Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Natuzzi First Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session and instructions will be provided at that time for you to queue up for questions. Joining us on today's call from Italy are Natuzzi's Chief Executive Officer, Mr. Pasquale Natuzzi; and the Chief Financial Officer, Mr. Vittorio Notarpietro; Mr. Marco Saltalamacchia, Chief Commercial Officer, and Francesca Cocco, Investor Relations. As a reminder, today's call is being recorded. I would now like to turn the conference over to Piero Direnzo. Please go ahead.

Good morning to our listeners in the U.S. and good afternoon to those of you connected from Europe. Welcome to the Natuzzi's first quarter 2015 conference call. After a brief introduction, we will give room for a Q&A session. Mr. Pasquale Natuzzi together with the Management Team will be glad to answer to your questions. By now you should have received an email copy of Natuzzi's earnings results. If not, you can find this information within our website at www.natuzzi.com. Before proceeding, we would like to advise our listeners that our discussion today could contain certain statements that constitute forward-looking statements under the United States security laws. Obviously, actual results may differ materially from those in the forward-looking statements because of risks and uncertainties that can affect our results of operations and financial condition. We have discussed such risks and uncertainties, which have in the past affected and may continue to affect our results of operations and financial condition in our Annual Report on Form 20-F for the fiscal year ended December 31, 2015. These reports are available within our website www.natuzzi.com. And now I would like to turn the call over to the Chief Financial Officer, Mr. Vittorio Notarpietro. Please, Vittorio.

Welcome everybody. First of all sorry for delay due to technical problems. We are so sorry for that. Okay, let me first welcome Francesca Cocco, Natuzzi newly appointed Investor Relations Manager after the good job done by Piero Direnzo who has taken already a new responsibility in the Treasury and Financial Planning, we are delighted inviting Francesco in this position. She has a huge experience in this field and I’m sure will give us strong, I’m sorry, she is already giving an outstanding contribution, sorry Francesco. Today, we will change the format of our conference call. I will recap briefly the main numbers and then the CEO of the company, Mr. Pasquale Natuzzi will elaborate on the more strategic items. As already discussed in previous conference calls, the first months of 2014 were characterized by one single event that affected the operating performance of the entire 2014 year of the Group. In fact while orders grew in particular from USA, we were not able to efficiently deliver on time from Chinese plant because of the effect of the huge change from the traditional production system to the new production system. Our taskforce was [Audio Gap] month after month, we registered gradual improvement in our industrial operations as set forth by the table including the last Friday press release. In this way we were capable by the end of last year to recover most of the backlog we accumulated. During the first quarter 2015 we completed the backlog recovery and we delivered a double-digit increase in shipments and readiness and as a consequence we were capable to improve margins. As a result, we registered consolidated revenues equal to €122.6 million, up 24.6% versus €98.4 million reported in the first quarter last year or 13.5% under constant exchange rate. The remaining part was mainly related to higher volumes, price increase and better product mix. Gross margin improvement to 29.4% on sales was mainly related to growth of volumes and better sales quality, which offset the increase of leather price. The quarterly EBITDA of minus €4.9 million improved by approximately 50% compared to the first quarter of 2014, partially thanks to the positive impact of a favorable exchange rates of about €1.7 million. Mr. Natuzzi, would you please continue to elaborate. Thank you.

Okay. Good morning to our listeners in United States and good afternoon to those of you connected from Europe. The brand strategy is well confirmed. The market is reacting very well with Natuzzi brand from everywhere, from Asia, to America, from Europe. We discovered a lot of interest from retailers that are interested in let’s say partnership with Natuzzi brand, with the Natuzzi brand. Now the 2014 has have been characterized primarily to be operation issues, in fact 180 models has been eliminated in order to reduce the complexity, which is 25% less, 134 upholstery coverage, which represent 38% of the total has been eliminated. Starting from the 1 of May, the program doesn’t accept the orders on that. Phase in and phase out, 70 models on all the product lines which represent 50% of the new models that we were developing in the past years. Reengineering of 85% of the revenue coming the moving line of production process, 43 moving lines already implemented within the industrial network. New industrial manufacturing planning, new logics and new software to support that, gradual roll out of the new integrated production process already tested in the experimental plan in all the major group of plants starting from Italy. As a consequence of all these actions quality and service are in line with our expectations. We already invested the main part of our CapEx to support the development of the production innovation in 2014. The benefit of all these actions would be more visible in the numbers in the near future. Sales and marketing; sales, first quarter 2013 by region versus the first quarter 2014 Americas lost 35.3%, Europe and Middle East and Africa plus 14.8%, which Italy plus 36%, U.K. 51% up, Germany unlikely flat. Asia-Pacific plus 32.2%, China plus 50%, South Korea…

[Operator Instructions] And we’ll take our first question from Denis Amato with Ancora Advisors.

Hi, thanks for taking the question. You guys have obviously done a great job on the top line and it seems like you got some momentum. I’ve got a two part question can you give us some help in understanding given the fact that the sales gain was significant and that you have had some benefit from lower cost. Can you help us understand at what level of sales that will be required to finally get to breakeven or profitability, because even with the sales gain you still had an EBITDA loss and a net loss that was unchanged from the year prior. And then the second part would be, can you give us a little insight as to why if you believe that you’re close to getting to profitability why you wouldn’t use a small amount of your current cash reserve to buy some stock back at the significant discount to book value? Thank you.

I’m sorry we didn’t get the second question did you ask us why we don’t buy back shares?

Yeah assuming that you feel you’re close to breakeven or profitability, why you wouldn’t at such a significant discount to book use a little bit of it cash to buy some stock back, which would benefit the existing shareholders?

Okay. So we got second question. Okay, regarding the first question you asked the same question as then asked by the Board member and we want to give accurate answer. We believe that this change €0.5 billion we will reach breakeven as starting to make profit again. We’re not so far from that level. The second question we need to manage to finance our brand strategy. We need to invest money in opening most store around the world, investing in marketing and we’re not interested in purchasing back the share so far at this moment. Did I answer your question?

Yeah, you’ve answered the question, I guess I would encourage you at least at the point that you have reached positive cash flow to consider what kind of investment for the shareholders can be higher return than the stock at such a significant discount?

Again our -- the Management commitment is to reach breakeven and start to make money again, that’s our main goal.

Sure, it should be.

You’re welcome.

And we’ll take our next question from Stefano Rossi with Edmond de Rothschild.

Good afternoon. Thank you for taking the question. I have a question regarding your expansion in the retail market. You mentioned that you’re doing fine in terms of growth in several countries. I wanted to know a little bit more please on your strategy regarding the retail market and what are at the moment your priorities given that it’s true that you’re a global company, but I’m sure that you should have or you have priorities where you can see your brand doing better so this is the first question. The second one is regarding farther scope of let’s say improvement in production and reducing complexity I understand that some of your problems last year were created by changing your production in a way that has been let’s say creating some problems. If you can go a little bit further explaining what are if there are still some problems there and what are we going to expect in the next few months from the production front of you regarding the reduction of complexity? Thank you.

I will start to answer the second question. What really concern the higher management last year was the operation area of the company where because the new production line was not implemented in the right way. In fact the first and the second quarter of last year, we had tremendous decrease in production and consequently and on the margin on the top line. So the Management has been let’s say very much committed in understanding how to address the entire operation. In fact as I explained in my speech, the 108 model elimination, 134 work shed I said certainly exit immediately to improve of productivity and also quality, product and quality service. The reason why we’ve been focusing on operation is because as you know we have Natuzzi strategy, Natuzzi brand strategy with Natuzzi Italia, which is retail division, Natuzzi Edition, which is wholesaler division together with Natuzzi Revive but then we have a huge business, which represents 35% of the total revenue in private label. Ikea in one of our customer. Now to reach an additional $50 million, $60 million or $70 million or Euro with the big customer, the big distribution like Ikea, like Costco, like Steiner Education Group, likely the way the distribution is moving that they are becoming bigger and bigger and the small dealer are disappearing. So we are continued to focus on Natuzzi brands but through the retailer division, but our priority today is to reach an additional $50 million, $60 million or $70 million volume or Euro in order to recover additional margin that will allow us to achieve the breakeven. So that’s the answer.

Okay. Thank you.

So, I’m sorry, you asked a question if we have still problem on the operation level. I can tell you that we've huge opportunity for improvement. So we see huge opportunity but we must face the problem -- we’re not getting yet, the benefits of all the investment we're making. So you will see a big improvement in the nearly future. I will say not this quarter, but certainly the next one.

Thank you.

You welcome, sir

[Operator Instructions] And we’ll go next to [John] [ph] Intermonte. And it appears John has withdrew his question. [Operator Instructions] And it appears John has queued back in for question. We’ll go to John and John your line is open. And once again John your line is open. Please state your question.

Hello, you can hear me? Hello, I have a question.

Yes John.

Okay, you can hear me. Yes, I want to -- I’d like to go more in deep about the profit and loss account and to understand if there is some more room to cut cost, general cost expenses because it seems to me that if I compare your profit and loss account to some competitor, there is some more room to reduce cost and improve the profitability. This is the first question. The second question is about your listing, you showed listing in U.S. consider that you’re made in Italy company you produce everything in Italy. You design everything in Italy. You have never considered to list the company also in Italy to get some interest from European investors. Thank you.

So, again I will start from the second question. Yes, it’s true that we design the product in Italy and we make also Natuzzi Italia product here in Italy, but it’s also true that we are a global company. We have factory in China. We have a factory in Rumania and in Brazil and we are so everywhere in the world. 20% of the revenue are, manufactured here in Italy, while the revenue are less than 10% in Italy. So we are a global company and certainly the list of the company in Italy is not our priority so far, but again probably in the near future, we will seriously consider that. Then there was another question.

I guess the first question was about house reduction room opportunity isn’t it?

Yes, correct. Cost reduction.

Yes, we do have this and we have a very precise plan return of budget, in order to reduce the basis of our cost. First of all, in the last years we've already reduce fixed as G&A of cost we cannot reduce transportation, advertising or commission, but as far as fixed cost are concerned, we have a good track record in recent years, but even in 2015 we have a precise plan we started in Q1 and is focused on the headquarter cost. So what we are doing. Thanks to S&P system. Thanks to newer leaner organization, we are casting H2 cost, I mean the reduction of top managers for example with debt in the first quarter this year a reduction of 16 managers obviously we will not -- you will not find numbers in Q1, because in Q1 we did the reduction, but thanks to [indiscernible] we were able to maintain same efficiency with a lower number of top managers and the result of this reduction in SG&A will be even more visible in the next quarters. But in the mean time please consider that while casting H2 cost we have to invest in a worldwide sales organization in order to be able to keep all the opportunities that Mr. Natuzzi was mentioning before with key accounts globalize, so we need people, skilled people in the territories worldwide. So we’ve [indiscernible] in terms of safe organization.

Thank you.

Welcome.

And at this time, we have no questions holding in the queue. I’d like to turn the call back over to our speakers for any comments or closing remarks.

We thank you very much for the listener for everyone. I’d like to make sure and that the Management is very much committed to achieve the goal and the goal will be really the breakeven as soon as possible. We thank you very much for the confidence to everyone and good bye.

And this does conclude today's conference. We thank you all for your participation. You may now disconnect.