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Godfrey Hirst's NZ profit climbs 41% to six-year high ahead of Mohawk sale

Monday 4th December 2017

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Godfrey Hirst reaped its biggest profit in six years from New Zealand, leaving the local unit in good health as global flooring manufacturer Mohawk Industries folds the Australasian carpetmaker into its empire. 

The local holding company - Avon Pacific Holdings - reported a profit of $15.4 million in the 12 months ended June 30, up from $11 million a year earlier, the latest financial statements filed with the Companies Office show. Revenue edged up 1.8 percent to $177.8 million and gross margin widened to 24.7 percent from 22.5 percent. Expenses shrank 1.9 percent to $156.2 million on a smaller wage bill, lower redundancy costs and a turnaround in foreign exchange losses. 

The profit was Godfrey Hirst's biggest in New Zealand since 2011 and saw the local unit pay a $13 million dividend, its first for two years. Godfrey Hirst expanded its Kiwi presence when it bought the failed Feltex carpetmaker out of receivership a decade ago, adding to its Clifton Wool Scour and Canterbury Spinners businesses. 

Godfrey Hirst's result was in a period when New Zealand retail spending on furniture, floor coverings, houseware and textile goods shrank 7.6 percent to $2.27 billion, and contrasts with the fortunes of NZX-listed rival Cavalier Corp, which reported a loss of $2.1 million on an 18 percent slide in revenue to $156.1 million, the first time its generated smaller sales than its Australasian rival. 

The local Godfrey Hirst unit paid $119.4 million in dividends to its Australian parent over the past 20 years, or 73 percent of the $163.2 million of net earnings its generated in two decades. 

Last month US-based Mohawk announced plans to buy Godfrey Hirst, ending five decades under the ownership of the McKendrick family in Australia. The deal is subject to closing conditions and regulatory approvals, and comes at a time New Zealand's Overseas Investment Office has been directed to demand higher hurdles in approving the sale of rural land to foreign buyers. 


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