issuance of shares, debentures convertible into shares and rights to subscribe for shares, in proportion to their holdings, unless such issues are for non-cash consideration or pre-emptive rights are waived or limited and such waiver or limitation is required in the interest of the Company. There can be no assurance that the holders of ADSs may be able to exercise fully any pre-emptive rights pertaining to Ordinary Shares.
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Preference Shares. Other Securities — The Company’s By-laws allow the Company to issue preference shares with limited voting rights, to issue other classes of equity securities with different economic and voting rights, to issue so-called participation certificates with limited voting rights, as well as so-called tracking stock. The power to issue such financial instruments is attributed to the extraordinary meeting of shareholders.
The Company, by resolution of the board of directors, may issue debt securities non-convertible into shares, while it may issue debt securities convertible into shares through a resolution of an extraordinary shareholders’ meeting.
Segregation of Assets and Proceeds — The Company, by means of an extraordinary shareholders’ meeting resolution, may approve the segregation of certain assets into one or more separate pools. Such pools of assets may have an aggregate value not exceeding 10% of the shareholders’ equity of the Company. Each pool of assets must be used exclusively to carry out a specific business and may not be attached by the general creditors of the Company. Similarly, creditors with respect to such specific business may only attach those assets of the Company that are included in the corresponding pool. Tort creditors, on the other hand, may always attach any assets of the Company. The Company may issue securities carrying economic and administrative rights relating to a pool. In addition, financing agreements relating to the funding of a specific business may provide that the proceeds of such business be used exclusively to repay the financing. Such proceeds may be attached only by the financing party and such financing party would have no recourse against other assets of the Company.
Liquidation Rights — Pursuant to Italian law and subject to the satisfaction of the claims of all other creditors, shareholders are entitled to a distribution in liquidation that is equal to the nominal value of their shares (to the extent available out of the net assets of the Company). Holders of preference shares, if any such shares are issued in the future by the Company, may be entitled to a priority right to any such distribution from liquidation up to their par value. Thereafter, all shareholders would rank equally in their claims to the distribution or surplus assets, if any. Ordinary Shares rank pari passu among themselves in liquidation.
Purchase of Shares by the Company — The Company is allowed to purchase shares, subject to certain conditions and limitations provided for by Italian law. Shares may be purchased out of profits available for dividends and out of distributable reserves, in each case as appearing on the latest stand-alone financial statements approved by the Company’s shareholders’ meeting. Further, the Company may only repurchase fully paid-in shares. Such purchases must be authorized by the ordinary shareholders’ meeting. The aggregate purchase price of such shares may not exceed the distributable dividends and the earnings reserve specifically approved by shareholders. Shares held in violation of the above conditions and limitations must be sold within one year of the date of purchase. Similar limitations apply with respect to purchases of the Company’s shares by its subsidiaries.
A corresponding reserve equal to the purchase price of such shares must be created in the statement of financial position, and such reserve is not available for distribution, unless such shares are sold or cancelled. Shares purchased and held by the Company may be resold only pursuant to a resolution adopted at an ordinary shareholders’ meeting. The voting rights attaching to the shares held by the Company or its subsidiaries cannot be exercised, but the shares are counted for quorum purposes in shareholders’ meetings. Dividends and pre-emptive rights attaching to such shares will accrue to the benefit of other shareholders.
The Company does not own any of its Ordinary Shares.
Notification of the Acquisition of Shares — In accordance with Italian antitrust laws, the Italian Competition Authority prohibits the acquisition of control in a company which would thereby create or strengthen a dominant position in the domestic market or a significant part thereof and which would result in the elimination or substantial reduction of competition on a lasting basis, provided that certain turnover thresholds are exceeded. However, if the turnover of the acquiring party and the company to be acquired exceeds certain other monetary thresholds, the antitrust review of the acquisition falls within the exclusive jurisdiction of the European Commission and will be assessed under the EU Merger Regulation (Council Regulation (EC) No. 139/2004).
Minority Shareholders’ Rights. Withdrawal Rights — Shareholders’ resolutions which are not adopted in conformity with applicable law or the Company’s By-laws may be challenged (with certain limitations and exceptions) within 90 days by absent, dissenting or abstaining shareholders representing individually or in the aggregate at least 5% of Company’s share capital (as well as by the board of directors or the board of statutory auditors). Shareholders not reaching this threshold or shareholders not entitled to vote at Company’s meetings may only claim damages deriving from the resolution.
Dissenting or absent shareholders may require the Company to buy back their shares as a result of shareholders’ meeting resolutions approving, among others things, material modifications of the Company’s corporate purpose or of the voting rights of its shares, the transformation of the Company from a stock corporation into a different legal entity, or the transfer of the Company’s registered office outside Italy. The buy-back would occur at a price established by the board of directors, upon consultation with the board of statutory auditors and the Company’s external auditor, having regard to the net assets value of the Company, its prospective earnings and the market value of its shares, if any. The Company’s By-laws may set forth different criteria to determine the consideration to be paid to dissenting shareholders in such buy-backs.
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Each shareholder may bring to the attention of the board of statutory auditors facts or actions which are deemed wrongful. If such shareholders represent more than 5% of the share capital of the Company, the board of statutory auditors must investigate without delay and report its findings and recommendations to the shareholders’ meeting (which must be convened immediately if the complaint appears to have a reasonable basis and there is an urgent need to take action).
Shareholders representing more than 10% of the Company’s share capital have the right to report to a competent court all of the serious breaches of the directors’ duties, which may be prejudicial to the Company or to its subsidiaries. In addition, shareholders representing at least 20% of the Company’s share capital may commence derivative suits before a competent court against its directors, statutory auditors and general managers.
The Company may waive or settle the suit unless shareholders holding at least 20% of the shares vote against such waiver or settlement. The Company will reimburse the legal costs of such action in the event that the claim of such shareholders is successful and the court does not award such costs against the relevant directors, statutory auditors or general managers.
Any dispute arising out of or in connection with the By-Laws that may arise between the Company and its shareholders, directors, or liquidators shall fall under the exclusive jurisdiction of the Tribunal of Bari (Italy).
Liability for Mismanagement of Subsidiaries — Under Italian law, companies and other legal entities that, acting in their own interest or the interest of third parties, mismanage a company subject to their direction and coordination powers are liable to such company’s shareholders and creditors for ensuing damages suffered by such shareholders. This liability is excluded if (i) the ensuing damage is fully eliminated, including through subsequent transactions, or (ii) the damage is effectively offset by the global benefits deriving in general to the company from the continuing exercise of such direction and coordination powers. Direction and coordination powers are presumed to exist, among other things, with respect to consolidated subsidiaries.
The Company is subject to the direction and coordination of INVEST 2003 S.r.l.
The Company is not a party to any material contract, other than contracts entered into in the ordinary course of business and the contracts described immediately below:
There are currently no exchange controls, as such, in Italy restricting rights deriving from the ownership of shares. Residents and non-residents of Italy may hold foreign currency and foreign securities of any kind, within and outside Italy. Non-residents may invest in Italian securities without restriction and may transfer to and from Italy cash, instruments of credit and securities, in both foreign currency and Euro, representing interest, dividends, other asset distributions and the proceeds of any dispositions.
Certain requirements however are imposed by law. Regulations on the use of cash and bearer securities are contained in legislative decree No. 231 of November 21, 2007, as amended from time to time (the “Decree 231”), which implemented in Italy the European directive on anti-money laundering 2005/60/EC (replaced by directive (EU) 2015/849, as amended by directive (EU) 2018/843, directive (EU) 2019/2177, Regulation (EU) 2023/1113 and directive (EU) 2024/1640). Such legislation requires that, subject to certain exceptions, transfers of cash or bearer instruments in Euro or in foreign currency, effected for whatsoever reason between different parties, shall be carried out by means of credit institutions, Poste Italiane S.p.A., electronic money institutions and payment institutions providing payment services which are different from those indicated under Article 1, paragraph 1, letter b), number 6) of legislative decree No. 11 of January 27, 2010 when the total amount to be transferred is equal to or higher than €5,000. Cash remittance services are subject to a €1,000 limit. Credit institutions and the other intermediaries effecting such transactions on behalf of residents or non-residents of Italy are required to maintain records of such transactions for 10 years after the end of the relevant
business relationship or the closing of the relevant transaction. Such records may be inspected at any time by the competent Italian authorities.
Non-compliance with, inter alia, the reporting and record-keeping requirements set forth in the above-mentioned Decree 231 may result in administrative fines or, in the case of (inter alia) reporting of false or misleading information or falsification of the information that is relevant for the purposes of compliance with Decree 231, criminal penalties. The Financial Intelligence Unit of the Bank of Italy (the “FIU”) may use the information received and/or transfer it to the anti-mafia investigative directorate (Direzione investigativa antimafia), the special monetary police nucleus (Nucleo speciale di polizia valutaria della Guardia di finanza) and other competent authorities, to police money laundering, tax evasion and any other unlawful activity. The FIU is required in certain cases to maintain record of the reports for 10 years.
Individuals, non-profit entities and partnerships that are residents of Italy must disclose on their annual tax returns all investments and financial assets held outside Italy. Such obligation lies also on the aforesaid resident taxpayers who, even if they do not directly own investments and financial assets held abroad, qualify as “beneficial owner” of the same. No such tax disclosure is required in respect of securities deposited for management with qualified Italian financial intermediaries and in respect of contracts entered into through their intervention, provided that the items of income derived from such foreign financial assets are subjected to withholding tax or substitute tax through the intervention of the same intermediaries. Corporate residents of Italy are exempt from these tax disclosure requirements with respect to their annual tax returns because this information is required to be disclosed in their financial statements.
There can be no assurance that the current regulatory environment in or outside Italy will persist or that particular policies presently in effect will be maintained, although Italy is required to maintain certain regulations and policies by virtue of its membership of the EU and other international organizations and its adherence to various bilateral and multilateral international agreements.
The following is a summary of certain U.S. federal and Italian tax matters. The summary contains a description of the principal U.S. federal and Italian tax consequences of the purchase, ownership and disposition of Ordinary Shares or ADSs by a holder who is a citizen or resident of the United States or a U.S. corporation or who otherwise will be subject to U.S. federal income tax on a net income basis in respect of the Ordinary Shares or ADSs (a “U.S. Holder”). The summary is not a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase or hold Ordinary Shares or ADSs. In particular, the summary deals only with beneficial owners who will hold Ordinary Shares or ADSs as capital assets and does not address the tax treatment of a beneficial owner who owns 10% or more of the shares of the Company (measured by voting power or value) or who may be subject to special tax rules, such as banks, tax-exempt entities, insurance companies, partnerships or partners therein, U.S. expatriates, or dealers in securities or currencies, or persons that will hold Ordinary Shares or ADSs as a position in a “straddle” for tax purposes or as part of a “constructive sale” or a “conversion” transaction or other integrated investment comprised of Ordinary Shares or ADSs and one or more other investments. The summary does not address the U.S. Medicare tax on net investment income, the U.S. alternative minimum tax, or any aspect of U.S. state or local tax law. The summary does not discuss the treatment of Ordinary Shares or ADSs that are held in connection with a permanent establishment through which a non-resident beneficial owner carries on business or performs personal services in Italy.
The summary is based upon tax laws and practice of the United States and Italy in effect on the date of this Annual Report, which are subject to change.
Investors and prospective investors in Ordinary Shares or ADSs should consult their own advisors as to the U.S., Italian or other tax consequences of the purchase, beneficial ownership and disposition of Ordinary Shares or ADSs, including, in particular, the effect of any state or local tax laws.
For purposes of the summary, U.S. Holders who are considered residents of the United States for purposes of the Income Tax Convention, and are not subject to an anti-treaty shopping provision that applies in limited circumstances, are referred to as “U.S. owners”. Beneficial owners who are citizens or residents of the United States, corporations organized under U.S. law, and U.S. partnerships, estates or trusts (to the extent their income is subject to U.S. tax either directly or in the hands of partners or beneficiaries) generally will be considered to be residents of the United States under the Income Tax Convention. Special rules apply to U.S. owners who are also residents of Italy, according to the Income Tax Convention.
For the purpose of the Income Tax Convention and the United States Internal Revenue Code of 1986, as amended, beneficial owners of ADSs will be treated as the beneficial owners of the Ordinary Shares represented by those ADSs.
Taxation of Dividends
i) Italian Tax Considerations — As a general rule, Italian laws provide for the withholding of income tax on dividends paid by Italian companies to shareholders who are not residents of Italy for tax purposes, currently levied at a 26% rate. Italian laws provide a mechanism under which non-resident shareholders can claim a refund, up to 11/26 of Italian withholding taxes on dividend income by establishing to the Italian tax authorities that the dividend income was subject to income tax in another jurisdiction in an amount at least equal to the total refund claimed. U.S. owners should consult their own tax advisers concerning the possible availability of this refund, which traditionally has been payable only after extensive delays. Alternatively, reduced rates (normally 15%) may apply to non-resident shareholders who are entitled to, and comply with procedures for claiming, benefits under an income tax convention.
Under the Income Tax Convention, dividends derived and beneficially owned by U.S. owners are subject to an Italian withholding tax at a reduced rate of 15%.
However, the amount initially made available to the Depositary for payment to U.S. owners will reflect withholding at the 26% rate. U.S. owners who comply with the certification procedures described below may then claim an additional payment of 11% of the dividend (representing the difference between the 26% rate, and the 15% rate, and referred to herein as a “treaty refund”). This certification procedure will require U.S. owners (i) to obtain from the U.S. Internal Revenue Service (“IRS”) a form of certification required by the Italian tax authorities (IRS Form 6166), unless a previously filed certification is effective on the dividend payment date (such certificates, filed together with the statement indicated under (ii) below, should be effective until the end of the fiscal year for which the statement was originally filed), (ii) to produce a statement in accordance with the Italian tax authorities decree of July 10, 2013, whereby the U.S. owner represents to be a U.S. owner individual or corporation with no permanent establishment in Italy, and (iii) to set forth other required information. IRS Form 6166 may be obtained by filing a request for certification on IRS Form 8802. (Additional information, including IRS Form 8802, can be obtained from the IRS website at www.irs.gov. Information appearing on the IRS website is not incorporated by reference into this document.) The time for processing requests for certification by the IRS normally is 30 to 45 days. Accordingly, in order to be eligible for the procedure described below, U.S. owners should begin the process of obtaining certificates as soon as possible after receiving instructions from the Depositary on how to claim a treaty refund.
The Depositary’s instructions will specify certain deadlines for delivering to the Depositary the documentation required to obtain a treaty refund, including the certification that the U.S. owners must obtain from the IRS. In the case of ADSs held by U.S. owners through a broker or other financial intermediary, the required documentation should be delivered to such financial intermediary for transmission to the Depositary. In all other cases, the U.S. owners should deliver the required documentation directly to the Depositary. The Company and the Depositary have agreed that if the required documentation is received by the Depositary on or within 30 days after the dividend payment date and, in the reasonable judgment of the Company, such documentation satisfies the requirements for a refund by the Company of Italian withholding tax under the Convention and applicable law, the Company will within 45 days thereafter pay the treaty refund to the Depositary for the benefit of the U.S. owners entitled thereto.
If the Depositary does not receive a U.S. owner’s required documentation within 30 days after the dividend payment date, such U.S. owner may for a short grace period (specified in the Depositary’s instructions) continue to claim a treaty refund by delivering the required documentation (either through the U.S. owner’s financial intermediary or directly, as the case may be) to the Depositary. However, after this grace period, the treaty refund must be claimed directly from the Italian tax authorities rather than through the Depositary. Expenses and extensive delays have been encountered by U.S. owners seeking refunds from the Italian tax authorities.
Distributions of profits in kind will be subject to withholding tax. In that case, prior to receiving the distribution, the holder will be required to provide the Company with the funds to pay the relevant withholding tax.
ii) United States Tax Considerations — Subject to the discussion below under “Passive Foreign Investment Company Rules”, the gross amount of any dividends (that is, the amount before reduction for Italian withholding tax) paid to a U.S. Holder generally will be subject to U.S. federal income taxation as foreign-source dividend income and will not be eligible for the dividends-received deduction allowed to domestic corporations. Dividends paid in Euro will be included in the income of such U.S. Holder in a dollar amount calculated by reference to the exchange rate in effect on the day the dividends are received by the Depositary or its agent. If the Euro are converted into dollars on the day the Depositary or its agent receives them, U.S. Holders generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. U.S. owners who receive a treaty refund may be required to recognize foreign currency gain or loss to the extent the amount of the treaty refund (in dollars) received by the U.S. owner differs from the U.S. dollar equivalent of the Euro amount of the treaty refund on the date the dividends were received by the Depositary or its agent.
The U.S. dollar amount of dividends received by an individual with respect to the Ordinary Shares or ADSs will be subject to taxation at reduced rates if the dividends are “qualified dividends”. Subject to certain exceptions for short-term and hedged positions, dividends paid on the Ordinary Shares or ADSs will be treated as qualified dividends if (i) the Company is eligible for the benefits of a comprehensive income tax treaty with the United States that the IRS has approved for the purposes of the qualified dividend
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rules and (ii) the Company was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid, a passive foreign investment company (“PFIC”). The Income Tax Convention has been approved for the purposes of the qualified dividend rules, and the Company believes it is eligible for the benefits of the Income Tax Convention. Based on the Company’s financial statements and relevant market and shareholder data, the Company believes that it was not treated as a PFIC for U.S. federal income tax purposes with respect to its 2024 or 2025 taxable year. In addition, based on the Company’s financial statements and its current expectations regarding the value and nature of its assets, the sources and nature of its income, and relevant market and shareholder data, the Company does not anticipate becoming a PFIC for its 2026 taxable year.
Subject to generally applicable limitations and conditions, Italian dividend withholding tax paid at the appropriate rate applicable to the U.S. Holder may be eligible for a credit against such U.S. Holder’s U.S. federal income tax liability. These generally applicable limitations and conditions include requirements adopted by the U.S. IRS in regulations promulgated in December 2021 and any Italian tax will need to satisfy these requirements in order to be eligible to be a creditable tax for a U.S. Holder. In the case of a U.S. Holder that either (i) is eligible for, and properly elects, the benefits of the Income Tax Convention, or (ii) consistently elects to apply a modified version of these rules under temporary guidance promulgated in December 2023 and complies with specific requirements set forth in such guidance, the Italian tax on dividends will be treated as meeting the requirements and therefore as a creditable tax. In the case of all other U.S. Holders, the application of these requirements to the Italian tax on dividends is uncertain and we have not determined whether these requirements have been met. If the Italian dividend tax is not a creditable tax for a U.S. Holder or the U.S. Holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. Holder may be able to deduct the Italian tax in computing such U.S. Holder’s taxable income for U.S. federal income tax purposes. Dividends will constitute income from sources without the United States and, for U.S. Holders that elect to claim foreign tax credits, generally will constitute “passive category income” for foreign tax credit purposes.
The availability and calculation of foreign tax credits and deductions for foreign taxes involves the application of rules that depend on a U.S. Holder’s particular circumstances. The temporary guidance discussed above also indicates that the Treasury and the IRS are considering proposing amendments to the December 2021 regulations and that the temporary guidance can be relied upon until additional guidance is issued that withdraws or modifies the temporary guidance. U.S. holders are urged to consult their tax advisors whether, and to what extent, a foreign tax credit will be available in light of their particular circumstances.
A beneficial owner of Ordinary Shares or ADSs who is, with respect to the United States, a foreign corporation or a nonresident alien individual, generally will not be subject to U.S. federal income tax on dividends received on Ordinary Shares or ADSs, unless such income is effectively connected with the conduct by the beneficial owner of a trade or business in the United States.
Taxation of Capital Gains
i) Italian Tax Considerations — Under Italian law, capital gains tax (“CGT”) is generally levied on capital gains realized by non-residents from the disposal of shares in companies resident in Italy for tax purposes even if those shares are held outside of Italy. However, capital gains realized by non-resident holders on the sale of non-qualified shareholdings (as defined below) in companies listed on a stock exchange and resident in Italy for tax purposes (as is the Company’s case) are not subject to CGT. In order to benefit from this exemption, such non-Italian-resident holders may need to file a certificate evidencing their residence outside of Italy for tax purposes.
A “qualified shareholding” consists of securities that entitle the holder to exercise more than 2% of the voting rights of a company with shares listed on a stock exchange in the ordinary meeting of the shareholders or represent more than 5% of the share capital of a company with shares listed on a stock exchange. A “non-qualified shareholding” is any shareholding that does not exceed either of these thresholds. The relevant percentage is calculated taking into account the shareholdings sold during the prior 12-month period.
As a general rule, capital gains realized upon disposal of a “qualified” shareholding are subject to a 26% substitute tax. If a taxpayer realizes taxable capital gains in excess of capital losses incurred in the same tax year, such excess amount is subject to the 26% substitute tax. If such taxpayer’s capital losses exceed its taxable capital gains, then the excess amount can be carried forward and deducted from the taxable amount of capital gains realized by such person in the following tax years, up to the fourth, provided that it is reported in the tax report in the year of disposal.
The above is subject to any provisions of an income tax treaty entered into by the Republic of Italy, if the income tax treaty provisions are more favorable. The majority of double tax treaties entered into by Italy, including the Income Tax Convention, in accordance with the OECD Model tax convention, provide that capital gains realized from the disposal of Italian securities are subject to CGT only in the country of residence of the seller. The Income Tax Convention between Italy and the U.S. provides that a U.S. owner is not subject to the Italian CGT on the disposal of shares, provided that the shares are not held through a permanent establishment of the U.S. owner in Italy.
ii) United States Tax Considerations — Subject to the discussion below under “Passive Foreign Investment Company Rules”, gain or loss realized by a U.S. Holder on the sale or other disposition of Ordinary Shares or ADSs will be subject to U.S. federal income
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taxation as capital gain or loss in an amount equal to the difference between the U.S. Holder’s basis in the Ordinary Shares or the ADSs and the amount realized on the disposition, as determined in U.S. dollars. If the amount realized is denominated in a foreign currency, its dollar equivalent generally will be determined at the spot rate in effect on the date of disposition (or, if the Ordinary Shares or ADSs are traded on an established securities market such as the NYSE, in the case of cash basis and electing accrual basis beneficial owners, the settlement date). Any such gain or loss generally would be treated as arising from sources within the United States. Such gain or loss will generally be long-term capital gain or loss if the U.S. Holder holds the Ordinary Shares or ADSs for more than one year. The net amount of long-term capital gain recognized by a U.S. Holder that is an individual holder generally is subject to taxation at a reduced rate. The ability to offset capital losses against ordinary income is subject to limitations. Deposits and withdrawals of Ordinary Shares by U.S. Holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.
A U.S. Holder generally will not be entitled to credit any Italian tax imposed on the sale or other disposition of the shares against such U.S. Holder’s U.S. federal income tax liability, except in the case of a U.S. Holder that consistently elects to apply a modified version of the U.S. foreign tax credit rules that is permitted under the temporary guidance discussed above and complies with the specific requirements set forth in such guidance. Additionally, capital gain or loss recognized by a U.S. Holder on the sale or other disposition of the shares generally will be U.S. source gain or loss for U.S. foreign tax credit purposes. Consequently, even if the withholding tax qualifies as a creditable tax, a U.S. Holder may not be able to credit the tax against its U.S. federal income tax liability unless such credit can be applied (subject to generally applicable conditions and limitations) against tax due on other income treated as derived from foreign sources. If the Italian tax is not a creditable tax, the tax would reduce the amount realized on the sale or other disposition of the shares even if the U.S. Holder has elected to claim a foreign tax credit for other taxes in the same year. The temporary guidance discussed above also indicates that the Treasury and the IRS are considering proposing amendments to the December 2021 regulations and that the temporary guidance can be relied upon until additional guidance is issued that withdraws or modifies the temporary guidance. U.S. Holders should consult their own tax advisors regarding the application of the foreign tax credit rules to a sale or other disposition of the shares and any Italian tax imposed on such sale or disposition.
A beneficial owner of Ordinary Shares or ADSs who is, with respect to the United States, a foreign corporation or a nonresident alien individual will not be subject to U.S. federal income tax on gain realized on the sale of Ordinary Shares or ADSs, unless (i) such gain is effectively connected with the conduct by the beneficial owner of a trade or business in the United States or (ii), in the case of gain realized by an individual beneficial owner, the beneficial owner is present in the United States for 183 days or more in the taxable year of the sale and certain other conditions are met.
Passive Foreign Investment Company Rules
Special U.S. tax rules apply to investors in companies that are considered to be passive foreign investment companies (“PFICs”). The Company will be classified as a PFIC in a particular taxable year if, either
For this purpose, passive income generally includes dividends, interest, gains from certain commodities transactions, rents, royalties and the excess of gains over losses from the disposition of assets that produce passive income.
Based on the financial statements and relevant market and shareholder data, the Company believes that it was not treated as a PFIC for U.S. federal income tax purposes with respect to its 2025 taxable year. In addition, based on the Company’s financial statements and its current expectations regarding the value and nature of its assets, the sources and nature of its income, and relevant market and shareholder data, the Company does not anticipate becoming a PFIC for its 2026 taxable year or the foreseeable future. However, the determination of whether the Company is a PFIC must be made annually based on the facts and circumstances at that time, including the valuation of its assets, including goodwill and other intangible assets (which may be determined, in part, by reference to the market price of ADSs, which could be volatile). Accordingly, the Company cannot be certain that it will not be a PFIC in the current year or in future years. U.S. Holders should consult their own tax advisors regarding the U.S. federal income tax considerations if the Company is classified as a PFIC.
Taxation of Distributions from Capital Reserves
Italian Tax Considerations — Special rules apply to the distribution of certain capital reserves. Under certain circumstances, such a distribution may be considered as taxable income in the hands of the recipient depending on the existence of current profits or outstanding reserves at the time of distribution and the actual nature of the reserves distributed. The application of such rules may also have an impact on the tax basis in the Ordinary Shares or ADSs held and/or the characterization of any taxable income received
and the tax regime applicable to it. Non-resident shareholders may be subject to withholding tax and CGT as a result of such rules. You should consult your tax adviser in connection with any distribution of capital reserves.
Other Italian Taxes
Estate and Inheritance Tax — A transfer of Ordinary Shares or ADSs by reason of death or gift is subject to an inheritance and gift tax levied on the value of the inheritance or gift, as follows:
If the beneficiary of any such transfer is a disabled individual, whose handicap is recognized pursuant to Law No. 104 of February 5, 1992, the tax is applied only on the value of the assets received in excess of €1,500,000 at the rates illustrated above, depending on the type of relationship existing between the deceased or donor and the beneficiary.
The tax regime described above will not prevent the application, if more favorable to the taxpayer, of any different provisions of a bilateral tax treaty, including the convention between Italy and the United States against double taxation with respect to taxes on estates and inheritances, pursuant to which non-Italian resident shareholders are generally entitled to a tax credit for any estate and inheritance taxes possibly applied in Italy.
Italian Financial Transaction Tax — The IFTT would apply on the transfer of Ordinary Shares or ADSs in 2026.
The IFTT is applicable, among other transactions, to all trades entailing the transfer of title of (i) shares or equity-like financial instruments issued by companies resident in Italy, such as the Ordinary Shares; and (ii) securities representing the shares and financial instruments under (i) above (including depositary receipts such as the ADSs), regardless of the residence of the securities’ issuer. The IFTT may also apply to the transfer of Ordinary Shares and ADSs by a U.S. resident.
As of January 1, 2026, the IFTT applies at a rate of 0.4% for over-the-counter transactions, reduced to 0.1% for trades executed on a regulated market or multilateral trading facility established in States or territories allowing an adequate exchange of information with the Italian tax authorities. The New York Stock Exchange should qualify as a regulated market for such purposes.
The rules governing the IFTT are fairly complex. As to its basic features, it should be noted that the IFTT (i) is levied on a tax base equal to (x) the market value (calculated by taking the net balance of daily trades on the relevant securities) or, in the absence of any such market value, (y) the consideration paid for each trade; and (ii) is borne by the purchaser but is collected by the financial intermediaries (including non-resident financial intermediaries) intervening in the relevant trades.
However, a number of exemptions apply, including with respect to trades of securities issued by companies having an average market capitalization lower than €500 million in the month of November of the year preceding the year in which the trade takes place. Companies, the securities of which are listed on a foreign regulated market, and which could benefit from this exemption, such as the Company, need a confirmation from the Italian Ministry of Economy and Finance: such companies must communicate their market capitalization for each tax year to the Ministry, which will then prepare a list of the companies in relation to which the exemption applies. Since the Company has not been included in the list issued by the Italian Ministry of Economy and Finance of companies having an average market capitalization lower than €500 million in the month of November 2025, the IFTT would not apply on transfers of Ordinary Shares or ADSs made in 2026.
EU Financial Transaction Tax — On February 14, 2013, the European Commission proposed the implementation of the EU FTT (see “Item 3. Key Information—Risk Factors”) that may also apply to the transfer of Ordinary Shares and ADSs by a U.S. resident. This directive has been modified by the European Commission. Moreover, the implementation of the proposed EU FTT may also affect the IFTT, as described above. However, the related EU directive has not yet been enacted and the European Commission has recently announced that it intends to withdraw the EU FTT proposal.
United States Information Reporting and Backup Withholding Requirements — In general, information reporting requirements will apply to payments by a paying agent within the United States to a non-corporate (or other non-exempt) U.S. Holder of dividends in respect of the Company Shares or ADSs, or the proceeds received on the sale or other disposition of the Company Shares or ADSs.
Backup withholding may apply to such amounts if the U.S. Holder fails to provide an accurate taxpayer identification number to the paying agent on a properly completed IRS Form W-9 or otherwise comply with the applicable requirements of the backup withholding rules. A holder that is not a U.S. Holder may be required to comply with certification and identification procedures in order to establish its exemption from information reporting and backup withholding. Amounts withheld as backup withholding will be creditable against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.
Specified Foreign Financial Assets — Certain U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of U.S.$50,000 on the last day of the taxable year or U.S.$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. Holders who fail to report the required information could be subject to substantial penalties. You should consult your own tax advisors concerning the application of these rules to your particular circumstances.
The Company is subject to the information reporting requirements of the Exchange applicable to foreign private issuers. In accordance therewith, the Company is required to file reports, including annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we have been required to make filings with the SEC by electronic means since November 4, 2002. Any filings we make electronically will be available to the public over the Internet at the SEC’s website at http://www.sec.gov. The Form 20-F and reports and other information filed by the Company with the SEC will also be available for inspection by ADS holders at the offices of BNY Mellon - Issuer Services – Depositary Receipts at 240 Greenwich Street, New York, NY 10286.
The following discussion of the Group’s risk management activities includes “forward-looking statements” that involve risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. See “Forward-Looking Information.” A significant portion of the Group’s net sales and costs is denominated in currencies other than the Euro.
The Group is exposed to market risks principally from fluctuations in the exchange rates between the Euro and other currencies, including, but not limited to, in particular the U.S. dollar, and to a significantly lesser extent, from variations in interest rates. See Note 33(C)(iv) to the Consolidated Financial Statements.
Exchange Rate Risk — The Group’s foreign exchange rate risk in 2025 arose principally in connection with sales denominated in U.S. dollars, British pounds, Euro (for the Company’s subsidiary located in Eastern Europe), Australian dollars and Japanese yen, as well as in connection with Chinese yuan, Romanian leu, Brazilian reais, Mexican pesos, Vietnamese dong, and Russian rubles, for the Company’s subsidiaries operating in currencies other than the Euro.
As of December 31, 2025, the Company was a party to a number of currency forward contracts, all of which are designed to hedge future cash flows from accounts receivables and sales orders denominated in different currencies, net of expected outflows from trade payables. The Group does not use such foreign exchange contracts for speculative trading purposes. As of December 31, 2025 and 2024, the notional amount in Euro terms of all of the Group’s outstanding currency forward contracts totaled €12.8 million and €12.7 million, respectively.
The tables below summarize (in thousands of Euro equivalent) the contractual amounts of currency forward contracts intended to hedge future cash flows from accounts receivable and sales orders, net of expected outflow from trade payables, as of December 31, 2025 and 2024:
December 31,
U.S. dollars
3,434
5,515
British pounds
3,414
4,304
Euro
4,850
2,416
Australian dollars
592
369
Mexican pesos
422
Japanese yen
113
124
12,825
12,728
The currency forward contracts denominated in Euro are used by the Group’s Romanian subsidiary to hedge its net collections in Euro vs. RON.
All of these forward contracts had various maturities extending through April 2026.
As of December 31, 2025, these forward contracts had a net unrealized gain of €0.1 million, compared to a net unrealized loss of €0.2 million as of December 31, 2024. The Group recorded this amount in “net exchange rate gains/(losses)” in its Consolidated Financial Statements.
The following tables present information regarding the contract amount in thousands of Euro equivalent and the estimated fair value of all of the Group’s foreign exchange contracts: contracts with unrealized gains are presented as “assets” and contracts with unrealized losses are presented as “liabilities.”
December 31, 2025
December 31, 2024
ContractAmount
Unrealizedgains (losses)
Assets
8,767
2,909
Liabilities
4,058
(19
9,819
(268
(244
As of December 31, 2025, the potential loss in fair value of all of the Group’s forward contracts outstanding that would have resulted from a hypothetical, instantaneous and unfavorable 10% change in currency exchange rates would have been approximately €1.3 million.
For the accounting of transactions entered into in an effort to reduce the Group’s exchange rate risks, see Notes 4(s) and 32 to the Consolidated Financial Statements. For further details about the Group’s exposure to currency risk, see Note 33(C)(iv) to the Consolidated Financial Statements.
Interest Rate Risk — To a significantly lesser extent, the Group is also exposed to interest rate risk. As of December 31, 2025, the Group had €52.5 million (equivalent to 19.3% of the Group’s total assets as of the same date) in debt outstanding (Bank overdrafts and short-term borrowings plus long-term debt, including the current portion of such debt), 58.4% of which is subject to floating interest rates. See Notes 20, 28 and 33(C)(iv) to the Consolidated Financial Statements.
The potential increase in interest expenses on the Group’s total debt (bank overdrafts and long-term debt, including their current portion) that would have resulted from a hypothetical, instantaneous and unfavorable 1.0% increase in the interest rates of the Group’s total debt outstanding as of December 31, 2025 would have been approximately €0.6 million.
In the normal course of business, the Group also faces risks that are either non-financial or non-quantifiable. Such risks principally include country risk, credit risk and legal risk.
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Fees paid by ADS holders — BNY, as Depositary of our ADSs, collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees to make distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.
Persons depositing or withdrawing shares must pay:
For:
U.S.$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
• Depositing or substituting the underlying shares
• Selling or exercising rights
• Cancellation of ADSs for the purpose of withdrawal, including if the Deposit Agreement terminates
A fee for the distribution of proceeds of sales of securities or rights in an amount equal to the lesser of: (i) the fee for the issuance of ADSs referred to above which would have been charged as a result of the deposit by owners of securities (for purposes hereof treating all such securities as if they were shares) or shares received in exercise of rights distributed to them, respectively, but which securities or rights are instead sold by the Depositary and the net proceeds distributed and (ii) the amount of such proceeds
• Distribution of securities distributed to holders of deposited securities which are distributed by the Depositary to ADS registered holders
Registration or transfer fees
• Transfer and registration of shares on our share register to or from the name of the Depositary or its agent when holders deposit or withdraw shares
Expenses of the Depositary
• Cable, telex and facsimile transmissions (when expressly provided in the Deposit Agreement)
• Converting foreign currency to U.S. dollars
Taxes and other governmental charges the Depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes
• As necessary
Any charges incurred by the Depositary or its agents for servicing the deposited securities
Fees payable by the Depositary to the Company
i) Fees incurred in past annual period — From January 1, 2025 to December 31, 2025, the Depositary waived a total of U.S.$250.00 in administrative fees for routine corporate actions including services relating to Natuzzi’s annual general meeting of shareholders.
ii) Fees to be paid in the future — The Company does not have any agreements in place with the Depositary for the payment or reimbursement of fees or other direct or indirect payments by the Depositary to the Company in connection with its ADS program.
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None.
(a) Disclosure Controls and Procedures — The Company carried out an evaluation under the supervision and with the participation of Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2025. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of controls and procedures and the Company’s management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives, and, if any, detecting instances of fraud.
Further, it should be noted that the Company has investments in certain non-consolidated entities. As the Company does not control or manage these entities, its disclosure controls and procedures with respect to such entities are necessarily more limited than those it maintains with respect to its consolidated subsidiaries.
Based on the Company’s evaluation of its disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were ineffective, due to the Company’s late filing of its Annual Report on Form 20-F for the year ended December 31, 2025 to provide reasonable assurance that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s applicable rules and forms, and that it is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Management’s Annual Report on Internal Control Over Financial Reporting — The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Even when determined to be effective, they can provide only reasonable assurance regarding the reliability of financial reporting and the preparation and presentation of financial statements. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. To assess the effectiveness of the Company’s internal control over financial reporting, Company’s management, including its Chief Executive Officer and Chief Financial Officer, used the criteria described in “2013 Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s management assessed the effectiveness of its internal control over financial reporting as of December 31, 2025. Based on such assessment, the Company’s management has concluded that as of December 31, 2025, the Company’s internal control over financial reporting was effective. The Company’s management has also concluded that there were no material weaknesses in the Company’s internal control over financial reporting.
(c) Attestation Report of the Registered Public Accounting Firm — Not applicable.
(d) Changes in Internal Control over Financial Reporting — There were no changes in our internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) that occurred during our most recently completed fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The Company has determined that, because of the existence and nature of its board of statutory auditors, it qualifies for an exemption provided by Rule 10A-3(c)(3) of the Exchange Act from many of the Rule 10A-3 audit committee requirements. The board of statutory auditors has determined that each of its members is an “audit committee financial expert” as defined in Item 16A of Form 20-F. For the names of the members of the board of statutory auditors, see “Item 6. Directors, Senior Management and Employees—Statutory Auditors” and “Item 16G. Corporate Governance—Audit Committee and Internal Audit Function.”
Each of the audit committee financial experts is independent under the NYSE Independence Standards that would apply to audit committee members in the absence of our reliance on the exemption in Rule 10A-3(c)(3).
The Company has adopted a code of ethics, as defined in Item 16B of Form 20-F under the Exchange Act. This code of ethics applies, among others, to the Company’s CEO and CFO. The Company’s code of ethics is downloadable from its website at https://www.natuzzigroup.com/en-EN/ir/code-of-ethics.
Our independent registered public accounting firm is PricewaterhouseCoopers S.p.A. (“PWC”), headquartered in Milan, Italy. PCAOB ID: 00030.
PWC served as the Group’s principal independent registered public accounting firm for fiscal years 2025 and 2024, for which it audited the consolidated financial statements for the years ended December 31, 2025 and December 31, 2024 included in this Annual Report.
KPMG S.p.A. (“KPMG”) served as the Group’s principal independent registered public accounting firm for fiscal year 2023, for which it audited the consolidated financial statements for the year ended December 31, 2023 included in this Annual Report.
The following table sets forth the aggregate fees billed and/or billable to the Company by PWC in Italy and abroad during the fiscal years ended December 31, 2025 and December 31, 2024, for audit fees, audit–related fees, tax fees and all other fees for audit.
(Expressed in thousands of euros)
Audit fees
709
690
Audit-related fees
Tax fees
All other fees
Total fees
715
Audit fees in the above table are the aggregate fees billed and billable in connection with the audit of the Company’s consolidated annual financial statements.
Audit related fees relate to regulatory compliance services and agreed upon procedures.
The Company’s board of statutory auditors expressly pre-approves on a case-by-case basis any engagement of our independent auditors for audit and non-audit services provided to our subsidiaries or to us. All services rendered by our independent auditors for audit and non-audit services were pre-approved by our board of statutory auditors in accordance with this policy.
The Company is relying on the exemption from listing standards for audit committees provided by Exchange Act Rule 10A-3(c)(3). The basis for this reliance is that the Company’s board of statutory auditors meets the following requirements set forth in Exchange Act Rule 10A-3(c)(3):
The Company’s reliance on Rule 10A-3(c)(3) does not, in its opinion, materially adversely affect the ability of its board of statutory auditors to act independently and to satisfy the other requirements of Rule 10A-3.
On November 6, 2014, INVEST 2003 S.r.l. completed the purchase of 250,000 ADSs, each representing one Ordinary Share at the time of purchase, at a price of U.S.$2.00 per ADS. The purchase was privately negotiated with a single individual and was effected through an escrow arrangement with BNY Mellon. On July 30, 2014, INVEST 2003 S.r.l. completed the purchase of 500,000 ADSs, each representing one Ordinary Share at the time of purchase, at a price of U.S.$2.75 per ADS. The purchase was privately negotiated with a single individual and was effected through an escrow arrangement with BNY Mellon. For more information, refer to Schedule 13D (Amendment No. 2), filed with the SEC on September 14, 2014, which amends and supplements the Schedule 13D filed with the SEC on April 24, 2008 (as amended by Amendment No. 1 filed on April 8, 2013).
From January 1, 2025 to December 31, 2025 no purchases were made by or on behalf of the Company or any other affiliated purchaser of the Company’s Ordinary Shares or ADSs.
Under NYSE rules, the Company is permitted, as a listed foreign private issuer, to adhere to the corporate governance rules of its home country in lieu of certain NYSE corporate governance rules.
Corporate governance rules for Italian stock corporations (società per azioni) like the Company, whose shares are not listed on a regulated market in the EU, are set forth in the Civil Code. As described in more detail below, the Italian corporate governance rules set forth in the Civil Code differ in a number of ways from those applicable to U.S. domestic companies under NYSE listing standards, as set forth in the NYSE Listed Company Manual.
As a general rule, Company’s main corporate bodies are governed by the Civil Code and are assigned specific powers and duties that are legally binding and cannot be derogated from. The Company follows the traditional Italian corporate governance system, with a board of directors (consiglio di amministrazione) and a separate board of statutory auditors (collegio sindacale) with supervisory functions. The two boards are separate and no individual may be a member of both boards. Both the members of the board of directors and the members of the board of statutory auditors owe duties of loyalty and care to the Company. As required by Italian law, an external auditing firm (società di revisione) is in charge of auditing the Company’s financial statements. The members of the Company’s board of directors and board of statutory auditors, as well as the external auditor, are directly and separately appointed by shareholder resolution at the shareholders’ meetings. This system differs from the unitary system envisaged for U.S. domestic companies by the NYSE listing standards, which contemplate the board of directors serving as the sole governing body.
Below is a summary of the significant differences between Italian corporate governance rules and practices, as the Company has implemented them, and those applicable to U.S. issuers under NYSE listing standards, as set forth in the NYSE Listed Company Manual.
Independent Directors
NYSE Domestic Company Standards — The NYSE listing standards applicable to U.S. companies provide that “independent” directors must comprise a majority of the board. In order for a director to be considered “independent,” the board of directors must affirmatively determine that the director has no “material” direct or indirect relationship with the company. These relationships “can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationship (among others).”
More specifically, a director is not independent if, inter alia, such director or his/her immediate family members has certain specified relationships with the company, its parent, its consolidated subsidiaries, their internal or external auditors, or companies that have significant business relationships with the company, its parent or its consolidated subsidiaries. Ownership of a significant amount of stock, by itself, is not a per se bar to independence.
Our Practice — The presence of a prescribed number of independent directors on the Company’s board is neither mandated by any Italian law applicable to the Company nor required by the Company’s By-laws.
However, Italian law sets forth certain independence requirements applicable to the Company’s statutory auditors. Statutory auditors’ independence is assessed on the basis of the following rules: a person who (i) is a director, or the spouse or a close relative of a director, of the Company or any of its affiliates, or (ii) has an employment or a regular consulting or similar relationship with the Company or any of its affiliates, or (iii) has an economic relationship with the Company or any of its affiliates which might compromise his/her independence, cannot be appointed to the Company’s board of statutory auditors. The law sets forth certain principles aimed at ensuring that any member of the board of statutory auditors who is a chartered public accountant (iscritto nel registro dei revisori contabili) be substantively independent from the company subject to audit and not be in any way involved in the company’s decision-making process. The Civil Code mandates that at least one standing and one alternative member of the board of statutory auditors be a chartered public accountant. Each of the current members of the board of statutory auditors is a chartered public accountant.
Executive Sessions
NYSE Domestic Company Standards — Non-executive directors of U.S. companies listed on the NYSE must meet regularly in executive sessions, and independent directors should meet alone in an executive session at least once a year.
Our Practice — Under the laws of Italy, neither non-executive directors nor independent directors are required to meet in executive sessions. The members of the Company’s board of statutory auditors are required to meet at least every 90 days.
Audit Committee and Internal Audit Function
NYSE Domestic Company Standards — U.S. companies listed on the NYSE are required to have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act and certain additional requirements set by the NYSE. In particular, all members of this committee must be independent and the committee must adopt a written charter. The committee’s prescribed responsibilities include (i) the appointment, compensation, retention and oversight of the external auditors; (ii) establishing procedures for handling “whistle blower” complaints regarding accounting, internal accounting controls, or auditing matters; (iii) engaging independent counsel and other advisers, as it determines necessary to carry out its duties and (iv) determine appropriate funding for payments to the external auditor, advisors employed by the audit committee and other necessary administrative expenses of the audit committee. A company must also have an internal audit function, which may be outsourced, except to the independent auditor.
Our Practice — Rule 10A-3(c)(3) of the Exchange Act provides that foreign private issuers with a board of statutory auditors established in accordance with local law or listing requirements and meeting specified requirements with regard to independence and responsibilities (including the performance of most of the specific tasks assigned to audit committees by Rule 10A-3, to the extent permitted by local law) (the “Statutory Auditor Requirements”) are exempt from the audit committee requirements established by the rule. The Company is relying on this exemption on the basis of its separate board of statutory auditors, which is permitted by the Civil Code and which satisfies the Statutory Auditor Requirements. Nevertheless, our board of statutory auditors, consisting of independent and highly professional experts, complies with the requirements indicated at points (i), (iii) and (iv) of the preceding paragraph. The Company has also an internal audit function, which has not been outsourced, and a Control and Risk Committee. This committee, comprised of three non-executive directors, is responsible for supporting the Board of Directors’ evaluations and decisions relating to the internal control and risk management system, as well as those relating to the approval of periodic financial reports. Further, the Board of Directors of the Company appointed a Related Parties Committee, comprised of three non-executive directors, which is consulted before carrying out any significant transaction with related parties, as defined in the Group’s Related Parties Policy.
Nominating and Compensation Committees
NYSE Domestic Company Standards — Under NYSE standards, a domestic company must have a nominating/corporate governance committee (or equivalent) comprised solely of independent directors, which is responsible for nominating directors, and a written charter addressing certain corporate governance matters. Additionally, U.S. companies listed on the NYSE are required to have a compensation committee (or equivalent) comprised solely of independent directors and have a written charter addressing certain corporate governance matters. The compensation committee must approve the compensation of the CEO and make recommendations to the board of directors with regard to the compensation of other officers, incentive compensation plans and equity-based plans. Disclosure of individual management compensation information for these companies is mandated by the Exchange Act’s proxy rules, from which foreign private issuers are generally exempt.
Our Practice — We do not have a nominating and compensation committee as it is not required under Italian laws. Under Italian law, directors may be designated by any of the Company’s shareholders but shall be appointed by the shareholders in a general shareholders’ meeting. If, during the term of the appointment, one or more directors of the Company resign, the other directors shall replace them by a resolution approved by the board of statutory auditors, provided that the majority of the board is still comprised of directors appointed by the Company’s shareholders. The coopted directors remain in office until the next shareholders’ meeting. If at any time more than half of the members of the board of directors appointed by the shareholders’ meeting resigns, such resignation is ineffective until the majority of the new board of directors has been appointed. In such a case, the remaining members of the board of directors (or the board of statutory auditors if all the members of the board of directors have resigned or ceased to be directors) must promptly call an ordinary shareholders’ meeting to appoint the new directors. INVEST 2003 S.r.l., a company controlled by Mr. Pasquale Natuzzi, by virtue of owning a majority of the outstanding shares of the Company, controls the Company and the appointment of its board of directors.
As a matter of Italian law applicable to Italian stock corporations whose shares are not listed on a regulated market in the European Union and under our By-laws, the compensation of executive directors, including the CEO, is determined by the board of directors, after consultation with the board of statutory auditors, within a maximum amount established by the Company’s shareholders, while the Company’s shareholders determine the base compensation for all members of the board of directors, including non-executive directors. Compensation of the Company’s executive officers is determined by the CEO. The Company discloses aggregate compensation of all of its directors and officers as well as individual base compensation of each director in Item 6 of its annual reports on Form 20-F.
Corporate Governance and Code of Ethics
NYSE Domestic Company Standards — Under NYSE standards, a company must adopt governance guidelines and a code of business conduct and ethics for directors, officers and employees. A company must also publish these items on its website and provide printed copies on request. Section 406 of the Sarbanes-Oxley Act requires a company to disclose whether it has adopted a code of ethics for senior financial officers, and if not, the reasons why it has not done so. The NYSE listing standards applicable to U.S. companies provide that codes of conduct and ethics should address, at a minimum, conflicts of interest; corporate opportunities; confidentiality; fair dealing; protection and use of company assets; legal compliance; and reporting of illegal and unethical behavior. Corporate governance guidelines must address, at a minimum, directors’ qualifications, responsibilities and compensation; access to management and independent advisers; management succession; director orientation and continuing education; and annual performance evaluation of the board.
Our Practice — In February 2025, the Company’s board of directors approved the adoption of a compliance program to prevent certain criminal offenses, according to the Italian Decree 231/2001. The task of supervising the application of the compliance program requested by the above-mentioned Italian Decree has been entrusted to an autonomous supervisory body (“Organismo di Vigilanza”) that consists of three qualified members. In June 2022, the board of directors approved a new code of ethics that applies to all employees and officers of the Company, including the board of directors and the board of statutory auditors, the CEO, the CFO and principal accounting officer. Additionally, the Company has in place an insider trading policy, which applies to all employees, officers, directors of the Company. The Company believes that its code of ethics and the conduct and procedures adopted by the Company address the relevant issues contemplated by the NYSE standards applicable to U.S. companies noted above. The full text of our code of ethics and insider trading policy and information related to our organizational model pursuant to Italian decree 231/2001 may be found on our website at www.natuzzigroup.com. A copy of the insider trading policy is filed as Exhibit 11.1 to this Annual Report.
Certifications as to Violations of NYSE Standards
NYSE Domestic Company Standards — Under NYSE listing standards, the CEO of a U.S. company listed on the NYSE must certify annually to the NYSE that he or she is not aware of any violation by the company of the NYSE corporate governance standards. The company must disclose this certification, as well as the fact that the CEO/CFO certification required under Section 302 of the Sarbanes-Oxley Act of 2002 has been made in the company’s annual report to shareholders (or, if no annual report to shareholders
87
is prepared, its annual report). Each listed company on the NYSE, both domestic and foreign issuers, must submit an annual written affirmation to the NYSE regarding compliance with applicable NYSE corporate governance standards. In addition, each listed company on the NYSE, both domestic and foreign issuers, must submit interim affirmations to the NYSE upon the occurrence of specified events. A domestic issuer must file such an interim affirmation whenever the independent status of a director changes, a director joins or leaves the board, a change occurs to the composition of the audit, nominating/corporate governance, or compensation committee, or there is a change in the company’s classification as a “controlled company.”
The CEO of both domestic and foreign issuers listed on the NYSE must promptly notify the NYSE in writing if any executive officer becomes aware of any non-compliance with the NYSE corporate governance standards.
Our Practice — Under the NYSE rules, the Company’s CEO is not required to certify annually to the NYSE whether he is aware of any violation by the Company of the NYSE corporate governance standards. However, the Company is required to submit an annual affirmation of compliance with applicable NYSE corporate governance standards to the NYSE within 30 days of the filing of its annual report on Form 20-F with the SEC. The Company is also required to submit to the NYSE an interim written affirmation any time it is no longer eligible to rely on, or chooses to no longer rely on, a previously applicable exemption provided by Rule 10A-3, or if a member of its audit committee ceases to be deemed independent or an audit committee member had been added. Under NYSE rules, the Company’s CEO must notify the NYSE in writing if any executive officer becomes aware of any material non-compliance by the Company with NYSE corporate governance standards.
Shareholder Approval of Adoption and Modification of Equity Compensation Plans
NYSE Domestic Company Standards — Shareholders of a U.S. company listed on the NYSE must approve the adoption of and any material revision to the company’s equity compensation plans, with certain exceptions.
Our Practice — Although the shareholders’ meeting of the Company must authorize (i) the issuance of shares in connection with capital increases, and (ii) the buy-back of its own shares, the adoption of equity compensation plans does not per se require prior approval of the shareholders.
We have adopted an insider trading policy and related procedures governing the purchase, sale, and other dispositions of our securities by directors, officers, and employees that is reasonably designed to promote compliance with insider trading laws, rules and regulations, and any applicable listing standards. A copy of the insider trading policy is filed as Exhibit 11.1 to this Annual Report.
Risk Management and Strategy
Our cybersecurity strategy prioritizes the detection, analysis, and response to both anticipated and unexpected threats, as well as the effective management of security risks and the promotion of resilience to incidents. Our cyber risk management processes include technical security controls, monitoring systems, employee training, third-party-provided tools and services, and management oversight to assess, identify, and manage material risks arising from cyber threats. These processes are part of our general enterprise risk management system, and their integration into the Company’s operational procedures, internal controls, and information systems is continuously improving.
To address cybersecurity risks, we have developed a scenario-based strategy that identifies various potential threats and cyber incidents to which we may be exposed and defines the necessary steps to prevent and/or manage them. This approach facilitates and expedites the identification, assessment and management of cyber threats.
Furthermore, to enhance the effectiveness of our risk management strategy, we have established cybersecurity and information security awareness training programs covering company policies and procedures related to cybersecurity and data protection. These programs include guidelines for reporting suspicious activities such as phishing attempts, viruses, spam, insider threats, suspicious
human behavior, or security issues. Certain employees receive specialized training based on their specific roles to improve their understanding of potential risks.
Courses are held on a biennial basis. In 2025, specialized training was provided to IT personnel responsible for cybersecurity activities, and additional training sessions were delivered to employees in sensitive positions. Further training sessions are planned to be conducted by 2027.
We continuously monitor and address cybersecurity risks through targeted phishing campaigns and defense/attack simulation software to test various categories of cyber threats.
Our security posture is based on a defense-in-depth strategy that relies on multiple layers of technology, including client- and server-side antivirus/antispam software. These technologies automatically initiate remediation actions when potential threats are detected. We use data collection tools to monitor access to corporate IT resources. These tools apply event correlation techniques and advanced protection features to promptly detect and manage threats, with notifications sent to the IT Department for immediate intervention. A simplified, but not exhaustive, example is the detection of simultaneous access from different geographic areas using the same account. Our tools can correlate events, analyze them, block the account’s operations, and send an alert to the IT Department and the Cybersecurity team.
We also have contractual agreements with third-party providers to strengthen our security measures, such as engaging a 24/7 Security Operations Center (SOC) for monitoring network events, including threat intelligence analysis, to identify intrusion attempts or attacks on our corporate networks in real-time. We also collaborate with specialized companies to conduct vulnerability assessments and penetration tests. In 2025, we conducted an annual risk assessment, reviewing our risk profile and making informed decisions regarding technology and resource investments for cyber risk management based on the results of that assessment.
We adopt a risk-based approach to mitigate cyber threats associated with third parties, IT vendors and business partners who share IT systems or infrastructure components with our Group. To ensure that IT third parties have adequate cyber risk management processes in place, we require a SOC report from high-risk vendors.
Finally, we have implemented a disaster recovery process to ensure business continuity in the event that our key IT systems are compromised or rendered unavailable due to a cyber incident. In 2025 and up to the date of this Annual Report, no cyber threat has had or is reasonably likely to have a material impact on our business strategy, operating results, or financial condition.
Governance
Our Board of Directors acknowledges the paramount importance of cybersecurity in protecting sensitive data and is responsible for overseeing risk management, including the review and approval of the Company’s approach to risk management and its related processes. The Board of Directors has delegated the oversight of the cybersecurity framework and risk management to the Control and Risk Committee, which reports to the Board of Directors at least once a year or, if necessary, in the event of significant cybersecurity incidents.
We have also designated a team of executives and managers responsible for governance, strategy, and risk management in the area of cybersecurity. The management of cybersecurity policies is entrusted to individuals with formal education and degrees in information technology or cybersecurity, or relevant experience in cybersecurity fields, including relevant industry experience.
In particular, the Chief Information Officer (CIO), Pierangelo Colacicco, and the Cybersecurity Manager, Michele De Palma, who is responsible for the Telecommunications & Cybersecurity function within the IT Department, play key roles in cybersecurity management. The CIO has thirty years of experience in IT at the Natuzzi Group and has held his current position since 2007, while the Cybersecurity Manager has held his role since 2022 and has over 16 years of experience as an IT Infrastructure & Networking Manager in various organizations. Both are involved in ensuring the security of the Company’s IT infrastructure on a daily basis.
Specifically:
The Control and Risk Committee, the CIO, and the Cybersecurity Manager meet at least once a year to discuss governance and cyber risk management. Moreover, in the event of significant incidents, they meet to assess the impact and, if necessary, initiate the communication process with investors and stakeholders.
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The Control and Risk Committee, the CIO, and the Cybersecurity Manager also meet annually to review the results of risk assessments and adjust the Company’s strategy accordingly.
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Our financial statements have been prepared in accordance with Item 18 hereof.
Our audited consolidated financial statements are included in this Annual Report beginning at page F-1.
Index to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm
F-1
Consolidated statements of financial position as at December 31, 2025 and 2024
F-5
Consolidated statements of profit or loss for the years ended December 31, 2025, 2024 and 2023
F-6
Consolidated statements of comprehensive income for the years ended December 31, 2025, 2024 and 2023
F-7
Consolidated statements of changes in equity for the years ended December 31, 2025, 2024 and 2023
F-8
Consolidated statements of cash flows for the years ended December 31, 2025, 2024 and 2023
F-9
Notes to consolidated financial statements
F-10
92
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Natuzzi SpA
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Natuzzi SpA and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for each of the two years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025 in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company incurred recurring losses from operations, has a net negative working capital and, in 2025, cash outflows from operating activities, and needs additional fundings to support its operations and has stated that these events or conditions indicate that a material uncertainty exists that may cast significant doubt (or raise substantial doubt as contemplated by PCAOB standards) on the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impairment Assessment of Property, Plant and Equipment of the Italian Upholstered Furniture Plant and Right-of-Use Assets of Certain Directly Operated Retail Stores
As described in Notes 4, 8, and 9 to the consolidated financial statements, the Company’s consolidated
property, plant and equipment (PP&E) balance was €64.1 million and the right-of-use assets (ROU) balance was €33.6 million as of December 31, 2025. Related to PP&E, there was an impairment loss of €2.6 million and no reversal for the year ended December 31, 2025. Related to ROU, there was an impairment loss of €3.6 million, an impairment reversal of €0.7 million, and a net impairment expense of €2.9 million for the year ended December 31, 2025. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (CGUs). The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. The key assumptions used in estimating the value in use include the annual sales growth rates used to project expected revenues for the period 2026-2028, the weighted average cost of capital rates and the long-term growth rates, all of which were determined at the CGU level. The fair value less costs of disposal was supported by appraisals performed by independent third-party valuation specialists. The fair value of land and buildings has been derived by reference to observable market evidence for comparable properties, adjusted to reflect the specific attributes and characteristics of the subject asset. The fair value of plant and machinery has been derived by using the depreciated replacement cost method.
The principal considerations for our determination that performing procedures relating to the impairment assessment of PP&E of the Italian upholstered furniture plant and ROU assets of certain directly operated retail stores is a critical audit matter are (i) the significant judgment by management when estimating the recoverable amounts; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the weighted average cost of capital rates, annual sales growth rates, long-term growth rates, appraisals performed and observable market evidence for comparable properties; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others: (i) testing management’s process for estimating the recoverable amount of PP&E of the Italian upholstered furniture plant and ROU assets of certain directly operated retail stores; (ii), evaluating the appropriateness of the methodology used to determine the recoverable amounts; (iii) testing the completeness, accuracy, and relevance of underlying data used in the models; and (iv) evaluating the reasonableness of the significant assumptions used by management. As it relates to value-in-use, this included evaluating the reasonableness in estimating future cash flows related to the weighted average cost of capital rates, annual sales growth rates, and long-term growth rates. Evaluating the reasonableness of management’s assumptions related to annual sales growth rates and long-term growth rate involved evaluating whether the assumptions used were reasonable considering (i) consistency with external market and industry data, (ii) the current and past performance of the Company and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. As it relates to fair value less costs of disposal, this included evaluating the reasonableness of appraisals performed and observable market evidence for comparable properties. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the value in use models, (ii) the reasonableness of the weighted average cost of capital rates assumption, (iii) evaluating the appropriateness of the valuation methodologies applied for the determination of the fair value less costs of disposal; and (iv) evaluating management’s process for allocating the impairment loss to individual assets of the Italian upholstered furniture plant.
F-2
/s/ PricewaterhouseCoopers SpA
Milan, Italy
May 15, 2026
We have served as the Company's auditor since 2024.
F-3
To the Stockholders and Board of DirectorsNatuzzi S.p.A.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of profit or loss, comprehensive income, changes in equity, and cash flows of Natuzzi S.p.A. and subsidiaries (the Company) for the year ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2023, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
We served as the Company’s auditor from 2016 to 2024.
/s/ KPMG S.p.A.
Bari, ItalyApril 30, 2024
F-4
Natuzzi S.p.A. and subsidiaries
(Expressed in thousands of euros except as otherwise indicated)
Note
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets and goodwill
2,947
6,628
Equity-method investees
37,458
40,875
Other non-current receivables
4,981
6,124
Other non-current assets
1,766
1,749
Deferred tax assets
1,981
1,653
Total non-current assets
146,888
175,596
Current assets
Inventories
49,534
62,815
Trade receivables
32,508
32,819
Other current receivables
7,562
10,618
Other current financial receivables
4,121
1,348
Other current assets
4,991
5,073
Current income tax assets
1,758
1,642
Gains on derivative financial instruments
Asset held for sale
1,105
Total current assets
121,975
143,428
TOTAL ASSETS
268,863
319,024
EQUITY
Share capital
55,073
Reserves
19,566
20,659
Retained earnings
(51,659
(21,726
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
22,980
54,006
Non-controlling interests
2,902
4,202
TOTAL EQUITY
25,882
58,208
LIABILITIES
Non-current liabilities
23,095
14,188
Long-term lease liabilities
39,963
47,400
Other non-current debts
465
Employees’ leaving entitlement
11,482
11,646
Non-current contract liabilities
6,860
6,786
Provisions
5,957
7,791
Deferred income for government grants
9,983
11,036
Other non-current liabilities
1,386
2,160
Deferred tax liabilities
998
Total non-current liabilities
98,731
102,470
Current liabilities
23,327
7,251
4,532
9,480
10,350
Trade payables
57,447
66,477
Other payables
25,084
26,706
Current contract liabilities
19,818
23,587
1,680
1,866
Other liabilities
403
Liabilities for current income tax
871
830
Losses on derivative financial instruments
268
Total current liabilities
144,250
158,346
TOTAL LIABILITIES
242,981
260,816
TOTAL EQUITY AND LIABILITIES
The accompanying notes are an integral part of the Company Financial Statements.
308,217
318,797
328,618
Cost of sales
(204,807
(203,095
(215,763
103,410
115,702
112,855
Other income
9,602
4,801
7,116
Selling expenses
(90,511
(90,229
(91,373
Administrative expenses
(40,773
(35,994
(37,607
Impairment on trade receivables
(46
(289
(33
Other expenses
(497
(260
(457
Operating profit/(loss)
(18,815
(6,269
(9,499
Finance income
554
829
941
Finance costs
(8,691
(10,201
(9,267
Net exchange rate gains/(losses)
(2,233
(144
Net finance income/(costs)
(10,370
(8,818
(8,470
Share of profit/(loss) of equity-method investees
(371
389
2,897
(1,036
(684
(1,090
Profit/(loss) attributable to:
Owners of the Company
(29,933
(15,150
(16,069
(659
(232
(93
Profit/(loss) per share
Basic earnings/(loss) per ordinary share
(0.54
(0.28
(0.29
Diluted earnings/(loss) per ordinary share
Other comprehensive income
Items that will not be reclassified to profit or loss
Actuarial gains/(losses) on employees’ leaving entitlement
229
(185
Tax impact
Items that are or may be reclassified subsequently to profit or loss
Exchange rate differences on translation of foreign operations
(3,100
(378
(3,260
Other comprehensive income/(loss) for the year, net of tax
(2,871
(310
(3,445
Total comprehensive income/(loss) for the year
(33,463
(15,692
(19,607
Total comprehensive income/(loss) attributable to:
(33,396
(15,625
(19,387
(67
(220
ShareCapitalamount
Translationreserve
IAS 19reserve
Otherreserves
Retainedearnings
Equityattributableto ownersof theCompany
Equityattributableto Non-controllinginterests
Totalequity
Balance as at December 31, 2022
5,468
1,312
16,512
9,493
87,858
4,698
92,556
Share capital increase
474
Dividend distribution
(135
Profit for the year
Other comprehensive income/(loss) for the year
(3,133
(3,318
(127
Balance as at December 31, 2023
2,335
1,127
16,986
(6,576
68,945
4,343
73,288
686
(74
(543
(475
165
Balance as at December 31, 2024
1,792
1,195
17,672
1,512
(375
(2,834
(2,605
(266
Balance as at December 31, 2025
(1,042
19,184
Cash flows from operating activities:
Profit/(loss) for the period
Depreciation
8 and 9
Amortisation
Impairment of non-financial assets
8,229
441
9 and 10
(Gain)/loss on sale of property, plant and equipment
(4,246
110
117
Deferred income for capital grants
Rent concessions
Interest expenses
6,148
7,013
7,111
Unrealised foreign exchange (gains)/losses
355
748
Share of (profit)/loss of equity-method investees
Tax expense
Total adjustment
30,824
27,947
26,893
Changes in:
13,281
(728
8,033
Trade and other receivables
3,897
2,357
7,332
Other assets
146
2,457
Trade and other payables
(7,623
5,108
(14,205
Contract liabilities
(3,695
2,840
2,983
(2,384
(2,581
(1,412
One-time termination benefit payments
(658
(9,597
(3,050
(364
(1,116
(1,402
Total changes
2,519
(3,571
736
Cash provided by (used in) operating activities
2,751
8,994
11,467
Interest paid
(5,862
(6,980
(5,641
Income taxes paid
(1,364
(292
(2,616
Net cash provided by (used in) operating activities
(4,475
1,722
3,210
Cash flows from investing activities:
Property, plant and equipment:
Additions
(6,222
(5,209
(10,299
Disposals
10,056
4,084
(1,441
(1,927
(1,519
Government grants received for PPE
203
918
Dividends from equity-accounted investees
2,221
3,024
(2,025
(1,348
Purchase of business, net of cash acquired
Disposal of a business, net of cash disposed of
Net cash provided by (used in) investing activities
2,792
(4,323
(7,876
Cash flows from financing activities:
Long-term borrowings:
Proceeds
17,846
3,314
10,912
Repayments
(4,717
(4,839
(8,715
Short-term borrowings
(1,976
(798
(6,703
Payment of lease liabilities
(9,482
(10,288
(11,057
9 and 21
Proceeds from increase in share capital
Dividends distribution to non-controlling interests
(419
(149
Capital contribution by non-controlling interests
150
Net cash provided by (used in) financing activities
1,402
(12,760
(15,698
Increase (decrease) in cash and cash equivalents
(281
(15,361
(20,364
Cash and cash equivalents as at January 1 (*)
16,994
31,573
52,721
Effect of movements in exchange rates on cash held
(567
782
(784
Cash and cash equivalents as at December 31 (*)
16,146
(*) As at December 31, 2025, 2024 and 2023, cash and cash equivalents include bank overdrafts of 4,174, 3,328 and 2,037, respectively, that are repayable on demand and form an integral part of the Group’s cash management.
Natuzzi S.p.A. and Subsidiaries
1. Introduction
The consolidated financial statements of Natuzzi S.p.A. have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board, including interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS.
2. Description of the business and Group composition
Natuzzi S.p.A. (“Natuzzi”, the “Company” or the “Parent”) is domiciled in Italy. The Company’s registered office is at via Iazzitiello 47, 70029 Santeramo in Colle (Bari, Italy). These consolidated financial statements include the accounts of Natuzzi S.p.A. and of its subsidiaries (together with the Company, the “Group”). The Group’s primary activity is the design, manufacture and marketing of leather and fabric upholstered furniture (see note 6 on operating segment).
During 2025, 2024 and 2023 no significant non-recurring events or unusual transactions have occurred. All transactions performed by the Group during 2025, 2024 and 2023 are part of the Group’s ordinary business.
The consolidated financial statements of the Group as at December 31, 2025 have been approved and authorized by the Company’s Board of Directors (the Board) on May 14, 2026.
The subsidiaries included in the consolidation as at December 31, 2025, 2024 and 2023, together with the related percentages of ownership and other information, are as follows:
(1) Manufacture and distribution
(2) Intragroup leather dyeing and finishing
(3) Services and distribution
(4) Investment holding
(5) Dormant
During 2025, the following companies were added to the scope of consolidation:
No business combinations occurred in 2025, 2024 and 2023.
The following table summarises the information related to the only material non-controlling interests (NCI) of the Group’s subsidiary Natuzzi Florida LLC, before any intra-group eliminations.
Summarised statement of financial position of Natuzzi Florida LLC and Non-controlling interests share in equity as at December 31, 2025 and 2024.
8,212
11,496
10,331
12,833
(9,652
(12,738
(6,501
(7,822
Net assets
2,390
3,769
Net assets attributable to NCI – 49%
1,171
1,847
Summarised statement of profit or loss of Natuzzi Florida LLC and Non-controlling interests share of loss for the years ended December 31, 2025, 2024 and 2023.
24,299
20,487
18,643
Expenses
(24,483
(20,525
(19,540
(184
(38
(897
Other comprehensive income/(loss)
(341
240
(219
(525
Profit/(loss) allocated to NCI – 49%
(90
(440
Other comprehensive income/(loss) allocated to NCI
(167
118
(107
Cash flow provided by operating activities
3,279
2,122
2,463
Cash flow used in investing activities
(13
(87
(1,122
Cash flow used in financing activities (dividends to NCI for years ended December 31, 2025, 2024 and 2023, respectively 419, 149 and 698)
(2,160
(2,324
(2,401
3. General principles for the preparation of the consolidated financial statements
(a) Compliance with IFRS
The consolidated financial statements of the Natuzzi Group have been prepared in accordance with IFRS Accounting Standards issued by the International Accounting Standards Board (IASB) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS.
Details of Group’s accounting policies are included in note 4.
F-11
(b) Historical cost convention
The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments measured at fair value (see note 33).
(c) Basis of preparation
The consolidated financial statements consist of the consolidated statement of financial position, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and the notes to the consolidated financial statements.
The consolidated statement of financial position has been prepared based on the nature of the transactions. Assets and liabilities have been distinguished in current and non-current in accordance with paragraphs 66–76B of IAS 1.
The consolidated statement of profit or loss has been prepared based on the function of the expenses, with a separate statement for the comprehensive income.
The consolidated statement of cash flows has been prepared using the indirect method.
The statement of changes in equity includes the components of comprehensive income, distinguishing those attributable to the parent company's shareholders from those pertaining to non-controlling interests. For each component of equity, this statement presents the changes during the year resulting from the net income for the period, other comprehensive income components, and other equity transactions affecting the parent company's shareholders and non-controlling interests.
The consolidated financial statements present all amounts rounded to the nearest thousands of Euro, unless otherwise stated. They also present comparative information in respect to the previous period.
(d) Functional and presentation currency
These consolidated financial statements are presented in Euro (the Group’s presentation currency), which is the Natuzzi S.p.A.’s functional currency.
(e) Use of estimates and judgement
In preparing these consolidated financial statements, management has made judgements and estimates that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. Estimates are based on historical experience and other factors, including expectations about future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.
(i) Judgements
Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes.
(ii) Assumptions and estimation uncertainties
Information about assumptions and estimates as at December 31, 2025 that have an high risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes.
F-12
In preparing the consolidated financial statements, management has considered the impact of climate change in the context of the disclosures. These considerations did not have a material impact on the financial reporting judgements and estimates, and at this time, the Group does not expect that climate change will have a significant impact on the Group’s going concern assessment, its ability to recover the carrying value of its long-lived assets or its liquidity.
(f) Going concern assumption
The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its obligations as they fall due within one year from the date of the approval of these consolidated financial statements. However there is material uncertainty that raises substantial doubt as contemplated by Public Company Accounting Oversight Board (“PCAOB”) to continue as a going concern within one year from the date of the approval of these financial statements. Circumstances and events, management’s plans and Directors’ conclusions on the Group’s going concern assumption as at December 31, 2025 are reported below.
(i) Circumstances and events
The Group incurred recurring losses from operations, has a net negative working capital and, in 2025, cash outflows from operating activities. In particular, the Group recognised a net loss after tax of 30,592 and an operating loss of 18,815 for the year ended December 31, 2025 and, as at that date, current liabilities exceeded current assets by 22,275 and total equity amounted to 25,882. Due to the loss for the year, the Group was unable to generate sufficient cash flow from operating activities during the year which adversely affected its net working capital and net financial position as at December 31, 2025. Based on these circumstances, Company has a material uncertainty to have sufficient liquidity to cover the operating losses for the next twelve months after the approval of these consolidated financial statements.
For the year ended December 31, 2025, the Group reported a revenue decline of 10,580 compared to the year ended December 31, 2024, resulting in total revenue of 308,217. The 3.32% decrease in revenue is primarily attributable to a combination of unfavorable macroeconomic conditions, including prolonged geopolitical instability, a significant discontinuity in international demand for upholstered furniture - further compounded by the recent tightening of the US tariff framework - elevated inflation leading to a reduction in consumers' disposable income, and a subdued real estate market. These factors have given rise to structural challenges, particularly excess workforce capacity and high labor costs at the Group's Italian operations.
Upon approval of the Company’s unaudited financial statements for the first nine months and third quarter ended September 30, 2025, the Company had recorded a loss for the quarter of 5,089, resulting in a reduction of the share capital by more than one-third, thereby triggering the obligations set forth in Article 2446 of the Civil Code, which requires the
F-13
board of directors of Italian joint-stock companies (società per azioni) to promptly convene a shareholders’ meeting to take appropriate actions. Accordingly, at the shareholders’ meeting held on February 16, 2026, the Company’s shareholders resolved to postpone any decision regarding the reduction of share capital pursuant to Article 2446 of the Civil Code to the forthcoming shareholders’ meeting to be called to approve the Company’s stand-alone financial statements for the year ended December 31, 2025. Such share capital reduction is essentially an accounting adjustment that aligns the nominal value of the share capital with its actual value as of December 31, 2025.
(ii) Management plans
Management’s plans to mitigate the adverse effects of such circumstances and events are set forth below.
The Company's directors, following the guidelines approved by Board of Directors in December 2025 and subsequent amendments, developed an economic and financial plan covering the period up to June 2027 (the “one-year budget”), and conferred delegated authority to the CEO to initiate an out-of-court composition proceeding (Composizione negoziata della crisi, the “Composition”) which is the context for a multi-year business plan aimed at restoring efficiency across the Group.
Most notably, the one-year budget envisages raising resources to cover the cash requirements to finance the operating cash outflow through a combination of (i) non-strategic asset disposals and (ii) a review of the Company’s capital structure and potential capital strengthening actions, including a capital increase with potential access by national government relaunch agency.
The Directors note that certain actions have already been undertaken by the Group in response to the challenging conditions described above, including the following:
F-14
By virtue of its nature as an out-of-court composition proceeding, Company’s management retains both ordinary and extraordinary powers of administration, since it is not divested of Company’s assets. Consequently, the company's shareholders continue to exercise their ordinary rights as equity holders of the Company.
Specifically, according to the named out-of-court composition proceeding, a debtor in financial difficulty (i.e., a condition of economic or financial imbalance that is likely to result in distress or insolvency) may access the Composition if recovery appears reasonably achievable. The process is initiated by the debtor through the filing of an application with the local chamber of commerce for the appointment of an independent expert. The expert’s role is to facilitate negotiations between the debtor, creditors and other stakeholders with a view to addressing the debtor’s financial distress and reaching a consensual solution within six (6) months (subject to a possible extension of an additional six (6) months) of the expert’s appointment.
During the Composition, the debtor remains in full control of its business and operations, and the corporate rules relating to minimum statutory capital of companies (including the requirement that a company with negative capital be recapitalized or liquidated) may be suspended. Such suspension operates at the option of the debtor, by means of a statement to be published on the Companies’ Register.
The Composition is primarily an out-of-court process; however, it allows the debtor to seek targeted court involvement, including to obtain protective measures (i.e., a moratorium) operating as a temporary stay on enforcement actions, where appropriate to facilitate a successful outcome of the negotiations. Such measures are subject to confirmation by the court and may apply for up to 240 days. The court may revoke them at any time if it determines that they are no longer necessary or proportionate, or if the Composition proves unsuccessful.
While the debtor may in principle take actions beyond the ordinary course of business (e.g., sale of a business unit, new financing), it may seek court authorization prior to doing so in order to obtain certain benefits or protections not otherwise available (e.g., protection against bankruptcy claw-back).
The process is intended to result in a consensual restructuring, which may take the form of bilateral or multilateral agreements or standstill arrangements. If the parties are unable to reach an agreement, the debtor may access more formal restructuring proceedings under Italian law, including court-based procedures that provide for binding effects on dissenting creditors.
(iii) Directors’ conclusions
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As of December 31, 2025, the Group’s cash and cash equivalents amount to 20,320, while its long-term borrowings amount to 23,095 (including a current portion of 7,251) and its bank overdrafts and short-term borrowings amount to 22,197. Furthermore, as of December 31, 2025, the unused portion of credit facilities available to the Group, for which no commitment fees are due, amounts to 4,445, comprising non-recourse factoring agreements for export-related trade receivables, borrowings secured by trade receivables, and bank overdrafts. For further details, please refer to note 28.
The Board of Directors notes that the inflows forecasted for covering the above operating net cash outflow, which include the request of the residual 5,000 granted in November 2025 by INVEST 2003 S.r.l. as a credit facility, are heavily dependent on disposal of non-strategic assets and/or on a capital increase with potential access by national government relaunch agency in the context of the mentioned out of court composition proceeding. Even if management intends to execute its mitigation plans, there can be no assurance that the necessary financing will be available, or that it will be available on terms acceptable to the Company or within the envisaged timeframe.
As a result of these events and conditions, the Board concluded a material uncertainty exists that might cast significant doubt (or raises substantial doubt as contemplated by Public Company Accounting Oversight Board (“PCAOB”)) to continue as a going concern for a reasonable period of time and, therefore, to continue realizing its assets and discharging its liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty if the Group were unable to continue as a going concern.
4. Material accounting policy information
This note presents the significant accounting policies adopted in the preparation of these consolidated financial statements. These policies have been applied consistently by the Group’s entities to all the years presented, unless otherwise indicated.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intragroup transactions, balances and unrealised gains on transactions between the Group’s entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the transferred asset.
Non-controlling interests (NCI) in the profit or loss and equity of subsidiaries are shown separately in the consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of comprehensive income and consolidated statement of changes in equity. Non-controlling interests are measured initially at their proportionate share of the fair value of the acquiree’s identifiable net assets at the date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
(ii) Associates
Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting (see (v) below), after initially being recognised at cost.
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(iii) Joint arrangements
Under IFRS 11 “Joint Arrangements”, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.
(iv) Joint ventures
Interests in joint ventures are accounted for using the equity method (see (v) below), after initially being recognised at cost in the consolidated statement of financial position.
(v) Equity method
Under the equity method of accounting, investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of variations in other comprehensive income of the investee. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.
When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. The accounting policies of equity-accounted investees have been aligned where necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in note 4 (i).
(vi) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Natuzzi S.p.A.
When the Group ceases to consolidate or equity account for an investment because of a loss of control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a joint venture or an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.
(b) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker identified as the Board of Directors.
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(c) Group Companies
(i) Foreign operations that have a functional currency different from the presentation currency
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency (Euro) are translated into the presentation currency as follows: (a) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; (b) revenue and expenses for each statement of profit or loss and statement of comprehensive income are translated at the average exchange rates of the year; and (c) all resulting exchange differences are recognised in other comprehensive income in the translation reserve.
When a foreign operation is sold, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
(ii) Foreign operations that have a functional currency that is the presentation currency
As at December 31, 2025 and 2024, there is one foreign subsidiary, Italsofa Romania, considered to be an integral part of Natuzzi S.p.A. due to the primary and secondary indicators reported in IAS 21, paragraphs 9 and 10. Therefore, the functional currency for this foreign subsidiary is the Parent’s functional currency, namely the Euro. As a result, all monetary assets and liabilities are remeasured, at the end of each reporting period, using the Euro and the resulting gain or loss is recognised in profit or loss. For all non-monetary assets and liabilities, share capital, reserves and retained earnings, the historical exchange rates are used. The average exchange rates of the year are used to translate non-Euro denominated revenue and expenses, except for those non-Euro denominated revenue and expenses related to assets and liabilities which are translated at historical exchange rates. The resulting exchange differences are recognised in profit or loss.
(d) Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency using the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the closing rate. Non-monetary items that are measured based on their historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. If a currency is not generally exchangeable into the functional currency and/or presentation currency, an initial assessment is made whether the currency is exchangeable for the specific purpose (i.e., whether the currency can be exchanged for some purposes but not for others). If, at the measurement date, a currency is not exchangeable for another currency, the entity must estimate the spot exchange rate at that date. To estimate the spot exchange rate, depending on the situation, an exchange rate observable on the market without adjustments may be used, or a different estimation technique may be adopted.
Foreign currency exchange gains and losses are recognised in profit or loss and presented within net exchange rate gains/(losses).
(e) Property, plant and equipment
Items of property, plant and equipment (PPE) are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and any accumulated impairment losses. The cost of certain buildings as at January, 1 2017, the Group’s date of transition to IFRS, was determined with reference to their deemed cost at that date.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on the disposal of an item of property, plant and equipment is recognised in profit or loss.
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.
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Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is recognised in profit or loss. Land is not depreciated.
The estimated useful lives of property, plant and equipment (see note 8) for current and comparative periods are as follows: (a) buildings, 30–50 years; (b) machinery and equipment, 4–10 years; (c) office furniture and equipment, 5–10 years; (d) retail gallery and store furnishing, 3–4 years; (e) leasehold improvements, 5–10 years.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
(f) Leases
As at December 31, 2025, the Group act as lessor in some lease contracts for a not significant amount.
(i) Policy as a lessee
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16.
At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, which is generally the case for the Group’s leases, the lessee’s incremental borrowing rate, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group: (a) where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received; (b) uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, which does not have recent third party financing, and (c) makes adjustments specific to the lease to reflect for instance the term of the lease, type of the asset leased, country, currency and security.
Lease payments included in the measurement of the lease liability comprise the following: (a) fixed payments, including in-substance fixed payments; (b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; (c) amounts expected to be payable under a residual value guarantee; (d) the exercise price under a purchase option that the Group is reasonably certain to exercise; (e) lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option; and (f) penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount
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expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets and lease liabilities in specific captions in the consolidated statement of financial position.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
(g) Business combinations
The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group (see note 4 (a)(i)). In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, as a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.
The Group has the option to apply a “concentration test” that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment (see note 4(i)). Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre‑existing relationships. Such amounts are generally recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is measured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.
If share‑based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards), then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market‑based measure of the replacement awards compared with the market‑based measure of the acquiree’s awards and the extent to which the replacement awards relate to pre-combination service.
(h) Intangible assets and goodwill
Expenditure on research activities is recognised in profit or loss as incurred.
Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses.
Other intangible assets, including software, trademarks and patents, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.
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Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. In respect of acquisitions prior to January 1, 2017, goodwill is included on the basis of its deemed cost, which represents the amount recorded under previous GAAP.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific intangible asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is recognised in profit or loss. Goodwill is not amortised.
The estimated useful lives for current and comparative periods are as follows: software 3-5 years, trademarks and patents 3–5 years, other 2–5 years.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
(i) Impairment of non-financial assets
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (hereinafter also CGUs). Goodwill arising from a business combination is allocated to the CGU or groups of CGUs that are expected to benefit from the synergies of the combination.
The identified CGUs are the sofa manufacturing facilities located in Italy, Brazil, Romania, China and Vietnam, as well as each of the retail stores directly operated by the Group and the interest in the Joint Venture Natuzzi Trading Shanghai.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(j) Interests in equity-accounted investees
The Group’s interests in equity-accounted investees comprise interests in associates and joint ventures (see (a) (ii) and (iv).
Interests in associates and joint ventures are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income (OCI) of equity-accounted investees, until the date on which significant influence or joint control ceases.
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(k) Inventories
Raw materials are stated at the lower of cost (determined under the specific cost method for raw hides and under the weighted-average method for finished hides and other raw materials) and net realisable value.
Goods in process and finished goods are valued at the lower of production cost and net realisable value. Production cost includes direct production costs and production overhead costs. The production overhead costs are allocated to inventory based on the manufacturing facility’s normal capacity.
Finished goods acquired for reselling (e.g., home furnishings accessories) are stated at the lower of cost, determined under the weighted-average method, and net realisable value.
The provision for slow moving and obsolete raw materials and finished goods is based on the estimated realisable value net of the costs of disposal.
(l) Trade and other receivables
Trade receivables and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for doubtful accounts.
In particular, trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 90 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Details about the Group’s impairment policies and the calculation of the loss allowance are provided in note 4(n)(i).
The Group derecognises trade receivables when the contractual rights to the cash flows from such financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of such financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of such financial asset.
(m) Cash and cash equivalents
Cash and cash equivalents are recorded at their nominal amount as it substantially coincides with the fair value.
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, on-demand deposits with financial institutions, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within bank overdrafts and short-term borrowings in current liabilities in the statement of financial position.
(n) Impairment of financial assets
The Group has the following types of financial assets that are subject to the expected credit loss model: (i) trade receivables for sales of goods and services; (ii) other receivables; (iii) cash and cash equivalents.
(i) Trade receivables
The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss allowance for all trade receivables.
In particular, for the credit losses on trade receivables determined on a collective basis, the Group adopted the practical expedient to use a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking
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factors specific to the debtors and the economic environment. To measure the expected credit losses, trade receivables are grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the historical credit losses experienced in the past five years. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
The Group recognised the expected credit losses for individual receivables which are known to be difficult to collect based on the financial difficulties of the debtor, the probability that the debtor will enter bankruptcy or financial reorganisation and default or late payments.
The Group records the expected credit losses on trade receivables determined on a collective and individual basis through the provision for doubtful accounts (see note 15). Trade receivables for which an impairment allowance is recognised are written off when there is no reasonable expectation of recovering additional cash. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group and a failure to make contractual payments for a period of greater than 180 days past due.
Impairment losses on trade receivables are presented as net impairment losses within operating profit/(loss). Subsequent recoveries of amounts previously written off are credited against the same line item.
(ii) Other receivables
Other receivables are considered to have low credit risk and the impairment loss is measured on a 12–month expected credit loss basis. Management considers other receivables to have a low credit risk if they have a low risk of default and the Group’s counterparties are able to meet its contractual cash flow obligations in the short-term.
(iii) Cash and cash equivalents
The Group considers its cash and cash equivalents to have “low credit risk” based on the external credit ratings of the financial institutions. Indeed, the Group’s cash and cash equivalents are held with financial institutions which have external credit risk ratings that are “investment grade”. Impairment of cash and cash equivalents is measured on a 12-month expected credit loss basis and reflects the short-term nature of the exposures.
(o) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to year-end which are unpaid. The amounts are unsecured and are usually paid within 90 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. The Group derecognises trade and other payables when its contractual obligations are discharged or cancelled or expired.
(p) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a borrowing that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as finance income or finance costs.
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Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
Further, general and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period in which they are incurred.
(q) Employee benefits
Information about employee benefits accounting policies is reported below.
(i) Share-based payment arrangements
The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as a expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
The fair value of the amount payable to employees in respect of SARs, which are settled in cash, is recognised as an expense with a corresponding increase in liabilities, over the period during which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the SARs. Any changes in the liability are recognised in profit or loss.
(ii) Employees' leaving entitlement
The Group provides its Italian employees with benefits on the termination of their employment. The benefits fall under the definition of defined benefit plans whose existence and amount is certain but whose date is not. The liability is calculated as the present value of the obligation at the reporting date, in compliance with applicable regulations and adjusted to take into account actuarial gains or losses. The amount of the obligation is remeasured annually based on the “projected unit credit” method. Actuarial gains or losses are recorded in full during the relevant period. Actuarial gains/(losses) are stated under “Other comprehensive income” (OCI) in accordance with IAS 19.
(iii) Benefits to employees for termination of the employment relationship
These are the benefits due to employees for the termination of their employment relationship due to the fact that the event that gives rise to the obligation is the termination of the employment relationship. The benefits due to employees for the termination of the employment relationship result from the Group's decision to terminate the employment relationship or from the decision of an employee to accept an offer from the Group consisting of benefits in exchange for the termination of the employment relationship. The liabilities for benefits due to employees for the early termination of the employment relationship (so-called liabilities for termination benefits) are accounted for on the earliest date among the following: (a) the moment in which the company is no longer able to withdraw the offer of such benefits made to employees; and (b) the moment in which the company recognizes the costs of a restructuring that involves the payment of benefits due to employees for the termination of the employment relationship. These liabilities are valued based on the nature of the benefit granted. The liability for termination benefits is determined by applying the provisions envisaged: (i) for short-term benefits, if it is expected that the termination benefits will be paid to employees entirely within twelve months from the closing date of the financial year in which they were recognized; or (ii) for long-term benefits if it is expected that the termination benefits will not be paid to employees in full within twelve months from the end of the financial year in which they were recognized.
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(r) Provisions
Provisions for legal claims, service warranties and one-time termination benefits for certain employees are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations is small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
(s) Derivative financial instruments and hedging activities
Derivatives financial instruments are accounted for in accordance with IFRS 9, except for hedging activities that are treated in accordance with IAS 39.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as hedges of a particular risk associated with the cash flows of recognised assets (trade receivables) and highly probable forecast transactions (sales orders) (cash flow hedges).
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items (trade receivables and/or sales orders). The Group documents its risk management objective and strategy for undertaking its hedge transactions.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.
(i) Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the hedging reserve within equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, within net exchange rate gains/(losses).
When forward contracts are used to hedge forecast transactions, the Group generally designates only the change in fair value of the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of the change in the spot component of the forward contracts are recognised in the hedging reserve within equity. The change in the forward element of the contract that relates to the hedged item (“aligned forward element”) is recognised within OCI in the costs of the hedging reserve within equity. In some cases, the Group may designate the full change in fair value of the forward contract (including forward points) as the hedging instrument. In such cases, the gains or losses relating to the effective portion of the change in fair value of the entire forward contract are recognised in the hedging reserve within equity.
Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss.
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remain in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast
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transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.
(ii) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in profit or loss and are included in net exchange rate gains/(losses). The fair value of derivative instruments is disclosed in note 32.
(t) Revenue from contracts with customers
(i) Sale of upholstered furniture and home furnishings accessories – wholesale (distributors and retailers)
The Group sells a wide range of upholstered furniture (upholstered sofas and beds) and home furnishing accessories (for instance coffee tables, lamps, rugs and wall units) in the wholesale market to distributors and retailers. The upholstered furniture is manufactured in the plants located in Italy, Romania, China, Vietnam and Brazil. Sales are recognised when control of the products has been transferred, i.e., when the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery occurs when the products have been dispatched from the Group’s warehouse or shipped to the location specified by the wholesaler, the risks of obsolescence and loss have been transferred to the wholesaler, and the Group has objective evidence that all criteria for acceptance have been satisfied.
The goods are often sold with retrospective volume discounts based on aggregate sales over a 12-month period. As part of variable considerations, revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated historical experience is used to estimate and provide for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A refund liability is recognised for the expected volume discounts payable to wholesalers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made with a credit term of 30-90 days, which is consistent with market practice. The Group’s obligation to repair or replace faulty products under the standard assurance warranty terms is recognised as a provision (see note 26).
A trade receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
It is the Group’s policy not to sell its products to the wholesaler with a right of return.
(ii) Sale of upholstered furniture and home furnishings accessories—retail (end consumers)
The Group operates a chain of retail stores (Natuzzi Italia stores, Natuzzi Editions stores and Divani&Divani by Natuzzi stores) selling to end consumers a wide range of upholstered furniture (upholstered sofas and beds) and home furnishing accessories (for instance coffee tables, lamps, rugs and wall units). The upholstered furniture is manufactured in the plants located in Italy, Romania, China, Vietnam and Brazil.
Revenue from the sale of the goods is recognised when the products are delivered and have been accepted by the customer in store or at its premise.
Payment of the transaction price is due immediately when the product is delivered to the customer. The Group’s obligation to repair or replace faulty products under the standard assurance warranty terms is recognised as a provision (see note 26).
It is the Group’s policy not to sell its products to the end consumer with a right of return.
(iii) Sale of polyurethane foam and leather processing by-products – wholesale
The Group sells leather processing by-products in the wholesale market. Such sales are recognised when control of the products has been transferred, i.e., when the products are delivered to the customer. Delivery occurs when the products
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have been dispatched from the Group’s warehouse or shipped to the location specified by the customer, the risks of obsolescence and loss have been transferred to the customer, and the Group has objective evidence that all criteria for acceptance have been satisfied.
Revenue from these sales is recognised based on the price specified in the contract. No element of financing is deemed present as the sales are made with a credit term of 30-90 days, which is consistent with market practice. The Group’s obligation to repair or replace faulty products under the standard assurance warranty terms is recognised as a provision (see note 26).
It is the Group’s policy not to sell these products to the wholesaler with a right of return.
(iv) Sale of Natuzzi Display System and related slotting fees
The Group sells the Natuzzi Display System (NDS) to retailers, used to set up their stores. Revenue from such sales is recognised over time based on the length of the distribution contract signed with the retailer. Revenue is accounted for based on the price specified in the contract. No element of financing is deemed present as the sales are made with a credit term of 30-90 days, which is consistent with market practice. The deferred revenue for the sales of Natuzzi Display System is included under the caption “Contract liabilities” of the statement of financial position.
The Group pays retailers slotting fees as contributions to prepare the retailer’s system to accept and sell the Group’s products. Slotting fees are recognised over time based on the length of the contract signed with the retailers and are treated as a reduction of revenue. Deferred slotting fees are included under the caption “Other assets” of the statement of financial position.
(v) Service-type warranty
Customers who purchase the Group’s products may require a service-type warranty. The Group allocates a portion of the consideration received to the service-type warranty. This allocation is based on the relative stand-alone selling price. The amount allocated to the service-type warranty is deferred, and is recognised as revenue over time based on the validity period of such warranty. The deferred revenue is included in the caption “Contract liabilities” of the statement of financial position.
(vi) Contract Sales
During the year, the Company launched a specific commercial activity based on signing contracts with customers for the design of interior spaces and the supply of furniture (sofas, beds, accessories and other furniture), both manufactured in-house and purchased from third-party suppliers, for restaurants, hotels, and residential apartments. In the case of partnerships with third parties that build residential buildings with interior design and supply of Natuzzi-branded products, these contracts may also provide for the granting of the right to use the trademark during the period of sale of the apartments to end customers. These contracts are subject to revenue recognition in accordance with IFRS 15 (at the point of time or over time) based on the specific conditions set out in each individual contract.
Contract costs are initially recognized as assets and expensed on a systematic basis in line with the transfer to the customer of the goods or services to which those costs relate and, therefore, in line with the recognition of revenue at the point of time or over time. These costs are the incremental costs of obtaining the contract (e.g., sales commissions, i.e., costs that would not have been incurred if the contract had not been signed) and the costs of fulfilling the contract that do not fall within the scope of other IFRSs (IAS 2, IAS 16, IAS 38) that allow new and additional resources to be made available to fulfill the obligation and that will be recovered in the sale price.
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(vii) Financing components
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.
(u) Cost of sales, selling expenses and administrative expenses
Cost of sales consist of the following expenses: change in opening and closing inventories, purchases of raw materials, purchases of finished goods for reselling, labour costs (included one-time termination benefit accruals), third party manufacturing costs, depreciation expense of property, plant and equipment and right-of-use-assets used in the production of finished goods, impairment of property, plant and equipment and right-of-use-assets, energy and water expenses (for instance light and power expenses), expenses for maintenance and repairs of production facilities, distribution network costs (including inbound freight charges, warehousing costs, internal transfer costs and other logistic costs involved in the production cycle), security costs for production facilities, small-tools replacement costs, insurance costs and other minor expenses.
Selling expenses consist of the following expenses: shipping and handling costs incurred for transporting finished products to customers, advertising costs, labour costs for sales personnel, expenses related to leases (e.g., short-term and low-value leases), customs duties, commissions to sales representatives and related costs, depreciation expense of property, plant and equipment and right-of-use-assets used in the selling activities, amortisation of intangible assets that, based on their usage, are allocated to selling expenses, impairment of property, plant and equipment and right-of-use-assets, impairment of intangible assets and goodwill, energy and water expenses for trade buildings (for instance, light and heating expenses), sales catalogue and related expenses, exhibition and trade-fair costs, advisory fees for sales and marketing of finished products, expenses for maintenance of stores and other trade buildings, insurance costs for trade receivables and other miscellaneous expenses.
Administrative expenses consist of the following expenses: labour costs for administrative personnel, advisory fees for accounting and information-technology services, non-income tax expenses, traveling expenses for management and other personnel, depreciation expense related to property, plant and equipment and right-of-use-assets used in the administrative activities, amortisation of intangible assets that, based on their usage, are allocated to administrative expenses, impairment of property, plant and equipment and right-of-use-assets, impairment of intangible assets, postage and telephone costs, stationery and other office supplies costs, expenses for maintenance of administrative facilities and softwares, directors’ fees, audit committee and external auditors’ fees, energy and water expenses for administrative buildings (for instance, light and heating expenses) and other miscellaneous expenses.
As noted above, the costs of the Group’s distributions network, which include inbound freight charges, warehousing costs, internal transfer costs and other logistic costs involved in the production cycle, are classified under the “Cost of sales” line item.
(v) Shipping and handling costs
Shipping and handling costs incurred to transport products to customers are expensed in the periods incurred and are included in selling expenses. Under IFRS 15, shipping and handling costs related to activities before the customer obtains control of the finished goods, are accounted for as fulfillment costs under the caption “Other assets” of the statement of financial position. Such costs are recognised in profit or loss consistent with the pattern of transfer of the finished goods. Shipping and handling expenses recorded for the years ended December 31, 2025, 2024 and 2023, come to 23,596, 24,767 and 26,325, respectively (see note 37).
(w) Advertising costs
Advertising costs are expensed in the periods incurred and are included in selling expenses. Advertising expenses recorded for the years ended December 31, 2025, 2024 and 2023 amount to 5,957, 5,986 and 5,936, respectively (see note 37).
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(x) Commission expense
Commissions payable to sales representatives and the related expenses are recorded at the time revenue from sale of products is recognised and are included in selling expenses. Commissions are not paid until payment for the related sale’s invoice is remitted to the Group by the customer. Under IFRS 15, sale commissions are considered costs of obtaining a contract and the Group has elected to apply the practical expedient under which such costs are expensed in profit or loss, as the amortisation period is less than one year. Commissions expenses recorded in profit or loss for the years ended December 31, 2025, 2024 and 2023 amount to 4,700, 5,327 and 5,861, respectively (see note 37).
(y) Government grants
Grants from the government are recognised at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are deferred and credited to profit or loss on a straight-line basis over the expected lives of the related assets. Amortisation of the deferred grant is recognised in profit or loss as a reduction in the cost of sales, selling expenses or administrative expenses.
(z) Net finance income/(costs)
The Group’s net finance income/(costs) include: interest income, interest expense, commission expense, gain or loss on derivative financial instruments, exchange rate gain or loss on financial assets and financial liabilities, and hedge ineffectiveness recognised in profit or loss.
Interest income or expense is recognised using the “effective interest rate”. The “effective interest rate” is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset or the amortised cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.
(aa) Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
The Group has determined that interest and penalties related to income taxes, including uncertain tax treatments, meet the definition of income taxes, and therefore accounted for them under IAS 12 “Income Taxes”.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable profit or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax assets and tax liabilities are offset when the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
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(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: (a) temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, unless it gives rise to equal taxable and deductible temporary differences; (b) temporary differences related to investments in subsidiaries, associates and joint arrangements (mainly unremitted earnings and withholding taxes) to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and (c) taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
(ab) Operating profit/(loss)
Operating profit/(loss) is the result generated from the continuing principal revenue-producing activities of the Group as well as other income and expenses related to operating activities. Operating profit/(loss) excludes net finance income/(costs), share of profit/(loss) of equity-accounted investees and income tax expense.
(ac) Fair value measurement
“Fair value” is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as “active” if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.
F-30
If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price.
The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price – i.e., the fair value of the consideration given or received. If the Group determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price.
Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.
(ad) Earnings/(loss) per share
(i) Basic earnings/(loss) per share
Basic earnings/(loss) per share are calculated by dividing the profit/(loss) attributable to the owners of the Parent, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.
(ii) Diluted earnings/(loss) per share
Diluted earnings/(loss) per share adjust the figures used in the determination of basic earnings/(loss) per share to take into account the post-income/(loss) tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
(ae) New standards, amendments and interpretations issued but not yet effective
In May 2024 the IASB issued IFRS 19 “Subsidiaries without Public Accountability: Disclosures” which simplifies the preparation for the subsidiary’s financial statements by allowing it to apply group accounting principles in the preparation of its local financial statements. Further in August 2025 IASB issued amendments to IFRS 19. IFRS 19 is effective on or after January 1, 2027 with early adoption.
In November 2025 the IASB issued the Amendments to IAS 21: The Effects of Changes in Foreign Exchange Rates: Translation to a Hyperinflationary Presentation Currency These amendments are effective on or after January 1, 2027.
The Group is still in the process of assessing the impact of these new accounting standards.
In May 2024 the IASB issued the Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7. These amendments are effective on or after January 1, 2026. The Group does not expect any significant impact from the adoption of them.
F-31
In July 2024, the IASB published the document “Annual Improvements to IFRS – Volume 11”, which mainly includes technical and editorial amendments to existing standards. The amendments are effective from January 1st, 2026. The Group does not expect any significant impact from the adoption of it.
On 18 December 2024, the IASB issued amendments to enhance companies’ reporting of the financial effects of contracts for the purchase of electricity from natural sources, often structured as Power Purchase Agreements (PPAs). The IASB made targeted changes to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures in order to improve the information provided in financial statements regarding these contracts. The amendments are effective from January 1st, 2026. The Group does not expect any significant impact from the adoption of it.
5. Changes in significant accounting policies
Changes in significant accounting policies for the years ended December 31, 2025 and 2024 are reported below.
(A) Amendment to IAS 12 International Tax Reform
In May 2023, the IASB issued an amendment to IAS 12 regarding the application of Pillar Two model rules, whichintroduced a temporary exception to the recognition of deferred taxes related to the application of Pillar Two provisionspublished by the OECD, as well as targeted additional disclosures for affected entities. The Group has not been impacted from the adoption of these amendments considering that Group consolidated revenue is less than 750,000 in 2025 and in each of the prior three years.
(B) Amendments to IAS 21: The effects of Changes in Foreing Exchange rates: lack of Exchangeability
In August 2023, the International Accounting Standards Board (IASB) issued an amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates concerning the lack of exchangeability. These amendments are to be applied by entities from the beginning of the first financial year commencing on or after 1 January 2025.
When a currency is not generally convertible into the functional currency and/or the presentation currency, the first step is to assess whether the currency is not convertible for the specific purpose (this occurs when the currency can be exchanged for some purposes but not for others). If, at the measurement date, a currency cannot be exchanged for another currency, the entity must estimate the spot exchange rate at that date. To estimate the spot exchange rate, depending on the circumstances, an observable market rate without adjustments may be used, or an alternative estimation technique may be adopted.
The adoption of this amendment did not have a significant impact on the financial statements.
(C) Other standards
There were no other amendments or new accounting standards effective as of 1 January 2025.
6. Segment Information
The Group operates in two operating segments, “Natuzzi brand” and “Private label”. The Natuzzi brand segment includes net sales from the “Natuzzi ltalia”, “Natuzzi Editions” and “Divani&Divani by Natuzzi” product lines. Segment disclosure is rendered by aggregating the operating segments into one reporting segment, that is the design, manufacture and marketing of leather and fabric upholstered sofas, beds and home furnishings accessories. It offers a wide range of upholstered furniture for sale, manufactured in production facilities located in Italy and abroad (Romania, China and Brazil and, from 2025, Vietnam). “Private label” is no more strategic for the Group and remains a minor business with selected numbers of clients (see note 34).
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
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The two operating segments have been aggregated into a single reporting segment as the two segments have similar characteristics, and are similar in each of the following respects: (a) the nature of the products; (b) the nature of the production processes; (c) the type of customer for their products; (d) the methods used to distribute their products.
Reference should be made to note 34 “Revenue” for details on revenue streams and disaggregation of revenue from contracts with customers by types of goods, geographical markets, geographical location of customers, distribution channels, brands and timing of revenue recognition, to note 33(C)(ii-a) "Trade receivables" for information about major customers, and to note 8 "Property, plant and equipment", note 9 "Right-of-use-assets", note 10 "Intangible assets and goodwill" for information about geographical areas of non-current assets.
7. Assets held for sale
During 2025, the disposal of the High Point building, located in North Carolina (USA), was completed by a U.S. subsidiary. The preliminary sale agreement, for a total consideration of USD 12.1 million, had been signed in October 2024, with the receipt of a down payment of 3,658 (USD 3.8 million). Following the completion of the transaction in March 2025, the subsidiary collected the remaining balance of 7,644 (USD 8.3 million). The transaction generated a capital gain of 1,595 (USD 1.8 million). See Note 36.
Also in 2025, the disposal of a land plot by the Romanian subsidiary was completed. The subsidiary had entered into a preliminary sale agreement in November 2024 for a total consideration of 2,769, receiving an advance payment of 400. The transaction was finalized in June 2025, with the collection of the remaining balance of 2,369. The disposal resulted in a capital gain of 2,773. See Note 36.
At the end of November 2025, the Parent Company entered into a preliminary agreement for the disposal of the photovoltaic plant to a company specialized in the sector.
The disposal transaction was finalized at the end of January 2026 and, on the closing date, the Company collected the total consideration for the sale amounting to 7,115. The net carrying amount of the photovoltaic plant as at 31 December 2025 amounted to 1,105 (see Note 46).
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8. Property, plant and equipment
Changes in the carrying amount of property, plant and equipment for the years ended December 31, 2025, 2024 and 2023 are analysed in the following tables.
Landandbuildings
Machineryandequipment
Officefurnitureandequipment
Retailgalleryand storefurnishing
Leaseholdimprovements
Constr. inprogress
Cost as at December 31, 2023
157,867
116,032
12,995
5,858
27,050
1,839
321,641
385
3,459
363
138
2,823
95
7,263
(79
(3,121
(988
(360
(4
(11,128
Reclassifications to asset held for sale
(23,665
Impairment loss
143
Reclassifications from constr. in progress
550
859
260
(1,692
Effect of translation adj.
671
(660
1,093
(9
1,193
Cost as at December 31, 2024
135,750
116,644
12,462
5,712
24,650
295,447
104
3,318
336
149
281
4,255
(1,008
(154
(99
(140
(1,414
(4,815
(2,300
(1
(271
(2,572
106
(118
(43
(130
(86
(2,119
(2,505
Cost as at December 31, 2025
135,727
111,902
12,525
5,676
22,401
288,396
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Accumulated depreciation as atDecember 31, 2023
(99,463
(103,396
(11,928
(5,624
(16,713
(237,124
(3,485
(373
(159
(1,640
(8,975
2,423
955
340
6,548
10,308
14,898
(669
510
(57
(110
(365
Accumulated depreciation as atDecember 31, 2024
(88,677
(103,781
(11,403
(5,482
(11,915
(221,258
(3,021
(3,295
(398
(109
(2,059
(8,882
917
151
3,711
(234
129
928
889
Accumulated depreciation as atDecember 31, 2025
(91,932
(102,467
(11,521
(5,417
(12,945
(224,282
Net book value as at December 31, 2023
58,404
12,636
1,067
234
10,337
84,517
Net book value as at December 31, 2024
47,073
12,863
1,059
230
12,735
Net book value as at December 31, 2025
43,795
9,435
1,004
259
9,456
Annual rate of depreciation for 2024 and 2023
0%-10%
10%-25%
10%-20%
25%-35%
As at December 31, 2025 and 2024, the carrying amount of property, plant and equipment temporarily idle is 3,987 and 4,744, respectively.
As at December 31, 2025, properties with a carrying amount of 24.631 (32,231 as at December 31, 2024) are subject to registered mortgages to guarantee the long-term borrowings (see note 20).
The following tables show a breakdown of property, plant and equipment by country.
35,161
41,523
15,707
16,585
8,317
11,381
2,570
2,574
1,013
1,168
Europe
597
779
Other countries
749
179
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The following tables show a breakdown of property, plant and equipment based on the cash generating units in which they are included.
As at December 31, 2025, the Group performed the impairment assessment of property, plant and equipment, right-of-use assets and goodwill included in several cash generating units (CGUs), such as the Italian upholstered furniture plant CGU and certain directly operated retail stores CGUs that presented indicators of impairment.
Further, Company performed an impairment assessment on the equity method investee Natuzzi Trading Shanghai.
The Group performed the impairment assessment in accordance with its accounting policy discussed in note 4(i).
With reference to the determination of value in use, the key assumptions applied by the Group in estimating such value include the annual sales growth rates used to project expected revenues for the period 2026–2028, with revenue levels for 2029 and 2030 equal to revenue in 2028, the weighted average cost of capital rates and the long-term growth rates, all of which were determined at the CGU level, including the effects of the duration of the current economic uncertainty. Such significant assumptions involved a high degree of subjectivity by management and reasonably possible changes to these assumptions have a significant effect on the value in use. Specifically, such assumptions were based on the Group’s future business performances and other forward-looking assumptions that entail significant judgments by management and are heavily impacted by several external events. Finally, cash flow projections for the period 2026–2028 were prepared on the basis of cash flow forecasts approved by the Board of Directors. These forecasts were developed taking into account both the Group’s historical performance and the expectation of a decline in sales in 2026, as a result of the current highly uncertain economic environment, which adversely affects demand for durable goods such as furniture.
F-36
For the Italian upholstered furniture plant CGU, the Group has concluded that it is not possible to determine the fair value less cost to disposal based on a single, unitary reorganization/restructuring plan, given the significant uncertainties identified. Based on value in use the Group allocated the impairment loss if the carrying amount of an asset was below the highest of: (a) its fair value less costs of disposal (if measurable); (b) its value in use (if determinable) and (c) zero, recognizing an impairment of 2,300 for machinery and equipment and 1,900 for software (see note 10)
In line with the market-based perspective required by IFRS 13, the Group considered alternative valuation approaches and determined the recoverable amount of property, plant and equipment on a disaggregated basis, using fair value less costs of disposal. This assessment was supported by appraisals performed by independent third-party valuation specialists. The fair value of land and buildings has been derived by reference to observable market evidence for comparable properties (“comparables”), adjusted to reflect the specific attributes and characteristics of the subject asset relative to those of the comparables (fair value level 2 under ifrs13). The fair value of plant and machinery using the depreciated replacement cost method, adjusted for the functional and economics obsolescence and marketability factors. (fair value level 3 under IFRS13).
As a result of the impairment tests performed by the Group on property, plant and equipment, the following were recognized in 2025: i) an impairment loss of 4,200 of which 2,300 on machinery and equipment, and 1,900 on software related to upholstered furniture plant CGU (see note 10), and ii) an impairment loss of 272, related to directly operated retail stores CGUs.
No impairment losses were identified in 2024.
Conversely, with reference to specific CGUs, no reversal of impairment was recognized in 2025, whereas reversal of impairment amounting to 143 was recognized in 2024.
The Group conducted sensitivity analyses across all Cash Generating Units (CGUs). In particular, stress scenarios were defined by gradually increasing the WACC rate by up to 2 percentage points and reducing the terminal growth rate (g-rate) assumptions down to zero. The results of the analysis for the year 2025 indicated that, even under these adverse conditions, the majority of store CGUs would not require impairment. Within the negative stress scenario considered, there would be an additional impairment loss for the already impaired store CGUs, which have a residual net value of about €6,624; in the same negative stress scenario, the risk of impairment related to store CGUs with no current impairment loss would be limited to three stores CGUs in the United States and four stores in Italy.
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9. Right-of-use-assets
Changes in the carrying amount of right-of-use assets for the years ended December 31, 2025 and 2024, are reported in the following tables.
Buildings
Vehicles
101,592
907
102,499
4,861
353
5,214
(10,329
(103
(10,432
Adjustments due to remeasurements
Adjustments due to modifications
182
93
275
Effect of translation adjustments
3,228
3,239
99,556
1,261
100,817
9,074
224
9,298
(14,510
(55
(14,565
476
(161
(6,176
(21
(6,197
88,420
1,248
89,668
Accumulated depreciation and impairment loss as at Dec. 31, 2023
(51,686
(369
(52,055
(10,372
(10,643
8,299
103
8,402
(458
(1,673
(1,685
Accumulated depreciation and impairment loss as at Dec. 31, 2024
(55,890
(549
(56,439
(9,645
(314
(9,959
9,605
9,660
(2,926
160
156
3,460
3,481
Accumulated depreciation and impairment loss as at Dec. 31, 2025
(55,400
(627
(56,027
49,906
538
50,444
43,666
712
33,020
621
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The Group leases buildings for its retail stores, warehouses and factory facilities. These leases typically run for a period of five to ten years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term. Some of such leases provide for additional rent payments that are based on changes in local price indices. For certain of these leases, the Group is restricted from entering into any sub-lease arrangements. A significant portion of retail stores, warehouse and factory facilities leases were entered into several years ago.
In March 2025, the High Point building, located in North Carolina (USA), was sold to a company belonging to the majority shareholder. This transaction was followed by the execution of a lease agreement for the entire property with a term of nine years and nine months, expiring on 31 December 2034. As at 31 December 2025, the net carrying amount of the right-of-use asset relating to the aforementioned property amounted to 2,717. See Notes 7 and 45.
The Group leases vehicles under a number of leases. The contract lease term of such leases run for a period of two to four years.
The Group leases also IT and office equipment with contract terms of one to three years. These leases are short-term and/or leases of low-value items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.
The following tables show a breakdown of right-of-use assets based on geographical location of the cash generating units (mainly directly operated retail stores) in which they are included.
As at December 31, 2025, the Group performed the impairment test of right-of-use assets included in cash generating units (CGUs) represented by every directly operated retail stores that presented indicators of impairment. For additional information on the impairment assessment, reference should be made to note 8.
As result of the 2025, 2024 and 2023 impairment losses were recognized on right-of-use assets relating to specific retail store CGUs, amounting to 3,615, 1,420 and 1,092, respectively. The impairment loss recorded in 2025 related to three stores in Italy, five in the United States, two in the United Kingdom and two in Australia, reflecting the fact that the sales forecasts for these stores—based on approved cash flow projections—resulted in a value in use lower than the carrying amount of the underlying assets.
More specifically, with reference to 2025:
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Other information about leases for which the Group is a lessee is presented below.
The following tables show the amounts recognized in profit or loss under IFRS 16 for the years ended December 31, 2025, 2024 and 2023.
Depreciation charge of right-of-use assets
9,959
10,643
12,021
Interest on lease liabilities
3,286
3,810
3,090
Expenses relating to short-term leases
1,721
1,970
2,326
Expenses relating to leases of low-value assets, excluding short-term leases
166
133
15,132
16,579
17,570
Lease payments recognised in statement of cash flows for the years ended December 31, 2025, 2024 and 2023 amount to 12,768, 14,098 and 14,147 , respectively, and include interest paid for 3,286, 3,810 and 3,090, respectively (see note 21).
10. Intangible assets and goodwill
Changes in the carrying amount of intangible assets and goodwill for the years ended December 31, 2025 and 2024 are analysed in the following tables.
Trademarks,patents and other
Software
Goodwill
3,359
17,416
1,921
22,696
220
3,853
4,073
(302
(7,842
(8,144
3,281
13,443
18,645
205
1,209
(1,900
(831
(2,731
(324
(3
(41
(44
3,483
12,182
16,755
Accumulated amortisation as at December 31, 2023
(2,963
(15,573
(18,536
(156
(1,570
7,842
8,102
(10
Accumulated amortisation as at December 31, 2024
(2,862
(9,155
(12,017
(164
(1,987
(2,151
320
Accumulated amortisation as at December 31, 2025
(3,026
(10,782
(13,808
396
1,843
4,160
419
4,288
457
1,400
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As at December 31, 2025 and 2024, goodwill of 1,090 and 1,921, respectively, relates to the “Italy – retail stores” CGU. It arose from the 2017 acquisition by the Parent of three “Divani&Divani by Natuzzi” stores located in the North East of Italy.
As at December 31, 2025 the impairment loss on software was 1,900 (see note 8).
In 2025, the item "disposals" refers to the writing-off of assets fully depreciated.
With reference to goodwill, since it is allocated to specific DOS, the Group has carried out an impairment test on property, plant and equipment, right-of-use assets as well as the goodwill for each cash-generating unit (CGU) of directly managed retail stores. As a result of this impairment test, for two of the three directly operated stores (DOS) to which goodwill is allocated, an impairment was identified, leading to the recognition of a loss of 831.
Further, the cash flows included specific estimates for three years and a long-term growth rate thereafter. Cash flow projections were prepared on the basis of forecasts approved by the Board of Directors. For additional information on the impairment assessment, reference should be made to note 8.
11. Equity-method investees
Changes in the carrying amount of equity-method investees for the years ended December 31, 2025 and 2024 are analysed as follows.
Natuzzi Trading Shanghai
Nars Miami LLC
Natuzzi Texas LLC
Natuzzi Store (UK)ltd
Foundation "Made in Italy circolare e sostenibile"
Salena S.r.l.
38,645
609
569
39,831
Share of profit for the year
988
(548
(47
Loss allowance
602
Share of other comprehensive income
Dividends received/(distributed)
(77
Liquidation
(520
(8
(54
(36
40,319
548
(512
364
(1,309
(2,221
148
(28
120
36,871
579
As at December 31, 2025 and 2024 equity-method investees include: (a) the 49% stake in the joint venture Natuzzi Trading Shanghai; (b) the 51% stake in the joint venture Natuzzi Texas LLC; (c) the 30% stake in the associate Natuzzi Store (UK) ltd; (d) the 49% interest in the associate Salena S.r.l., whose carrying value was totally impaired in 2014 in consideration of some legal disputes among shareholders.
With reference to the investment in the associate Nars Miami LLC, the entity was liquidated in early 2024 following the closure of its sole store in 2023.
All such investments are accounted for using the equity method.
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(i) Disclosures on Natuzzi Trading (Shanghai) Co. Ltd., joint venture
The following table shows the reconciliation of the carrying amount of the retained interest in Natuzzi Trading Shanghai as at December 31, 2024 with the carrying amount as at December 31, 2025 included in the consolidated statement of financial position.
Carrying amount as at December 31, 2024
Dividends distribution
Share capital reduction
Group’s share of profit for the year
(366
Elimination of amortisation of Natuzzi’s trademarks
368
Elimination of intercompany profit on inventories
469
Amortisation of intangibles assets
(519
Reversal of deferred tax liabilities
130
Group’s share of profit for the year, net of equity method adjustments
Group’s share of other comprehensive income
Carrying amount as at December 31, 2025
The following table shows the reconciliation of the carrying amount of the retained interest in Natuzzi Trading Shanghai as at December 31, 2023 with the carrying amount as at December 31, 2024 included in the consolidated statement of financial position.
Carrying amount as at December 31, 2023
292
717
Summarised financial information of the joint venture Natuzzi Trading Shanghai, based on its IFRS financial statements, and reconciliation with the carrying amount of the Group’s share in net assets and in profit or loss as reported in the consolidated financial statements are set out below. As at December 31, 2025, the Group performed, in accordance with its accounting policy discussed in note 4(i), the impairment assessment. No impairment losses arose from the test performed.
The significant assumptions that were used in performing the impairment test for the interest in Natuzzi Trading Shanghai are as follows: weighted average cost of capital rate of 10.35%, long-term growth rate of 1.74%, annual sales growth rate for 2026 equal to -5.40% and annual sales growth rate (average of 2027-2030 period) equal to +8.97%, and equivalent to a compound annual sales growth rate (average of 2026-2030 period) of +5.93%.
The Group conducted sensitivity analyses on its interest in the joint venture, Natuzzi Trading Shanghai. In particular, stress scenarios were defined by gradually reducing the terminal growth rate (g-rate) assumptions down to zero. The results of the analysis for the year 2025 indicated that, even under these adverse conditions, the impairment would not be material.
With reference to the determination of value in use, the key assumptions applied by the Group in estimating such value include the annual sales growth rates used to project expected revenues for the period 2026–2030, the weighted average
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cost of capital rates and the long-term growth rates, all of which were determined at the asset level, including the effects of the duration of the current economic uncertainty. Such significant assumptions involved a high degree of subjectivity by management and reasonably possible changes to these assumptions have a significant effect on the value in use. Specifically, such assumptions were based on the joint venture’s future business performances and other forward-looking assumptions that entail significant judgments by management and are heavily impacted by several external events. These projections, leading to a 5,93% CAGR in net sales for the period 2026-2030, were developed taking into account both the joint venture’s historical performance and the expectation of a decline in sales in 2026, as a result of the current highly uncertain economic environment, which adversely affects demand for durable goods such as furniture.
Summarised statement of financial position of Natuzzi Trading Shanghai and Group’s share in net assets as at December 31, 2025 and 2024
41,569
52,951
14,262
16,954
(20,903
(25,753
(1,611
(2,885
Net Assets
33,317
41,267
Group’s share in net assets – 49% of net assets
16,325
20,221
753
1,272
26,140
Elimination of intercompany profit from licensing Natuzzi’s trademarks
(4,626
(4,994
(1,530
(1,999
(191
(321
Group’s carrying amount of interest
As at December 31, 2025 and 2024 cash and cash equivalents, bank overdrafts and borrowings, lease liabilities current and non-current are set out below.
25,461
33,230
Lease liabilities current
Lease liabilities non-current
(1,202
(767
Total, net
22,648
29,578
F-43
Summarised statement of profit or loss of Natuzzi Trading Shanghai and Group’s share of profit for the year ended December 31, 2025, 2024 and 2023.
48,508
57,222
69,939
(29,320
(33,492
(39,823
Other income and expenses, net
(7
(747
(17,687
(19,036
(24,297
(1,623
(2,775
(3,332
Net finance income
(37
315
Profit before tax
(71
1,470
2,055
(675
(874
(522
Profit for the period
(746
596
1,533
Other comprehensive profit/(loss)
(2,671
(2,565
Total comprehensive profit for the period
(3,417
1,996
(1,032
Group’s share of profit for the period – 49%
751
367
2,144
Amortisation of intangible assets
Group’s share of profit/(loss), net of equity method adj.
2,873
Group’s share of other comprehensive income/(loss) for the period
(1,257
Group’s share of total comprehensive income/(loss) for the period
(1,227
1,674
1,616
Dividends received by the Group
For the years ended December 31, 2025, 2024 and 2023, depreciation and amortisation, interest income, interest expense and income tax expense are set below.
Depreciation and amortisation
2,710
4,153
5,571
Interest income
263
557
Interest expense
354
242
675
874
522
(ii) Disclosures on Natuzzi Texas LLC, joint venture
Natuzzi Texas LLC is an immaterial joint venture, set up in 2021, which is engaged in the sale of the Group’s Natuzzi upholstery furniture and home furnishings accessories to end consumers through directly-operated single-brand stores (Natuzzi Italia stores). The company opened its first store in February 2022.
(iii) Disclosures on Natuzzi Stores (UK) Ltd, associate
Natuzzi Stores (UK) Ltd is an immaterial associate, in which the Group acquired a 30% stake in early 2021. Natuzzi Stores (UK) Ltd is engaged in the sale of upholstered furniture and home furnishings accessories to end consumers through directly-operated Natuzzi Italia mono-brand stores.
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12. Other non-current receivables
Other non-current receivables consist of the following:
Security deposits for lease and other contracts
The security deposits for lease contracts, essentially consisting of leasing contracts, include the restricted cash for 892 as at December 31, 2025 and 2024, respectively, which relates to the early retirement contract that the Company signed with certain employees in 2023 (see note 23).
13. Other assets (non-current and current)
Other assets are analysed as follows:
Advances to suppliers
2,077
2,719
Deferred delivery and commission costs related to finished goods
1,160
844
Deferred costs for Natuzzi Display System
1,687
1,666
Deferred costs for slotting fees
681
842
Deferred costs for Service-Type Warranty
552
316
Other prepaid expenses and accrued income
600
435
Total other assets
6,757
6,822
Less current portion
(4,991
(5,073
Non-current portion
“Advances to suppliers” represent advance payments for raw materials, services and other expenses.
“Deferred delivery and commission costs related to finished goods” are related to the deferral of shipping and handling costs and commission expenses for finished goods that had not been delivered at year-end.
“Deferred costs for Natuzzi Display System” refer to the deferred costs incurred by the Company to purchase store fittings, which are then sold to retailers and used to set up their stores (“Natuzzi Display System” – NDS). Such costs are recognised over the life of the distribution contract signed with the retailer (usually five years).
“Deferred costs for slotting fees” refer to contributions made by the Company to retailers to prepare the retailer’s system to accept and sell the Group’s products. Such fees are recognised over the life of the contract signed with the retailers (usually five years).
“Deferred costs for Service-Type Warranty” refer to the deferral of costs incurred by the Company for the sale of a service-type warranty to end customers, considering that this insurance is provided by a third-party. Such costs are recognised over the life of the contractual insurance period, which is five years.
14. Inventories
Inventories are analysed as follows:
Leather and other raw materials
13,858
19,700
Goods in process
10,241
9,327
Finished goods
25,435
33,788
F-45
The following tables summarise the changes to the provision for slow moving and obsolete raw materials and finished goods included in inventories for the years ended December 31, 2025 and 2024.
Balance at beginning of year
13,961
14,986
1,172
Reductions
(1,185
(2,197
Balance at end of year
13,683
The additions and reductions are included in “cost of sales”.
There are no pledged inventories that could be limited in their availability.
15. Trade receivables
Trade receivables are due primarily from distributors and retailers who sell directly to end customers.
Trade receivables disaggregated by nature of the relationship with the customers are as follows:
Third parties
27,917
31,157
Related parties
7,963
5,323
Gross trade receivables
35,880
36,480
Allowance for doubtful accounts
(3,372
(3,661
Total trade receivables
For further information about transactions with related parties see note 45.
Trade receivables by geographic region are analysed as follows:
Italian customers
7,104
6,633
Other European customers
8,397
North American customers
9,040
9,277
Chinese customers
2,354
4,435
South American customers
4,148
4,300
Other foreign customers
4,837
3,433
Provision for doubtful accounts
The following tables provide the movements in the provision for doubtful accounts for the years ended December 31, 2025 and 2024.
3,661
4,263
Charges – bad debt expense
289
Reductions – write off of uncollectible amounts
(222
(806
Foreign exchange effect
(113
(85
3,372
F-46
The Parent sold trade receivables to a financial institution for cash advances (for further details, see note 33(C)(iii)). These trade receivables have not been derecognized from the statement of financial position, because the Parent retains substantially all of the risks and rewards – primarily credit risk. The amount received on their transfer has been recognised as a secured bank borrowing (see note 28).
The arrangement with the financial institution is such that the customers remit cash directly to the Parent and the Parent transfers the collected amounts to the financial institution. The receivables are considered to be held within a held‑to‑collect business model consistent with the Group’s continuing recognition of the receivables.
The following information shows the reporting-date carrying amount of trade receivables that have been transferred but have not been derecognised and the associated liabilities.
Carrying amount of trade receivables transferred
14,617
11,588
Carrying amount of associated liabilities
(13,434
(10,665
1,183
923
Information about the Group’s exposure to credit risk and impairment losses for trade receivables is included in note 33(C)(ii-a).
16. Other current receivables
Other current receivables are analysed as follows:
VAT
1,971
2,408
Receivables from National Institute for Social Security
3,041
4,615
Other
2,550
3,595
The “VAT” receivables include value added taxes and related interest reimbursable to the various companies of the Group. While currently due at the reporting date, the collection of the VAT receivable may extend over a maximum period of up to two years.
The “Receivables from National Institute for Social Security” represent the amounts paid in advance by the Company on behalf the governmental institute related to salaries and wages for those workers and employees subject to temporary work force reduction.
The “Other“ caption mainly includes certain receivables related to incentives on photovoltaic investments, receivables for advance payments on sales commissions related to the Group's Concessions in Mexico, and receivables from lessors.
17. Other current financial receivables
Other current financial receivables are analysed as follows:
During 2025, the Brazilian subsidiary made short-term financial investments amounting to 2,930 (18,857 Brazilian reais), through the purchase of government securities yielding approximately an interest of 1.0% per month.
In 2024, the Board of Directors of a subsidiary, in light of its liquidity position, approved the granting of a renewable annual loan to the minority shareholder, Truong Thanh Furniture Corporation (“TTF”), upon request. The loan carries an
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interest rate of LIBOR USD 1M - 0.25%, aligned with the yield of the Time Deposit in which the same subsidiary invested its excess liquidity. This loan, amounting to 1,191 ($1,400), has been renewed for a further 12 months. See Note 45.
18. Cash and cash equivalents
Cash and cash equivalents are analysed as follows:
Cash on hand
135
116
Bank accounts
20,185
20,206
The following tables show the Group’s cash and cash equivalents broken-down by region.
11,272
10,486
Asia
4,906
5,069
North America
3,812
3,261
South America
1,337
125
169
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:
31/12/23
Cash and cash equivalents in the statement of financial position
Bank overdrafts repayable on demand
(4,174
(3,328
(2,037
Cash and cash equivalents in the statement of cash flows
Bank overdrafts repayable on demand form an integral part of the Group’s cash management (see note 28).
19. Share capital, reserves and retained earnings
As at December 31, 2025, 2024 and 2023 the equity attributable to owners of the Company is analysed as follows:
20,448
As at December 31, 2025, the Company’s share capital, which is totally authorized and issued, is composed of 55,073,045 ordinary shares with par value of Euro 1 each, for a total of 55,073. Please, refer to Note 3(f) "Going concern assumption" for the reduction of share capital by more than one-third and related obligations set forth in Article 2446 of the Italian civil code.
Ordinary shareholders have the right to receive dividends, as approved by shareholders’ meetings, and to express one vote per each share owned.
F-48
Share capital is owned, as at December 31, 2025, 2024 and 2023, as follows:
Mr. Pasquale Natuzzi
Mrs. Anna Maria Natuzzi
2.6
Mrs. Annunziata Natuzzi
2.5
Other investors
38.7
An analysis of “Reserves” is as follows:
Legal reserve
10,971
Majority shareholder capital contribution
488
Share premium reserve
175
Stock option reserve
1,501
1,133
Reserve for gain on disposal of Non-controlling interests
4,219
Foreign operations translation reserve
Remeasurement of defined benefit plan
Reserve from Shareholder Financing
1,830
318
The “Legal reserve” is related to the requirements of Italian law, which provide that 5% of net income of the Parent Company is retained as a legal reserve, until such reserve is 20% of the issued share capital. The legal reserve may be utilized to offset losses; any portion which exceeds 20% of the issued share capital is distributable as dividends. The legal reserve totaled 10,971 as at December 31, 2025, 2024 and 2023.
The “Majority shareholder capital contribution” is one of the Parent Company’s reserves, which is restricted for capital grants received.
The "Share premium reserve" refers to the value of the service provided by the beneficiary who subscribed to the stock option, for the portion accrued in 2022.
The "Stock option reserve" represents the value of the services provided as at 31 December 2025 by the beneficiaries ofthe stock option plan.
The “Reserve for gain on disposal of Non-controlling interests” reports the recognition, for the share pertaining to the Group, of the contribution by the shareholder Troung Thanh Furniture (TTF) who carried out the relevant payment in March 2022 for the acquisition of 20% stake in Natuzzi Singapore PTE LTD. No further contribution took place in 2024 and 2025.
The “Foreign operations translation reserve” relates to the translation of foreign subsidiaries’ financial statements for those subsidiaries which have assessed their functional currency being different from Euro.
The “Remeasurement of defined benefit plan” refers to the calculation of the present value of the employees’ leaving entitlement at each reporting date, in compliance with applicable regulations and adjusted to take into account actuarial gains or losses. In particular, such actuarial gains or losses are reported in OCI (see note 4 (q)).
The “Reserve from Shareholder Financing” increased compared to the balance as at 31 December 2024, following the disbursement in 2025 of a three-year interest-free loan amounting to 10,000. The benefit arising from the absence of market-rate interest is recognized as an equity contribution. This increase is therefore in addition to that recognized in 2024, when the majority shareholder granted an initial three-year loan at below-market terms. See Notes 20 and 45.
OCI accumulated in reserves, net of tax, is reported in the following tables.
F-49
382
2,987
3,462
(117
(17
Total OCI
265
3,135
3,445
The disaggregation of changes of OCI by each type of reserve in equity is shown in the tables below.
Year ended December 31, 2025
Foreignoperationstranslationreserve
Remeasurementof definedbenefit plan
Exchange difference on translation of foreign operations
(1,791
Share of OCI of equity-method investees
Year ended December 31, 2024
(1,064
Year ended December 31, 2023
(2,003
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20. Long-term borrowings
Long-term borrowings (debts) as at December 31, 2025 and 2024 consist of the following:
Six-month Euribor (360) plus a 2.5% spread long-term debt with final payment due July 2025
1,313
2.3% fixed long-term debt with final payment due January 2026
1,240
1.5% fixed long-term debt with final payment due September 2027
217
0.21% fixed long-term debt with final payment due December 2034
7,734
80% of six-month Euribor (360) plus a 0.95% spread long-term debt with final payment due January 2035
894
1,035
Three-month Euribor (360) plus a 2.00% spread long-term debt with final payment due December 2027
1,600
2,400
Three-month Euribor (360) plus a 2.95% spread long-term debt with final payment due December 2028
1,895
2,526
2.5% Fixed rate long-term debt to majority shareholder with final payment due March 2027
2,359
2,255
Six-month Euribor (360) plus a 2.75% spread long-term debt with final payment due May 2027
4,096
Short-term financing (two disbursements with monthly interest rates of 1.00% and 1.45%), with the final tranche payable in November 2026.
3,107
Interest-free shareholder loan, repayable on 31 December 2028
8,515
Total long-term borrowings
30,346
18,720
Less current installments
Long-term borrowings, excluding current installments
During 2025, the actual level of rates ranged from 2.19% to 6.44%.
During 2023, the Romanian subsidiary renegotiated the two existing loans, one amounting to 10,000 obtained in 2015 with residual debt renewals every two years and maturing in August 2023, and the other amounting to 5,000 maturing in March 2025 with government guarantee, into a single loan with a balance as of December 31, 2024, of 1,313. The new repayment plan involves monthly installments until July 2025. The variable interest rate is based on the performance of the 6-month Euribor (360) plus a spread of 2.5%. The loan is secured by a mortgage on the Romanian plant for 16,628 and by the following covenants: (a) cash receipts >= 60% of turnover; (b) earnings before taxes and depreciation (EBITDA) >= 4.5%; (c) net debt / EBITDA <=3; (d) Debt Service Cover Ratio >= 1.35. The outstanding loan balance was fully repaid in July 2025.
In July 2017, the Company incurred long-term debt for a 7,000 nominal amount with installments payable on a monthly basis, fixed interest rate of 2.3% and with final payment due January 2026. The loan was early repaid in December 2025, resulting in the release of the mortgage over properties located in Matera for an amount of 14,000.
In March 2020, the Swiss subsidiary obtained a long-term loan from a financial institution, amounting to 378. This loan has been obtained as part of the COVID-19 measures to support business approved by the Swiss government. Such loan, of which 146 remains at year-end, has installments repayable on a six-month basis starting from 2022 and ending in September 2027. Since April 2023, the bank has informed us that the government authority has decided to apply a fixed annual interest rate of 1.5%.
In December 2019, the Company incurred long-term debt for a 4,181 nominal amount with installments payable on semi-annual basis, fixed interest rate of 0.21% and with final payment due December 2034. This long-term debt, of which 7,735 remains at year-end, following a further disbursement obtained in 2023 and a new disbursement in 2024, as well as the update of the amortization plan by the financial institution, is guaranteed by a mortgage on the properties located in Ginosa,
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Laterza and Santeramo in Colle (Italy) for a total amount of 13,936. Repayment of the aforementioned long-term debt will commence during 2026.
In December 2019, one of the Italian subsidiaries incurred long-term debt for a 435 nominal amount with installments payable on semi-annual basis and with final payment due January 2035. This long-term financing, which benefited from additional disbursements in 2021 and 2023 and had an outstanding balance of 894 at year-end, bears interest at a variable rate based on 80% of the 6-month Euribor (360) plus a spread of 0.95%. Such loan is guaranteed by a mortgage on the properties located in Pozzuolo del Friuli (Italy) for a total amount of 3,000.
In January 2022, the Parent obtained a long-term loan from a financial institution, amounting to 4,000. This loan, which is guaranteed by an Italian governmental authority, has been made available by the Italian government as part of the COVID-19 measures to support businesses. Such loan, of which 1,600 remains at year-end, has installments repayable on a quarterly basis starting from January 2023, after the 12-month interest-only period, and ending in December 2027. This long-term debt provides for variable interest installments determined based on the three-month Euribor (360) plus a 2.00% spread.
In January 2024, the Parent Company obtained a long-term bank loan with a nominal amount of 3,000, repayable in quarterly installments starting from June 2024, at an interest rate of Euribor 3M + a 2.95% spread, with a final payment due on December 31, 2028. The debt is secured by a government entity guarantee covering 90% of the loan. As of December 31, 2025, the outstanding debt amounts to 1,895.
On March 31, 2024, the Parent Company obtained a three-year loan from the majority shareholder, due on March 31, 2027, with a nominal amount of 2,500, at an annual interest rate of 2.5%, with annual interest payments and full repayment of the debt on March 31, 2027. As of December 31, 2025, the outstanding debt amounts to 2,359.
During 2025, the Romanian subsidiary obtained a long-term loan of 5,000, repayable in monthly installments until May 2027. The loan bears a variable interest rate based on the 6-month Euribor (360) plus a spread of 2.75%. The financing is secured by a mortgage over the Romanian plant and is subject to the following covenants: (a) collections ≥ 70% of revenue; (b) earnings before interest, taxes, depreciation, and amortization (EBITDA) ≥ 4.5%; (c) net debt / EBITDA ≤ 3; and (d) Debt Service Cover Ratio ≥ 1.35. As at 31 December 2025, the outstanding balance of the loan amounted to 4,096.
In August and October 2025, the Brazilian subsidiary contracted two short-term loans, each with a nominal amount of BRL 10 million, for a total of 3,107. The first loan is structured with repayment in two installments: the first due in February 2026 and the second in August 2026, bearing a fixed monthly interest rate of 1.0%. The second loan is repayable in a single installment in November 2026, with a fixed monthly interest rate of 1.45%.
On 21 November 2025, the majority shareholder and CEO of the Group entered into an agreement with the Parent Company to support the industrial restructuring plan through a credit facility. Under this facility, the Parent Company may request, until 31 December 2026, multiple tranches of an interest-free loan up to a total amount of 15,000, with the option to convert the disbursed loan tranches into equity contributions in the event of a capital increase. In the absence of a capital increase, the loan is repayable by 31 December 2028. The Parent Company requested and received two tranches of 5,000 each, the first at the end of November and the second in mid-December. As the loan is interest-free, a market interest rate of 5.50% was determined, resulting in the recognition of the present value of the loan at the time of disbursement of 8,488, with the difference of 1,512 recorded in an equity reserve (see Notes 19 and 45). As at 31 December 2025, interest of 26 had accrued on the loan, bringing the outstanding balance to 8,514.
During 2025 and 2024, the Company made all installment payments related to the aforementioned long-term borrowings.
Interest expense related to long-term borrowings for the years ended December 31, 2025, 2024 and 2023 is 699, 768 and 599, respectively. Interest due is paid with the related installment.
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21. Lease liabilities (non-current and current)
The non-current and current portion of the lease liabilities as at December 31, 2025 and 2024 is as follows:
Non-current portion of the lease liabilities
Current portion of the lease liabilities
49,443
57,750
Changes in the carrying amount of the lease liabilities for the year ended December 31, 2025 and 2024 are reported in the following tables.
62,327
Additions for new leases
10,313
5,215
Lease payments
(12,768
(14,098
Disposal of leases
(5,301
(1,911
243
(4,125
2,356
As at December 31, 2025, the incremental borrowing rate is within the range of 3% and 12% (the same range as at December 31, 2024).
The maturity analysis of the contractual undiscounted cash flows of the lease liabilities as at December 31, 2025 and 2024 are reported in the tables below.
Less than one year
13,629
One to five years
32,076
39,294
More than five years
17,970
Total undiscounted lease liabilities
70,893
Some property leases contain extension options exercisable by the Group up to one year before the end of the non-cancellable contract period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement date whether it is reasonably certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant changes in circumstances within its control. The Group has estimated that the potential future lease payments, should it exercise the extension option, would result in an increase in lease liability of 39,967 as at December 31, 2025 (43,309 as at December 31, 2024).
22. Other non-current debts
The installment liability related to the adaptation works of the plant of a Chinese subsidiary, originated in 2024, was settled early in 2025.
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Trade payables on leasehold improvements
Total Other non-current debts
23. Other non-current liabilities
The item "Other non-current liabilities" as at December 31, 2025 and 2024 is as follows:
Total Other non-current liabilities
The item reports the non-current portion of the debt to employees of the Parent Company following acceptance of the offer ("early retirement agreement") for termination of the employment relationship regulated by a specific legislative regulation providing for the early retirement of specific employees.
In particular, on 30 November 2023, 59 employees of the Parent Company signed up to a voluntary exit plan regulated by specific Italian regulations aimed at encouraging the retirement of staff earlier than indicated by Italian laws, with the commitment of the Company to hire new staff with professional skills more suited to current and prospective needs.
The early retirement agreement provides that the Company makes monthly payments to the government agency, INPS-National Social Security Institute, for the people who have left, equal to the amount of the allowance communicated by the same government agency, whose amount is lower than the salary such people were entitled to, and the related social contribution according to a plan that for each individual employee covers the time period remaining until accrual of pension rights.
The total amount of non-discounted installment payments to be completed in 2028 is 2,169, of which the debt payable beyond one year (from 2027 onwards) amounts to 1,402.
The total debt has been discounted at a rate of 6.308%, and as at December 31, 2025 the amount of the discounted debt beyond the year is equal to 1,386 (2,160 as at December 31, 2024).
In 2023, the early retirement agreement required the opening of a deposit account as a guarantee for 892 (see note 12) and the issuance of a surety bond for 4,459 in favor of the government entity (see note 44).
24. Employees’ leaving entitlement
Changes to employees’ leaving entitlement occurring during 2025 and 2024 are analysed as follows:
12,389
Current service cost
365
Benefits paid
Actuarial losses/(gains)
(229
(68
The employees’ leaving entitlement refers to a defined benefit plan provided for by the Italian legislation due and payable upon termination of employment, assuming immediate separation (see note 4(q)).
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The principal assumptions used in determining the present value of such defined benefit obligation (“DBO”) related to the employee benefit obligation are reported as follows:
Annual discount rate
3.37%
3.18%
Annual future salary increase rate
2.00%
Annual inflation rate
Annual DBO increase rate
3.00%
Mortality
RG48 mortality tables published by the General State Accounting
Inability
National Institute for Social Security tables, by age and sex
Retirement
100% upon achievement of AGO requisites
Annual frequency of turnover
Annual frequency of DBO advances
A quantitative sensitivity analysis for significant assumptions impacting the DBO as at December 31, 2025 and 2024 is reported as follows:
+1.00% on turnover rate
-1.00% on turnover rate
(45
(42
+0.25% on annual inflation rate
128
-0.25% on annual inflation rate
(126
(141
+0.25% on annual discount rate
(197
-0.25% on annual discount rate
226
The sensitivity analysis above has been determined based on a method that extrapolates the impact on the defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity analysis is based on a change in a significant assumption, keeping all other assumptions constant. Such analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.
The following are the expected payments of the employees’ leaving entitlement in future years:
Within 1 year
1,099
742
Between 2 and 5 years
3,471
3,263
The average duration of the defined benefit plan as at December 31, 2025 and 2024 are 8.2 and 8.7 years, respectively.
Employee benefits
Share-based payment arrangements
The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
A. Description of share-based payment arrangement
On July 1, 2022, the extraordinary shareholders’ meeting of Natuzzi S.p.A. approved the “Natuzzi 2022-2026” Stock Option Plan for the Natuzzi Group’s key employees and directors (the “SOP”) and granted the Company’s Board of
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Directors the right to carry out an increase in the share capital of Natuzzi S.p.A., in one or more tranches, with the exclusion of preemptive rights that will be necessary to issue ordinary shares of the Company to the beneficiaries under the SOP.
On July 15, 2022, Natuzzi S.p.A. entered into an award agreement with each of three key officers of the Natuzzi Group having strategic functions. The award agreements have the following characteristics:
The ordinary shares of Natuzzi S.p.A. are listed on the New York Stock Exchange (“NYSE”) in the form of American Depositary Shares (“ADSs”), issued by a U.S. depositary bank. Each ADS represents 5 ordinary shares of Natuzzi S.p.A.
To determine the fair value of an option, it was necessary to compare the price of the underlying ADS of the Company with the strike price relating to each tranche subject to evaluation, the latter multiplied by 5, since each ADS represents 5 ordinary shares of Natuzzi S.p.A.
The terms and conditions of the award agreements entered into are set forth below.
Grant date/beneficiaries
Number of equity-based instruments
Vesting conditions
Contractual life of the options
Three key officers having strategic functions – July 15, 2022
562,512 ADSs equivalent to2,812,560 ordinary shares
Continuous service status until the vesting date
From 1 to 6 years
In particular, the number of ordinary shares of Natuzzi S.p.A. that each of the three beneficiaries can subscribe for pursuant to the relevant award agreements is broken down below and shown in terms of ADS equivalent.
Vesting Date
Beneficiary 1
Beneficiary 2
Beneficiary 3
15/Aug/22
36,533
6,583
44,000
87,116
31/May/23
54,800
9,874
33,000
97,674
31/May/24
38,338
103,012
31/May/25
73,067
13,165
5,338
91,570
31/May/26
31/May/27
365,334
65,826
131,352
562,512
The exercise date for the stock options is 31 December 2027 for Beneficiaries 1 and 2, and 31 December of each vesting year up to 31 December 2027 for Beneficiary 3. In addition to Beneficiary 3, who left the Group in February 2024, both Beneficiary 1 and Beneficiary 2 waived their vested stock options upon resigning from the Parent Company during 2025. Consequently, as at 31 December 2025, no employees held any outstanding stock options.
B. Measurement of fair values
The fair value of the stock options granted to each of the three beneficiaries was measured based on the binomial tree model by Cox, Ross e Rubinstein (binomial tree lattice model). Service and non-market performance conditions attached to the arrangements were not taken into account in measuring fair value.
The inputs used in the measurement of the fair values at grant date of the stock options were as follows:
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Input data
Beneficiary 3 (sub 1)
Beneficiary 3(sub 2)
Fair value of the ADS option at grant date
$
4.3900
4.3000
4.5300
3.3700
EURUSD exchange rate at grant date
n.a.
1.0059
Closing price of the ADS at grant date
8.8700
Currency of the exercise price
U.S. dollar
Exercise price
14.5950
15.3450
5.0295
15.6000
Expected volatility of the stock price (weighted-average)
67.73
Expected volatility of the EURUSD exchange rate
7.27
Expected life (weighted-average) *
2.72 years
0.51 years
0.59 years
Expected dividends
Risk-free interest rate (based on government bonds)
2.80
(*) average of the different vesting dates.
Expected volatility was based on an evaluation of the historical volatility of both the price of the underlying ADSs of Natuzzi S.p.A. and EURUSD exchange rate, in particular by considering the relevant time series of the preceding 260 business days.
The total fair value of the SOP as at July 15, 2022, as determined by the abovementioned financial method, was equal to $2,458,542.
C. Reconciliation of outstanding share options
The number and weighted-average exercise prices of the stock options granted in 2025 are the following:
Number of options (ADS)
Weighted-average exercise price (ADS)
Outstanding as at January 1, 2025
431,160
14.71
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding as at December 31, 2025
Exercisable as at December 31, 2025
There are no further options granted during the year in addition to those granted on 15 July 2022.
During 2025, no beneficiaries exercised the vested portion of their options, and Beneficiaries 1 and 2 waived, upon resignation, the right to exercise options on shares vested during their service, a right that under the terms of the plan would have expired on 31 December 2027. Consequently, as at 31 December 2025, the number of outstanding and exercisable shares under the plan was nil.
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25. Contract liabilities (non-current and current)
Contract liabilities as at December 31, 2025 and 2024 consist of the following:
Advance payments from customers
18,055
22,041
Deferred income from licensing of Natuzzi’s trademarks
4,814
5,196
Deferred revenue for Natuzzi Display System
2,191
2,162
Deferred revenue for Service-Type Warranty
1,618
974
Total contract liabilities
26,678
30,373
(19,818
(23,587
“Advance payments from customers” are related to considerations received by the Group upon sale of the Group’s products, and before their delivery to end customers.
“Deferred income from licensing Natuzzi’s trademarks” refers to the deferral of revenue deriving from licensing Natuzzi’s Trademarks, to the former subsidiary Natuzzi Trading Shanghai. Such revenue, in the amount of 4,184 (net of the elimination of intercompany profit on the transaction), has been deferred over the useful life (20 years) of the licensed trademarks.
“Deferred revenue for Natuzzi Display System” refers to the deferral of revenue deriving from the sale of store fittings to retailers, which are used to set up their stores (“Natuzzi Display System” – NDS). Such revenue is recognised over time based on the length of the distribution contract signed with the retailer (usually five years).
“Deferred revenue for Service-Type Warranty” refers to the deferral of revenue deriving from the sale of a service-type warranty to end customers, which is recognised over time based on the contractual length of the insurance period (five years).
The amount of revenue recognised for the years ended December 31, 2025, 2024 and 2023 that was included in the opening contract liabilities balance amounts to 23,587, 20,333 and 17,124, respectively.
26. Provisions (non-current and current)
Provisions as at December 31, 2025 and 2024 consist of the following:
Provision for legal claims
5,425
Provision for tax claims
400
436
Provision for warranties
Termination indemnities for sales agents
825
Other provisions
Total provisions
7,637
9,657
(1,680
(1,866
The provision for legal claims includes the amounts accrued by the Group for the probable contingent liability related to legal procedures initiated by several third parties as result of past events.
The provision for tax claims refers to the amounts accrued by the Group for the probable liability that will be paid to settle some tax claims.
The provision for warranties includes the estimated liabilities for the Group’s obligation to repair or replace faulty products under the assurance warranty terms (see notes 4(r) and 4(t)). The warranty claims for the finished products sold are
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estimated based on past experience of the level of repairs, faulty products and disputes with customers. The Company expects that these costs will be incurred mainly in the next financial year. Significant assumptions used to calculate the provision for such assurance type warranty are the warranty period for all products sold, current sales levels and historical information available about repairs, faulty products and dispute with customers.
The termination indemnities for sales agents refer to termination indemnities, provided for by the current regulations, due to the Group’s agents upon termination of their agreement with the Company or relevant subsidiary.
The item "other provisions" includes amounts set aside for investments in joint ventures that have already been fully written down.
Changes in the above provisions for the years ended December 31, 2025 and 2024 are analysed as follows:
Provisionfor legalclaims
Provisionfor taxclaims
Provisionforwarranties
Terminationindemnitiesfor salesagents
7,432
489
2,352
861
502
11,636
Provisions made during the year
1,108
603
2,738
Provisions used during the year
(2,566
(1,357
(192
(4,117
Provisions reversed during the year
(51
(600
747
633
407
2,350
(2,410
(924
(3,642
(710
As at 31 December 2025, the provision for legal disputes relates to 1,397 (3,795 as at 31 December 2024) and represents a probable contingent liability arising from legal claims brought by a group of employees against the Company in connection with an alleged misapplication of the social security procedure “CIGS—Cassa Integrazione Guadagni Straordinaria” without the correct implementation of temporal rotation during the period 2004–2016. According to the “CIGS” procedure, the Company pays a reduced salary to the worker for a certain period of time based on formal agreements signed with the Trade Unions and other Public Social parties. The Company, with the support of its legal advisors, has assessed the probable liability in respect of these legal claims at 1,397.
27. Deferred income for government grants
Changes in the carrying amount of deferred income for government grants for the years ended December 31, 2025 and 2024 are analysed as follows:
13,135
398
Credit to profit or loss
(1,451
(2,187
Government grants are related to benefits the Group obtained in 2025 and previous years from the Italian government as part of the incentive programs for under-industrialised regions in Southern Italy. They have been received to compensate the Group for the purchase of certain items of property, plant and equipment and for certain expenses mainly related to research projects. Deferred income for grants related to property, plant and equipment are credited to profit or loss on a straight-line basis over the expected lives of the related assets. Deferred income for grants related to expenses are credited to profit or loss in the periods in which the costs are recognised.
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There are no unfulfilled conditions or contingencies attached to these grants, except for that in accordance with the terms of some grants, the Group is prohibited from selling certain items of property, plant and equipment for a period of five years from the date on which the related grant was finally approved by the Italian governmental agency.
28. Bank overdrafts and short-term borrowings
Bank overdrafts and short-term borrowings as at December 31, 2025 and 2024 are analysed as follows:
Bank overdrafts
4,174
3,328
Borrowings related to a recourse factoring agreement
13,434
10,665
Borrowings secured with trade receivables not part of factoring agreement
3,828
8,734
Borrowings unsecured
761
The weighted average interest rates on the bank overdrafts and short-term borrowings for the years ended December 31, 2025 and 2024 are as follows:
6.07
7.02
Borrowings
5.68
6.37
As at December31, 2025, the unused portion of credit facilities available to the Group, for which no commitment fees are due, amount to 4,445 (30,640 as at December 31, 2024). Such unused portion is mainly related to a recourse factoring agreement for export-related trade receivables (3,383) and bank overdrafts (1,062).
29. Trade payables
Trade payables as at December 31, 2025 and 2024 are analysed as follows:
Invoices received - supplier not part of factoring facility
36,140
40,474
Invoices received - supplier factoring facility
10,097
11,670
Accruals for invoices to be received
11,210
14,333
Trade payables mainly represent amounts payable for purchases of goods and services in Italy and abroad.
There were no trade payables outstanding to related parties as of December 31, 2025 and 2024. For further details, reference is made to Note 45.
The Parent participates in a supply chain finance programme (SCF), also known as 'reverse factoring', under which certain of its suppliers may elect to receive early payment of their invoices from a bank by factoring their receivables from the Parent. Under the arrangement, a bank agrees to pay amounts to a participating supplier in respect of invoices owed by the Parent and receives settlement from the Parent at a later date.
The principal purpose of this programme is to enable the willing suppliers to sell their receivables due from the Parent to a bank before their due date. This also enables the Parent to facilitate efficient payment processing.
The Parent has not derecognised the original liabilities to which the arrangement applies because neither a legal release was obtained nor was the original liability substantially modified on entering into the arrangement. This is because the replacement of the commercial invoice with another debt instrument is not foreseen, nor is the company required to provide guarantees or request the opening of credit lines.
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From the Parent’s perspective, the arrangement does not significantly extend payment terms beyond the normal terms agreed with other suppliers that have not elected to participate in the program.
The settlement of trade payables, measured in terms of the average number of days between the invoice date and the payment date, occurs within a timeframe ranging from 90 to 150 days, including payables subject to reverse factoring arrangements.
The Parent, therefore, presents the amounts factored by these suppliers as trade payables because the nature and function of the financial liability remain the same as those of other trade payables but discloses disaggregated amounts in this note. All payables under the SCF program are classified as current as at December 31, 2025 and 2024.
The payments to the bank are included within operating cash flows because they continue to be part of the Group’s normal operating cycle and their principal nature remains operating – i.e., payments for the purchase of goods and services.
Of the invoices received from suppliers and included in the factoring agreement, totaling 10,097 and 11,670 as of December 31, 2025 and 2024, respectively, suppliers had collected a total amount of 5,280 and 5,444, respectively.
No significant changes unrelated to cash flows have been identified in the carrying amount of trade payables subject to reverse factoring arrangements.
30. Other payables
Other payables as at December 31, 2025 and 2024 are analysed as follows:
Salaries and wages
6,653
6,014
Social security contributions
5,643
5,292
Vacation accrual
5,265
4,499
Withholding taxes on payroll and on others
1,928
1,966
Advance payment from the sale of a building (High Point, NC, USA)
3,658
Other accounts payable
5,595
5,277
Liabilities to employees, social security institutions, and for accrued but unused vacation primarily relate to obligations for the payment of monthly salaries, provisions for vacation, and the related social charges. The item 'Withholding taxes on payroll and on others' reflects tax withholdings made in accordance with applicable tax legislation.
As at 31 December 2025, the item 'Social security contributions'includes the current portion of the early retirement agreement ('expansion contract’), amounting to 660 (668 as at 31 December 2024).
The liability arising from the advance payment for the sale of the building located in High Point was zero as at 31 December 2025, following the execution of the property sale agreement in March 2025 (see Notes 7 and 45). As at 31 December 2024, a liability of 3,658 had been recognized in relation to the advance received from the majority shareholder upon signing the preliminary agreement for the disposal of the High Point building in October 2024.
31. Other liabilities
Other liabilities as at December 31, 2025 and 2024 are analysed as follows:
Advance payments for government grants
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As at December 31, 2025 and 2024, advance payments for government grants are related to considerations received by the Parent for government grants obtained for research projects.
32. Derivative financial instruments
A significant portion of the Group’s revenue and costs are denominated in currencies other than the Euro. Consequently, a significant portion of its revenue and costs is exposed to fluctuations in the exchange rates between the Euro and other currencies. The Group uses forward exchange contracts (known in Italy as domestic currency swaps) to reduce its exposure to the risks of short-term decrease in the value of its foreign currency denominated revenue. The Group uses such derivative instruments to protect the value of its foreign currency denominated revenue, and not for speculative or trading purposes. Despite being entered into such domestic currency swaps with the intent to reduce the foreign currency exposure risk for trade receivables and expected sales, the Group’s derivative financial instruments do not qualify for being accounted for as hedging instruments according to IAS 39. Therefore, the Company reflects the positive or negative changes in the fair value of those derivatives through profit or loss in the caption “Net exchange rate gains/(losses)”.
The tables below summarise in euro equivalent the contractual amounts of forward exchange contracts used to hedge principally future cash flows from trade receivables and sale orders as at December 31, 2025 and 2024.
The following tables present information regarding the contract amount in euro equivalent amount and the estimated fair value of all of the Group’s forward exchange contracts. Contracts with net unrealized gains are presented as “assets” (within the caption “Gains on derivative financial instruments”) and contracts with net unrealized losses are presented as “liabilities” (within the caption “Losses on derivative financial instruments”).
Contractamount
Unrealisedgains/(losses)
As at December 31, 2025 and 2024, the forward exchange contracts have a net unrealized gain of 57 and a net unrealized loss of 244, respectively. These amounts are recorded in net exchange rate gains/(losses) in the consolidated statements of profit or loss (see note 40).
33. Financial Instruments – Fair values and risk management
IFRS 9 “Financial Instruments” sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaced IAS 39 “Financial Instruments: Recognition and Measurement”.
IFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit and loss (FVTPL). The classification of financial assets under IFRS 9 is generally based on the business model within which a financial asset is managed and its contractual cash flow characteristics.
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The Group’s principal financial assets, other than derivatives, include cash and cash equivalents, trade and other receivables that derive directly from operations. The Group’s principal financial liabilities, other than derivatives, comprise of long-term borrowings, lease liabilities, bank overdrafts and short-term borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group also enters into derivative transactions, namely forward exchange contracts, to protect the value of its foreign currency denominated revenue, not for speculative or trading purposes (see note 32).
For an explanation of how the Group classifies and measures financial instruments and accounts for related gains and losses under IFRS 9, see notes 4(l), 4(m), 4(n), 4(o), 4(p) and 4(s).
A. Accounting classification of financial assets and financial liabilities
The following tables show the classification and carrying amounts of Group’s financial assets and financial liabilities as at December 31, 2025 and 2024.
Financial assets
Financial assets measured at amortised cost
Total (a)
69,492
71,231
Financial assets measured at fair value
Forward exchange contracts
Total (b)
Total financial assets (a+b)
69,568
71,255
Financial assets measured at amortised cost include trade receivables, other receivables (non-current and current) and cash and cash equivalents. Financial assets at fair value reflect the positive change in fair value of forward exchange contracts that are not designated as hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for future cash flows from accounts receivables and sale orders.
For further details on “Trade receivables”, “Other receivables”, “Cash and cash equivalents” and “Forward exchange contracts” reference should be made to notes 15, 12-16, 18 and 32, respectively.
Financial liabilities
Financial liabilities measured at amortised cost
Lease liabilities
185,903
195,605
Financial liabilities measured at fair value
Total financial liabilities (a+b)
185,922
195,873
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Financial liabilities measured at amortised cost include long-term borrowings (non-current and current portion), lease liabilities (non-current and current portion), bank overdrafts and short-term borrowings, trade payables and other payables. Financial liabilities measured at fair value reflect the negative change in fair value of forward exchange contracts that are not designated as hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for expected future cash flows from trade receivables and sale orders.
For further details on “Long-term borrowings”, “Lease liabilities”, “Other non-current liabilities", “Bank overdrafts and short-term borrowings”, “Trade payables”, “Other payables” and “Forward exchange contracts” reference should be made to notes 20, 21, 22, 23, 28, 29, 30 and 32, respectively.
B. Fair value and measurement of fair values of financial assets and financial liabilities
Management has assessed that the fair values of cash and cash equivalents, trade and other receivables, trade and other payables, bank overdrafts and short-term borrowings approximate their carrying amounts largely due to the short-term maturities of these instruments.
The following tables show the carrying amount and fair value of Group’s financial assets and financial liabilities as at December 31, 2025 and 2024, other than those with carrying amount that are reasonable approximation of fair value.
Carrying amount
Fairvalue
Floating-rate borrowings
8,485
8,778
7,274
7,552
Fixed rate borrowings
21,861
24,390
11,446
14,078
33,168
21,630
As at December 31, 2025 and 2024, the fair value measurement hierarchy of the forward exchange contracts and long-term borrowings is “significant observable inputs” (level 2).
There were no transfers between level 1 (quoted prices in active markets) and level 2 during 2025 and 2024. There were no level 3 (significant unobservable inputs) fair values estimated as at December 31, 2025 and 2024.
The following methods and assumptions are used to estimate the fair values.
Forward exchange contracts are valued using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation techniques include forward pricing using present value calculations. The models incorporate various inputs, including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies, interest rate curves and forward rate curves of the underlying commodity.
The fair values of the Group’s interest-bearing borrowings are determined using the discounted cash flow method. The discount rate used reflects the issuer’s borrowing rate as at the end of the reporting period. The own non-performance risk as at December 31, 2025 and 2024 is determined to be insignificant.
C. Financial risk management
The Group has exposure to the following risks arising from financial instruments:
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(i) Risk management framework
The management of the Group’s risks arising from financial instruments is performed on the basis of guidelines set by the Company’s Board of Directors. The main purpose of these guidelines is to balance the Group’s liabilities and assets, in order to ensure an adequate capital viability. The main financial sources of the Group are represented by a mix of equity and financial liabilities, including long-term borrowings used to finance investments, bank overdrafts and short-term borrowings used to finance the Group’s working capital.
(ii) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from customers. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in this note.
Impairment losses on financial assets recognised in profit or loss for the years ended December 31, 2025, 2024 and 2023 are related mainly to trade receivables and are as follows:
Impairment loss on trade receivables
(ii-a) Trade receivables
The Group’s customers are distributors, retailers and end consumers.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate. Details of concentration of revenue are included in note 34.
Customer credit risk is managed on the basis of the Group’s established policies, procedures and controls relating to customer credit risk management.
In particular, the Group has established a credit policy under which each customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, if they are available, financial statements, credit agency information, industry information and in some cases bank references. After such review, sale limits are established for each customer and reviewed periodically. Any sales exceeding those limits require approval from senior management.
Furthermore, the Group limits its exposure to credit risk from trade receivables by establishing a maximum payment period in the range of 30-90 days for individual customers. All extensions were granted within current sales limits after careful consideration of the creditworthiness of the customer and each customer that was granted an extension is closely monitored for credit deterioration. In order to mitigate credit risk, sales to distributors or retailers for which no payment extensions are granted due to an uncertain creditworthiness assessment, are required to be settled in cash (“cash against documents”, “cash on delivery”, “payment in advance”). Furthermore, sales to the end consumers are also required to be settled in cash or using major credit cards, thus mitigating the credit risk.
More than 80% of the Group’s distributors and retailers have been transacting with the Group for at least five years, and none of these customers’ balances have been written off or are credit‑impaired at the reporting date. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a distributor or retailer, their geographic location, industry, trading history with the Group and the existence of previous financial difficulties.
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The Group does not require collateral to be given for trade receivables. The Group does not have trade receivables for which no loss allowance is recognised because of collateral provided.
Management closely monitors the outstanding trade receivables to prevent losses.
Finally, in order to significantly reduce its exposure to credit risk, the Group insures the non-collection risk related to a significant portion of its trade receivables with a third party insurer and, in the case of customer insolvency, the insurance company refunds about 85% of the uncollected outstanding balances. Accordingly, the credit risk is entirely borne by the Group for non-insured trade receivables while it is only exposed to approximately 15% for insured trade receivables.
The Group evaluates the concentration of risk with respect to trade receivables and revenue as low, as its customers are located in several jurisdictions and operate in largely independent markets (see notes 15 and 34). Furthermore, as at December 31, 2025, 2024 and 2023, the Group had one customer, the joint venture Natuzzi Trading Shanghai, whose purchases exceeded 5% of revenue and trade receivables (see note 45).
23,215
25,192
26,523
2,341
4,022
4,198
As at December 31, 2025 and 2024, insured and non-insured trade receivables are as follows:
Insured trade receivables
24,250
23,253
Non-insured trade receivables
11,630
13,227
Net trade receivables
As at December 31, 2025 and 2024 the ageing of trade receivables is as follows:
Current (not past due)
26,534
24,462
From 1 to 29 days past due
5,199
3,945
From 30 to 60 days past due
841
746
From 61 to 90 days past due
595
582
More than 90 days past due
2,711
6,745
The movements in the provision for doubtful accounts in respect of trade receivables for the years ended December 31, 2025 and 2024 are reported in note 15.
The provision for doubtful accounts is estimated by the Group based on the insurance in place, the credit worthiness of its customers, historical trends, as well as current and future general economic conditions.
Specifically, for receivables subject to collective valuation an impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The impairment allowance rates (default rates) are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by customer type and rating, and coverage by credit insurance). The calculation reflects the probability-weighted outcome based on reasonable and supportable information available at the reporting date about past events, current conditions and forecasts of future economic conditions.
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Instead, for individual receivables which are known to be difficult to collect an impairment analysis is performed at each reporting date to measure expected credit losses. The impairment allowance is estimated by the Group based on the financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or late payments.
Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix as at December 31, 2025 and 2024, further to the adoption of IFRS 9.
Days past due
<30 days
30-60 days
61-90 days
> 90 days
Trade receivables subject to collective valuation
215
Trade receivables subject to specific valuation
35,665
Total gross carrying amount
Default rate
0.57
7.04
12.72
19.75
Expected credit loss
1,279
1,358
35,122
0.65
9.60
26.31
58.83
(ii-b) Other receivables
As at December 31, 2025, and 2024 other receivables current and non-current amount to 16,668 and 18,089, respectively. Such receivables are considered to have a low credit risk and the impairment loss has been measured on a 12-months expected credit loss basis. Management considers its other receivables to have a low credit risk as they have a low risk of default and their counterparties are able to meet their contractual cash flow obligations in the short-term. As at December 31, 2025 and 2024 the identified impairment loss of other receivables is immaterial.
(ii-c) Cash and cash equivalents
As at December 31, 2025 and 2024 the Group has cash and cash equivalents of 20,320 and 20,322, respectively. Indeed, the Group considers its cash and cash equivalents to have a low credit risk based on the external credit ratings of the financial institutions. Indeed, the Group’s cash and cash equivalents are held with financial institutions, which have external credit risk ratings that are equivalent to the understood definition of “investment grade”. Impairment of cash and cash equivalents has been measured on a 12-months expected credit loss basis and reflects the short-term nature of the exposures. As at December 31, 2025 and 2024 the identified impairment loss of cash and cash equivalents is immaterial.
(ii-d) Derivative financial instruments
Domestic currency swaps (see note 32) are entered into with financial institutions that have outstanding external credit ratings (“investment grade”). As at December 31, 2025 and 2024 the identified impairment loss of the favourable domestic currency swaps is immaterial.
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(iii) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group aims to maintain the level of its cash and cash equivalents at an amount in excess of expected cash outflows on financial liabilities over the next 60 days. The Group also monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables. As at December 31, 2025, the expected cash flows from trade and other receivables maturing within two months were in excess of the expected cash outflows for trade and other payables due within two months. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted.
Therefore, the Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, short-term borrowings and long-term borrowings.
The steps taken by the Group in 2025 to manage its liquidity needs, together with the impact of those steps on the consolidated financial statements, include the following:
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The tables below summarize the remaining contractual maturities of financial liabilities as at December 31, 2025 and 2024. The amounts are gross and undiscounted, and include contractual interest payments and exclude the impact of netting agreements.
Less than2 months
2 to 12months
1 to 2years
2 to 5years
More than5 years
378
7,056
2,079
9,709
82,531
Total financial liabilities
49,757
74,212
194,584
626
4,459
2,568
8,034
5,943
2,379
11,250
12,513
26,781
66,942
93,648
53,306
82,651
15,081
34,815
23,913
209,766
Interest payments on variable-rate borrowings presented in the tables above reflect forward interest rates as at the reporting date and may vary in line with changes in market interest rates.
With the exception of such financial liabilities, the cash outflows included in the maturity analysis are not expected to occur significantly earlier, nor for amounts materially different from those presented.
In addition, the following is to be considered: (a) as at December 31, 2025, the Group has unused credit lines of 4,445 (see note 28); (b) the Parent Company can use the credit facilities of its subsidiaries adhering to the cash pooling contract in place; from time to time, the Parent Company evaluates the adequacy of such credit facilities, requesting additional facilities as needed; (c) the Group holds cash at foreign subsidiaries, that can be withdrawn by the Company subject to the approval of a dividend distribution; some of these dividends are subject to withholding taxes; (d) the Group can apply for long-term borrowings to sustain long-term investments; (e) there are no significant liquidity risk concentrations, both on financial assets and on financial liabilities.
(iv) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (e.g., interest rates, foreign exchange rates). Market risk, mainly, depends on the trend of the demand for furniture and other finished products, the trend in prices of raw materials and the fluctuation of interest rates and foreign currencies.
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The market demand risk is managed by way of a constant monitoring of markets, performed by the commercial division of the Group, market diversification in the different geographical locations of customers and a product diversification in the different brands and models.
In order to manage the prices of raw materials risk, the Group constantly monitors procurement policies and attempts to diversify suppliers while respecting the quality standards expected by the market.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term borrowings obligations with floating interest rates. The Group manages its interest rate risk by having a portfolio of fixed and variable rate borrowings. As at December 31, 2025, approximately 72.04% of the Group’s borrowings were at a fixed rate of interest (2024: 61.14%). No derivative financial instruments were entered into by the Group to manage the cash flow risk on floating interest-rate borrowings.
The following tables demonstrate the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Group’s profit before tax is affected through the impact on floating rate borrowings as follows:
Increase/decreasein basis points
Effect on profitbefore tax
+45
-45
(40
December 31, 2023
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in a foreign currency) and the Group’s net investments in foreign subsidiaries. In particular, a significant portion of the Group’s revenue and costs are denominated in currencies other than the Euro. Consequently, a significant portion of its revenue and costs is exposed to fluctuations in the exchange rates between the Euro and other currencies. The Group uses forward exchange contracts (known in Italy as domestic currency swaps) to reduce its exposure to the risks of short-term decreases in the value of its foreign currency denominated revenue. For further details, see note 32.
When a derivative is entered into for the purpose of being a hedge, the Group negotiates the terms of the derivative to match the terms of the hedged exposure. For hedges of forecast transactions, the derivative covers the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable that is denominated in the foreign currency.
The following tables demonstrate the sensitivity to a reasonably possible change in foreign exchange rates, with all other variables held constant.
The Group’s profit before tax is affected through the change in foreign in exchange rates as follows:
Change in foreignexchange rates
+5%
-5%
(1,639
2,150
(2,403
1,707
(1,848
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As at December 31, 2025 and 2024 the Group’s financial assets and financial liabilities denominated in foreign currency are as follows:
21,643
23,384
18,225
16,224
Total financial assets
39,868
39,608
3,253
216
35,374
41,604
Bank overdraft and short-term borrowings
11,500
10,336
19,059
21,355
69,186
73,511
As at December 31, 2025 and 2024, the summary quantitative data about Group’s exposure to currency risk as reported to the management of the Group is as follows:
FinancialAssets (a)
Financialliabilities (b)
Net Exposure(c) = (a)-(b)
21,014
42,157
(21,143
Chinese Yuan
6,412
6,841
(429
4,496
5,369
(873
Brazilian Reais
2,888
4,246
(1,358
Canadian dollars
Romanian Leu
6,256
(5,572
529
1,342
(813
3,827
2,958
869
(29,318
21,705
42,212
(20,507
5,173
10,005
(4,832
4,453
7,722
(3,269
4,089
2,497
1,229
1,415
(186
810
6,772
(5,962
2,087
2,884
(797
(33,903
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(v) Reconciliation of movements of liabilities to cash flows arising from financing activities
The following tables show the reconciliation of movements of financial liabilities to cash flows arising from financing activities for the three years ended December 31, 2025, 2024 and 2023.
Jan. 1, 2025
Cash outflows
Cash inflows
Changes infair value
Otherchanges
Dec. 31, 2025
(1,503
1,175
19,999
18,023
846
(951
Total liabilities from financing activities
103,999
(16,594
18,762
(1,279
104,888
Bank overdrafts are used only for cash management purposes.
Jan. 1, 2024
Dec. 31, 2024
17,353
2,892
5,711
20,797
2,037
1,291
106,857
(16,074
4,605
8,611
Jan. 1, 2023
Dec. 31, 2023
17,290
(2,134
51,849
21,535
27,500
1,754
283
103,091
(26,610
11,195
19,181
34. Revenue
(i) Revenue streams
The Group generates revenue primarily from the sale of leather and fabric upholstered furniture and home furnishing accessories to its customers. Other sources of revenue include sale of polyurethane foam, sale of leather-by products, sale of Natuzzi Display System and sale of Service Type Warranty.
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Therefore, all the Group’s revenue is related to revenue from contracts with customers.
(ii) Disaggregation of revenue from contracts with customers
In the following tables, revenue from contracts with customers are disaggregated by types of goods, primary geographical markets, geographical location of customers, distribution channels, brands and timing of revenue recognition.
Types of goods
Sale of upholstery furniture
260,824
272,935
281,638
Sale of home furnishing accessories
34,478
37,610
38,199
Sales of Contract
3,357
Sale of polyurethane foam
2,329
1,932
2,509
Sale of other goods
7,229
6,320
6,272
The sale of upholstery furniture includes the following categories: stationary furniture (sofas, loveseats and armchairs), sectional furniture, motion furniture, sofa beds and occasional chairs, including recliners and massage chairs.
Geographical markets
Europe, Middle East and Africa
152,059
153,033
159,570
Americas
Geographical location of customers
88,010
90,921
87,250
50,796
47,509
39,037
26,114
32,252
36,291
21,295
22,178
26,211
12,826
13,534
11,634
10,822
13,516
14,498
Mexico
10,148
9,913
8,197
Australia
5,744
5,723
Canada
5,413
7,275
8,117
Belgium
4,391
5,302
South Korea
3,713
3,395
3,518
Israel
3,190
3,514
3,371
United Arab Emirates
2,988
3,181
4,839
Other countries (none greater than 5%)
62,766
61,281
74,097
Distribution channels
Wholesale (distributors and retailers)
238,972
242,667
255,507
Directly operated stores (end consumers)
69,245
76,130
73,111
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Brands
Natuzzi Editions
164,028
167,416
176,600
Natuzzi Italia
119,504
120,487
119,323
Private label
15,127
22,639
23,914
9,558
8,255
8,781
Timing of revenue recognition
Goods transferred at a point in time
307,886
318,250
327,316
Goods and services transferred over time
331
547
1,302
(iii) Contract balances
The following table provides information about receivables and contract liabilities from contracts with customers.
Reference should be made to note 15 “Trade receivables” and note 23 “Contract liabilities (non-current and current)” for details about such contract balances.
(iv) Performance obligations and revenue recognition policies
Revenue is measured based on the consideration specified in the customer contract. The Group recognises revenue when it transfers control over a good or service to a customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for goods or services. The Group has generally concluded that it is the principal in its revenue arrangements, because it controls the goods or services before transferring them to the customer.
In determining the transaction price for its contracts with customers, the Group considers the effects of variable consideration and the existence of significant financing components.
The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. The allocation of the transaction price to the Group’s performance obligations is performed using the relative stand-alone selling price method.
For detailed information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms and related revenue recognition policies, see note 4(t).
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The transaction price allocated to the remaining performance obligations (partially unsatisfied) as at December 31, 2025 and 2024 is as follows:
Sale of the license for Natuzzi trademarks
Within a year
383
More than a year
4,428
4,811
5,194
Sale of Natuzzi Display System
884
851
1,307
1,311
Sale of Service-Type Warranties
497
1,121
439
(v) Variable considerations
If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale of furniture provide customers with volume discounts, which give rise to variable consideration.
In particular, the Group provides retrospective volume discounts to certain customers once the quantity of products purchased during the period exceeds a threshold specified in the contract. Discounts are offset against amounts payable by the customer. Accumulated experience is used to estimate and provide for the discounts, using the expected value method. A refund liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period.
(vi) Financing components
For information about financing components, reference should be made to note 4(t)(vii).
(vii) Warranty obligations
The Group typically provides warranties for general repairs of defects that existed at the time of sale, as required by law.
Customers who purchase the Group’s upholstered furniture and home furnishings accessories may require a service-type warranty. As disclosed in note 4(t)(v), the Group allocates a portion of the consideration received to the service-type warranty, based on the relative stand-alone selling price. The amount allocated to the service-type warranty is deferred, and is recognised as revenue over the time based on the validity period of such warranty.
These warranties are accounted for under IAS 37. Refer to the accounting policy on warranty provision in note 4(r).
(viii) Cost to obtain a contract
The Group pays sales commission to its agents for each contract that they obtain. For information about the accounting policy elected by the Group on sales commissions, reference should be made to note 4(x).
(ix) Fulfillment costs
The Group accounts for shipping and handling costs related to activities before the customer obtains control of the finished goods as fulfillment costs under the caption “Other assets” of the consolidated statement of financial position. For
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information about the accounting policy applied by the Group for shipping and handling costs, reference should be made to note 4(v).
35. Cost of sales
Cost of sales is analysed as follows:
Opening inventories
62,087
70,120
Purchases of raw materials
83,750
92,851
92,457
Purchases of finished products
16,294
21,393
20,459
Labour costs
71,049
69,827
72,862
6,620
6,526
8,639
Third party manufacturers costs
1,210
1,176
1,276
Other manufacturing costs
12,664
13,956
13,540
2,300
Government grants related to PPE
(2,361
(1,906
Closing inventories
(49,534
(62,815
(62,087
204,807
203,095
215,763
The line item “Depreciation and amortisation” includes the depreciation expenses of property plant and equipment and right-of-use assets used in the production of finished goods.
36. Other income and other expenses
Other income is analysed as follows:
Gain on disposal of certain items of property
4,522
VAT relief
951
1,169
1,475
Reimbursements
698
935
2,875
3,431
2,694
2,762
The item 'Gain on disposal of certain items of property' includes a capital gain of 2,773 arising from the sale of a land plot. See Note 7.
During 2025, 2024 and 2023 the Brazilian subsidiary obtained a VAT relief of 951, 1,169 and 1,475, respectively, connected to local tax rules on VAT payments.
During 2025, 2024 and 2023, the Group recorded different reimbursements of 698, 935 and 2,875, respectively, mainly related to refund of transportation expenses and other items.
In 2025, the item “Other” primarily includes rental income earned by a U.S. subsidiary of 597, proceeds from the sale of photovoltaic energy of 1,765, the capital gain on the disposal of the building located in High Point of 1,595 (see Note 7), and other minor income.
Other expenses amounted to 497, 260 and 457 in 2025, 2024 and 2023, respectively, and mainly refer to minor costs incurred by the Group and not related to cost of sales, selling and administrative expenses.
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37. Selling expenses
Selling expenses are analysed as follows:
Shipping and handling costs
23,596
24,767
26,325
24,587
26,027
25,971
11,529
12,450
12,369
Customs duties
5,593
4,568
5,473
Commissions to sales representatives
5,327
5,861
Advertising expenses
5,986
5,936
Utilities
4,454
4,271
3,960
Fairs
1,058
638
Other insurance costs
929
1,047
1,042
4,029
Leases
1,094
1,271
1,627
Promotions
606
512
632
Advisory services
147
329
528
Insurance costs on trade receivables
312
Samples
585
494
505
1,445
1,926
233
90,511
90,229
91,373
38. Administrative expenses
Administrative expenses are analysed as follows:
21,188
20,663
20,416
Professional services costs
3,466
3,340
2,979
Indirect taxes
2,452
1,919
1,991
Directors and audit committee fees
1,635
1,791
1,886
Office and software maintenance
2,448
2,549
2,846
2,212
1,364
Travel expenses
1,957
2,279
2,677
Mail and Phone
490
509
Printing and Stationery
361
295
519
Car costs
443
661
1,900
(66
(1,333
(145
2,011
1,428
2,158
40,773
35,994
37,607
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39. Finance income and costs
Finance income is analysed as follows:
Interest income from financial institutions
321
711
Other interest income
Finance costs are analysed as follows:
Interest expenses due to financial institutions
2,561
2,864
3,346
Interest expenses related to lease liabilities
Other interest expenses
855
Financial institution commissions
1,989
2,156
8,691
10,201
9,267
40. Net exchange rate gains/(losses)
Net exchange rate gains/(losses) are analysed as follows:
Net realised gains/(losses) on derivative instruments
(196
1,251
Net realised gains/(losses) on trade receivables and payables
(1,004
424
(422
Total net realised gains/(losses) (a)
(986
228
Net unrealised gains/(losses) on derivative instruments
299
(438
Net unrealised gains/(losses) on trade receivables and payables
(218
1,006
142
Net unrealised gains/(losses) on non-monetary assets
(1,328
(242
Total net unrealised gains/(losses) (b)
(1,247
326
(973
Total realised and unrealised exchange rate gains/(losses) (a+b)
“Net unrealised gains/(losses) on non-monetary assets” refers to the remeasurement of non-monetary assets of the subsidiary Italsofa Romania, since such entity has the same functional currency as the Parent, namely the Euro (see note 4(c)(ii)).
41. Income tax expense
Italian companies are subject to two enacted income taxes at the following rates:
IRES (state tax)
24.00
IRAP (regional tax)
4.82
IRES is a state tax and is calculated on the taxable income determined on the income before taxes modified to reflect all temporary and permanent differences regulated by the tax law.
IRAP is a regional tax and each Italian region has the power to increase the current rate of 3.90% by a maximum of 0.92%. In general, the taxable base of IRAP is a form of gross profit determined as the difference between gross revenues (excluding interest and dividend income) and direct production costs (excluding interest expense and other financial costs). The enacted IRAP tax rate due in the Puglia region of Italy for 2025, 2024 and 2023 is 4.82% (3.90% plus 0.92%).
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Total income taxes for the years ended December 31, 2025, 2024 and 2023 are allocated as follows:
Current:
- Domestic
(332
(1,065
- Foreign
(2,016
(865
(2,348
(871
(1,724
Deferred:
514
798
634
Total (a + b)
Consolidated profit/(loss) before income taxes and Non-controlling interests of the consolidated statement of profit or loss for the years ended December 31, 2025, 2024 and 2023, is analysed as follows:
Domestic
(29,738
(6,199
(12,078
Foreign
(8,499
(2,994
The effective income taxes differ from the expected income tax expense (computed by applying the IRES state tax to profit before income taxes and non-controlling interests) as follows:
Expected tax benefit (expense) at statutory tax rates
7,093
3,527
3,617
Effect of:
- Tax exempt income
1,799
1,657
4,530
- Aggregate effect of different tax rates in foreign jurisdictions
568
(254
(481
- Italian regional tax
(11
- Non-deductible expenses
(4,580
(3,140
(5,675
- Tax effect on unremitted earnings
- Chinese withholding tax on income not recoverable
(1,100
- Effect of net change in deferred tax assets unrecognised
(5,916
(2,463
(1,973
Actual tax charge
In 2025, the Group reported a loss before tax of 29,556 and income tax expense of 1,036, compared to a loss before tax of 14,698 and income tax expense of 684 in 2024, and a loss before tax of 15,072 and income tax expense of 1,090 in 2023.
The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as at December 31, 2025 and 2024 are presented below:
Tax loss carry forward
752
Inventories obsolescence
1,201
886
Provision for contingent liabilities
Total deferred tax assets
F-79
Withholding tax on unremitted earnings of subsidiaries
(516
Withholding tax on liquidation of subsidiaries
(480
Unrealised net gains on foreign exchange rate
(5
Total deferred tax liabilities
(998
Movements in deferred tax balances occurred during 2023, 2024 and 2025 are analysed as follows:
1,965
(1,929
Recognised in profit or loss
623
Recognised in OCI
Recognised directly in equity
1,975
(1,306
669
(121
308
(201
655
993
1,301
1,976
The following tables show the reconciliation of deferred tax assets and deferred tax liabilities with the balances included in the consolidated statements of financial position as at December 31, 2025 and 2024.
Deferred tax liabilities compensated
Net deferred tax assets
As of December 31, 2025, deferred tax assets mainly relate to carried-forward tax losses, inventory write-down for obsolescence, and provision for risks accounted for by some subsidiaries.
The application of the amendment to IAS 12 Deferred tax related to Assets and Liabilities Arising from a Single Transaction determined net unrecognized deferred tax assets of 617 as of December 31, 2025 and net unrecognized deferred tax assets of 2,297 as of December 31, 2024, related to leases, included in the “Other temporary differences” of the “Unrecognised deferred tax assets” table.
In assessing the reliability of deferred tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will not be realised. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and the tax loss carry-forwards are utilised.
Given the cumulative loss position of the domestic companies and of some of foreign subsidiaries as at December 31, 2025 and 2024, management has considered the scheduled reversal of deferred tax liabilities and tax planning strategies, in making their assessment. After an analysis as at December 31, 2025 and 2024, management has not identified any relevant tax planning strategies prudent and feasible available to recognise the deferred tax assets. Therefore, as at December 31,
F-80
2025 and 2024 the realisation of the deferred tax assets is primarily based on the scheduled reversal of deferred tax liabilities, except in certain historically profitable jurisdictions.
Based upon this analysis, management believes that the Natuzzi Group will realise the deferred tax assets of 1,981 as at December 31, 2025 (1,653 as at December 31, 2024).
As at December 31, 2025 and 2024 deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable profit will be available against which the Group can use the benefits therefrom.
Unrecognised deferred tax assets
Gross Amount
Tax effect
Tax loss carry-forwards
399,843
97,381
378,307
93,266
2,442
687
4,892
1,396
Inventory obsolescence
11,537
3,326
10,989
2,272
2,996
719
3,218
Intercompany profit on inventories
6,867
1,979
7,644
2,203
1,751
1,929
556
7,443
3,051
587
Other temporary differences
2,506
3,975
17,799
3,921
Total unrecognised deferred tax assets
435,385
109,210
427,829
104,973
The Group does not expect to distribute dividends from its subsidiaries, primarily due to the losses incurred by the majority of such entities. Accordingly, no provision has been recognized for taxes attributable to the Group’s share of these undistributed profits.
As at December 31, 2025 and 2024 the tax losses carried-forward of the Group expire as follows:
Expire date
Expire in five years
11,827
2026-2030
7,720
2025-2029
Expire after five years
181
> 2030
127
> 2029
Never expire
389,665
372,675
401,673
380,522
In Italy all tax losses carried-forward no longer expire, with the only limitation being that such tax losses carried-forward can be utilised to off-set a maximum of 80% of the taxable income in each following year.
The income tax payable recorded as at December 31, 2025 and 2024 is 871 and 830, respectively. Whereas, the current income tax receivable recorded as at December 31, 2025 and 2024 is 1,758 and 1,642, respectively.
The tax audit initiated by the Italian Revenue Agency (Agenzia delle Entrate) in October 2020 was completed in 2025, with the examination of the documentation relating to the 2019 fiscal year. In particular, the tax auditors’ focus was on the uncertain tax treatment concerning the interpretation of how tax regulations apply to the Group’s transfer pricing arrangements. The outcome of the audit did not identify any requirement to recognize tax liabilities, also in light of the tax losses incurred in the 2019 fiscal year.
The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience.
The Company operates in many foreign jurisdictions. With no substantial exceptions, the Company and its main subsidiaries located in Romania and China are no longer subject to tax audits for years preceding 2020.
F-81
42. Earnings/(loss) per share
Basic and diluted earnings/(loss) per share is analysed as follows:
Weighted average number of ordinary shares
55,073,045
Basic earnings/(losses) per share
Diluted earnings/(losses) per share
Basic earnings/(loss) per share is calculated by dividing earnings/(loss) for the year, attributable to ordinary equity holders of the Parent Company, by the weighted average number of ordinary shares outstanding.
Diluted earnings/(loss) per share as at December 31, 2025, 2024 and 2023 equals the basic earnings/(loss) per share.
On February 8, 2019 the Company announced a change in the ratio of its American Depositary Receipts (ADRs) to ordinary shares, from 1 ADR representing 1 share to 1 ADR representing 5 shares. The effective date of the ratio change was February 21, 2019. No new shares have been issued in connection with the ratio change.
43. Expenses by nature
The following tables show the expenses by nature for the years ended December 31, 2025, 2024 and 2023 as required by IAS 1.104.
Changes in inventories
Services costs
67,553
69,296
75,457
Employee benefits expenses
116,824
116,517
119,249
Depreciation and amortisation, net of government grants
19,587
19,733
20,724
18,802
10,256
8,364
Total cost of sales, selling and administrative expenses
336,091
329,318
344,743
F-82
The following tables show in which caption is included the depreciation and amortisation, net of government grants.
Included in cost of sales
Depreciation of property, plant and equipment
6,309
6,535
Depreciation of right-of-use assets
310
253
2,102
Government grants
(1,342
(1,388
5,278
5,138
7,136
Included in selling expenses
2,177
2,450
9,352
10,121
9,919
Included in administrative expenses
373
325
297
271
2,151
1,568
1,039
Total (c)
2,780
2,145
1,219
Total depreciation and amortisation (a+b+c)
The following tables show in which caption is included the employee benefits expenses.
50,594
47,739
49,968
15,271
16,113
14,825
3,405
3,353
4,611
Other costs
1,779
2,622
3,458
19,474
20,558
20,641
3,680
3,756
3,716
473
604
960
1,010
15,327
14,871
15,376
3,689
3,404
3,007
707
637
643
1,465
1,390
Total employee benefits expenses (a+b+c)
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44. Commitments and contingent liabilities
As at December 31, 2025, the Group is not committed to investing in significant property, plant and equipment, intangibles assets and other capital expenditure.
Certain financial institutions have provided guarantees as at December 31, 2025 to secure payments to third parties amounting to 8,805, (11,767 as at December 31, 2024). These guarantees are unsecured and have various maturities extending through May 2029.
The most significant guarantee relates to the early retirement agreement ('expansion contract’), amounting to 4,459, with maturity in May 2029 (see Note 23).
The Group is involved in a number of claims (including tax claims) and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters, after the provisions accrued, will not have a material adverse effect on the Group’s consolidated financial position or results of operations (see note 26).
45. Related parties
Related parties of the Group include mainly associates and joint ventures of the Group and the Group’s key management personnel.
The following tables provide the total amount of transactions that have been entered into with related parties for the relevant financial year.
(i) Compensation of key management personnel of the Group
The compensation of key management personnel of the Group is analysed as follows:
Directors’ fee
428
642
849
Short-term employee benefits
3,251
3,343
2,772
Social security contributions and defined contribution plans
911
913
777
Employee benefit obligations
183
254
188
Expenses for stock options
4,773
5,519
The amounts disclosed in the tables are the amounts recognised as an expense during the reporting period related to key management personnel. No loans and/or guarantees have been provided for or agreed to with key management personnel.
(ii) Transactions with directors of the Group
The aggregate value of transactions and outstanding balances related to directors were as follows.
Amountsdue
Finished products purchased from TTF
3,509
3,823
652
1,340
412
Purchase of agency services from the company REFLEX MARKETING
992
Rent service rendered by Steel Vessel Corporation
4,407
4,783
2,332
413
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Amountsowed
Selling of finished products to NAT STORE LTD
729
1,350
303
1,631
171
Selling of finished products to IN CASA GROUP PTY
726
1,741
593
1,735
732
3,467
807
3,091
896
3,366
903
Following the disposal of the building located in High Point, NC, USA, the Company's U.S. subsidiary entered into a lease agreement with the purchaser, The Steel Vessel Corporation, a company owned by the majority shareholder, for a term of nine years and nine months, expiring on 31 December 2034, with an annual rent of USD 700. The lease rate is at market terms, as it was determined based on a dedicated third-party valuation report. As of December 31, 2025, the carrying amount of the lease liability is 3,733.
With reference to the purchases of finished products from the outsourcer Truong Thanh Furniture Corporation ("TTF"), which since March 2022 has become a minority partner with a 20% stake in the subsidiary Natuzzi Singapore, and, as of June 2025, also holds a 5% stake in Natuzzi Vietnam JSC, and whose president, Mr. Mai Hữu Tín, has become a Board Member of the same Natuzzi Singapore, the supply business relationship is based on agreements signed in 2020, which are still in force.
With reference to the purchase of agency services from the company REFLEX MARKETING (whose agency agreement was terminated in March 2025) and the sale of finished products to NAT STORE LTD, a company in which Mr. R. Mynett is a partner, who is also a minority shareholder at 30% in the subsidiary Natuzzi UK Retail Limited and its Board Member, the business relationship is based on pre-existing agreements predating the establishment of Natuzzi UK Retail Limited.
With reference to the sales of finished products to IN CASA GROUP PTY, Ms. J. Francis, who has served as director, is no longer a Board Member of Natuzzi Oceania PTI Ltd, having resigned from the position in September 2024..
From time to time, Directors of the Group, or their related entities, may buy goods from the Group. These purchases are made on the same terms and conditions as those entered into by the Group’s other employees or customers.
The majority shareholder and Executive Chairman of the Board of Directors, in early April 2024, granted a three year loan to the Parent Company amounting to 2,500. The loan is set to mature on March 31, 2027, with a below-market interest rate of 2.50%. The interest rate differential compared to the market interest rate has been recognized under the caption “Reserves” within the Total Equity. See notes 20 and 46.
Furthermore, during 2025, the following additional transactions involving Group directors took place:
F-85
(iii) Transactions with associates, joint ventures and other related parties
The following tables provide the total amount of transactions that have been entered into with such related parties for the relevant financial year. Such transactions have been conducted at arm’s length.
Sales
Dividendsreceived
Amountsowed byrelatedparties
Amountsdue torelatedparties
Natuzzi Trading Shanghai Co, Ltd. (joint venture)
2,023
Natuzzi Texas LLC (joint venture)
1,577
4,739
Natuzzi Stores (UK) LTD (associate)
4,683
Natuzzi Design S.a.s. (other related party)
2,181
293
Natuzzi Arredamenti S.r.l. (other related party)
1,150
Natuzzi Sofa S.r.l. (other related party)
438
33,244
The Parent Company received dividends declared by Natuzzi Trading Shanghai Co. Ltd in October 2025.
3,515
4,699
2,004
534
1,083
322
34,551
8,528
Nars Miami LLC (associate)
167
431
1,951
2,598
5,876
2,130
724
1,619
38,651
7,966
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All outstanding balances with these related parties are to be settled in cash within three months of the reporting date. None of the balances are secured. No guarantees have been given or received.
46. Subsequent events
The following events have occurred in the period between the reporting date and the date of authorisation of these consolidated financial statements.
At the end of November 2025, the Parent Company entered into a preliminary agreement for the disposal of the photovoltaic plant to a company specialized in the sector. The disposal was completed at the end of January 2026 and, on the closing date, the Company received the total sale consideration of 7,115. The net carrying amount of the photovoltaic plant as at 31 December 2025 amounted to 1,105 (see Note 7). The Group has entered into a power purchase agreement with the buyer of the photovoltaic plant.
In March 2026, the Parent Company received a total of 2,705 from the government agency INVITALIA, of which 2,114 relates to a loan and 590 to a non-repayable grant, following the completion of the planned industrial investments. In 2019, the Parent Company entered into a development agreement with the agency, which provided for an investment program supported by public funding covering 71.3% of the total, granted as a combination of non-repayable contributions and subsidized financing. The March 2026 collection represents the final tranche of this program, which concluded in 2025.
On March 31, 2026, the majority shareholder formally expressed its irrevocable intention to convert the two loans made in favor of the Parent Company, amounting to 2,500 and 10,000 and granted, respectively, in 2024 and 2025, into a capital contribution to be allocated to a future share capital increase, with the aim of strengthening the Group’s equity position. This decision has been taken in anticipation of a share capital increase, for which an extraordinary shareholders’ meeting will be convened to resolve upon the proposed capital increase.
On May 14, 2026, the board of directors approved an economic and financial plan covering the period up to June 2027 (the “one-year budget”) and conferred delegated authority on the CEO to initiate an out-of-court composition proceeding (Composizione negoziata della crisi, the “Composition”), a voluntary, debtor-in-possession restructuring tool under the Italian Insolvency and Restructuring Code (Legislative Decree no. 14 of January 12, 2019) designed to address financial distress at an early stage through consensual negotiations, with limited court involvement. The formal request to initiate the Composition is expected to be filed in the next forthcoming weeks. (See Note 3(f)).
F-87
English translation of the by-laws (Statuto) of the Company, as amended and restated as of March 21, 2023 (incorporated by reference to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on May 1, 2023, file number 001-11854).
2.1
Deposit Agreement dated as of May 15, 1993, as amended and restated as of December 31, 2001, among the Company, The Bank of New York, as Depositary, and owners and beneficial owners of ADRs (incorporated by reference to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on April 30, 2019, file number 001-11854).
2.2
Description of Securities registered under Section 12 of the Exchange Act (incorporated by reference to Exhibit 2.2. to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on June 15, 2020, file number 001-11854).
4.1^
English translation of the Joint Venture Contract between Natuzzi S.p.A. and Jason Furniture (Hangzhou) CO., Ltd., dated March 22, 2018 (incorporated by reference to Exhibit 4.8 to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on April 30, 2018, file number 001-11854).
4.2^
English translation of the New Framework Agreement for Assignment of Receivables between Natuzzi S.p.A. and Muttley S.r.l., dated July 22, 2020 (incorporated by reference to Exhibit 4.13 to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on April 30, 2021, file number 001-11854).
4.3*^+
English translation of the amendment agreements, dated July 25, 2025 and January 14, 2026, among the Company, Muttley S.r.l., and the other parties thereto, relating to, among other things, certain amendments to the New Framework Agreement for Assignment of Receivables dated July 22, 2020.
English translation of the agreement among the Company, certain trade unions and Italian authorities therein related to (i) early retirement for employees who are within 60 months of reaching retirement age, (ii) the hiring of new employees, (iii) the implementation of training programs and (iv) access to the CIGS for redundant employees, dated July 11, 2023 (incorporated by reference to Exhibit 4.3 to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on April 30, 2024, file number 001-11854).
4.5*
English translation of the agreement among the Company, certain trade unions and Italian authorities therein related to the access to the CIGS for redundant employees, dated November 5, 2025, as further extended on January 27, 2026.
4.6^+
English translation of the agreement between the Company and INVEST 2003 S.r.l. dated April 9, 2024 (incorporated by reference to Exhibit 4.5 to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on April 30, 2024, file number 001-11854).
4.7*
English translation of the agreement between the Company and INVEST 2003 S.r.l. dated November 21, 2025.
4.8*
English translation of the agreement between the Company and INVEST 2003 S.r.l. related to the reclassification of the outstanding loan as an advance payment on account of a future capital increase, dated March 31, 2026.
4.9^+
Agreement between Natuzzi Americas Inc. and The Steel Vessel Corporation related to the sale of the property located in High Point, North Carolina, USA, dated March 25, 2025 (incorporated by reference to Exhibit 4.6 to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on April 30, 2025, file number 001-11854).
4.10^+
Agreement between Natuzzi Americas Inc. and The Steel Vessel Corporation related to the lease of the property located in High Point, North Carolina, USA, dated March 25, 2025 (incorporated by reference to Exhibit 4.7 to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on April 30, 2025, file number 001-11854).
4.11*^+
English translation of the agreement between the Company and E25E S.r.l. related to the transfer of the photovoltaic business unit, dated January 29, 2026.
4.12
Natuzzi 2022-2026 Stock Option Plan (incorporated by reference to Exhibit 4.1 to the Form S-8 filed by Natuzzi S.p.A. with the Securities and Exchange Commission on July 29, 2022, file number 333-266414).
8.1*
List of Significant Subsidiaries.
11.1*
Insider Trading Policy.
12.1*
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2*
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1*
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1*
Consent of PricewaterhouseCoopers S.p.A.
15.2*
Consent of KPMG S.p.A.
97.1
Policy for the Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97.1 to the Form 20-F filed by Natuzzi S.p.A. with the Securities and Exchange Commission on April 30, 2024, file number 001-11854).
101.INS*
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH*
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
104*
Cover Page Interactive Data File (embedded within the Inline XBRL document).
*
Filed herewith
^
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to the Instructions as to Exhibits of Form 20-F.
+
Schedules to this exhibit have been omitted pursuant to the Instructions as to Exhibits of Form 20-F.
SIGNATURE
The registrant, Natuzzi S.p.A., hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
By
/s/ Pasquale Natuzzi
Name:
Title:
Chief Executive Officer ad interim
Date: May 15, 2026