Cavalier says first-half profit plunges 59%, will miss full-year guidance

Cavalier Corp, the carpet maker that is attempting to build a monopoly in wool scouring, said first-half profit tumbled 59 percent, meaning the company is unlikely to meet its full-year guidance.

The shares dropped almost 9 percent on the news.Profit in the six months ended Dec. 31 fell to about $3.5 million, down from $8.5 million a year earlier, Cavalier said in a statement today. The company is still finalising its results ahead of their official release on Feb. 20.

“As a result of this disappointing result for the first half and a very slow start to the second half, it is now extremely unlikely that the company will finish the full year within the $8.5 million to $10.5 million tax-paid earnings guidance range provided to shareholders at the annual meeting last November,” it said.

The November guidance was based on a gradual improvement in market conditions this year after what had been “a very difficult first quarter with sales volume of broadloom carpet and carpet tiles down around 20%.”Instead, market conditions in Australia and New Zealand “have not improved.”

A large number of commercial projects were being delayed by “the uncertainties resulting from the European sovereign debt issues” while a subdued retail environment is “making it extremely difficult to maintain sales and to protect margins,” it said.

The shares dropped 20 cents to $2.10, the lowest since early January.

The stock has fallen 32 percent in the past six months.Cavalier is part of a group that has antitrust approval to acquire the wool scouring assets of Wool Services International as part of a plan to rationalise the nation’s total scouring capacity to enable the industry to compete with scours in China.

(BusinessDesk)

BusinessDesk.co.nz

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