Cavalier Corp normalised profit up 4 pct

NZPA

Monday 22nd August 2011

Carpet maker Cavalier Corporation lifted normalised after tax earnings 4 percent to $17.3 million, as better market conditions in Australia helped offset subdued markets in this country.

Revenue for the 12 months to the end of June was 4 percent up on a year earlier to $229.4m, as the share of company revenue from Australia rose to 57 percent from 54 percent.

Revenue from the carpet business rose 3 percent to $204m, with 11 percent growth across the Tasman and a 10 percent fall in New Zealand, Cavalier said today.

With new home starts and refurbishments at historically low levels, market conditions in this country for residential carpets and, to a lesser extent, for commercial were soft throughout the year.

While Australia was better, market conditions there softened in the second half as tighter monetary policies and high interest rates started to take hold.

The size and pace of an 80 percent rise in wool prices during the year had been unprecedented, Cavalier said.

While the market was slowly coming to terms with the resulting 10 to 20 percent lift in the price of woollen carpets, there were risks because of the comparatively now much cheaper synthetic alternatives, particularly at the value end of the market.

The rise in wool prices was due to a worldwide shortage of crossbred wools and to carpet mills around the world replenishing stock levels which had been allowed to run down during the global financial crisis. Cavalier's view was that current wool prices were not sustainable.

An unchanged final dividend of 11c per share is to be paid, taking the total for the year to 18cps.

No immediate improvement to market conditions was expected in this country, although some increase in demand was expected toward the end of the financial as rebuilding picked up in earthquake-hit Christchurch.

In Australia slower market conditions were expected to continue for the time being, although a general shortage of housing in main cities should help underpin the residential segment of the market, Cavalier said.

Reported profit for the latest year was up 60 percent to $18.2m, including accounting adjustments to deferred tax.

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