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Cavalier forecasts jump in full-year profit, on benefits of restructuring, favourable wool prices

Tuesday 5th June 2018

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Cavalier Corp forecast a jump in full-year profit, driven by improved margins following the carpetmaker's restructuring and the benefits of more favourable wool prices.

Net profit in the year ending June 30 is expected to be in a range of $3.7 million to $4 million compared to a net loss of $1.8 million a year earlier. Earnings before interest, tax, depreciation and amortisation would be $9.6 million to $10 million, up from $2.6 million in the 2017 year. The stock jumped 11 percent to 61 cents, the highest in more than two months. The shares have climbed 34 percent this year.

The improvement showed up in its first-half results, reported in February, which included a net profit of $1 million from just $31,000 a year earlier after the company restructured to reduce costs and introduced a more efficient manufacturing system.

The forecast result reflects the company’s continuing turnaround, following a period of restructuring and the now-completed yarn spinning consolidation programme undertaken in the previous year, chief executive Paul Alston said in a statement. A combination of "greater efficiencies, better margins, positive performances from the wool operations and favourable macro-economic factors such as the wool price, (are) key drivers behind the guidance," he said.

Cavalier will release its full-year results on Aug. 22 and provide an update on its strategic review, it said.


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