Cavalier Corp millions ahead

Carpet manufacturer Cavalier Corporation says it is trading ahead of budget and headed for a 24 per cent increase on last year's earnings - subject to New Zealand's strengthening currency.

Managing director Alan James told the company's annual meeting on Wednesday that exceptionally strong carpet sales in the past year had pushed the company's estimate for a half year tax-paid profit up to $9 million - 12.5 per cent ahead of budget, and a 56 per cent increase on last year's first half.

"Nobody should expect us to carry that level of increase through for the full year," James said in speech notes.

"However, I believe the $16 million [forecast for a full year operating profit after tax] to be very achievable provided there is no dramatic change in the business environment."

Cavalier is expecting earnings before interest and tax (ebit) of $27.8 million for the current year, which would be 24 per cent up on the previous year.

That included a $2 million maiden contribution from Australian carpet tile maker Ontera Modular Carpets and a 15 per cent increase in contribution from Cavalier's existing activities.

The company made a net profit of $13.15 million in 2002.

However, James warned that the company was vulnerable to NZ's cross rate with the Australian dollar.



Cavalier also said it planned a 2:1 share split to make its share price more attractive.

James said the company's growing earnings, together with a cancellation of one in eight shares last year, meant the stock was getting quite high in price.

The share price was over $6 and prospective earnings were getting up towards 50c.

This perhaps was the reason it was thinly traded, he said.

The proposed share split would take place after the first interim dividend payment, creating just under 63 million shares on issue.

- NZPA