Exchange rate help and hindrance to Cavalier

Carpet manufacturer Cavalier is still contending with the strong dollar but says the benefits this brings to its import costs is helping to bridge the gap.

The company said yesterday that it expected a full-year net profit in the range of $21 million to $22 million, similar to last year's $21 million.

The dollar's strength against the Aussie was still one of the biggest burdens on profits for the company, which disclosed a net profit of $10.7 million for the six months to December yesterday. The dollar bought 91Ac last night.

Carpet exports to Australia, which makes up about half of its export market, were expected to return less in the second half as it had used up most of its favourable A86c hedges on hand and there were no indications the dollar would weaken substantially against the Aussie in the short term.

However, managing director Wayne Chung said the high dollar did have some offsetting gains, lowering the cost of its imported materials, which included backing, latex and dye.

Carpet demand in the Australian housing market had slowed, but was offset by increased demand from commercial customers. Locally, demand from the housing market was expected to remain steady.

Cavalier shares closed down 5c at $4.40 yesterday.