Cavalier posts 38 per cent profit slump

Carpet maker Cavalier Corp today announced a 38 per cent fall in first half profit and warned its full year earnings will be 20-30 per cent lower than last year as soft market conditions prevail.

Cavalier posted a net after tax profit of $6.8 million for the six months to December 31, compared with $10.7m for the same period a year earlier.

Operating revenue was also 5 per cent down on the previous year at $96.3m, with most of the reduction coming from Cavalier's broadloom carpet operation.

Shares in Cavalier, which announced a second interim dividend of 5 cents per share, payable on March 17, were steady at $2.85 on the result, compared with a year high of $4.45 and a low of $2.40.

Cavalier flagged the weak result at its annual meeting in November.

The result reflected "softer and more challenging conditions" in both its carpet and wool scouring operations, it said.

Operating revenue for Cavalier's carpet division declined 6 per cent to $78 million in the first half.

Cavalier said a slow down in the housing sector had caused a sharp drop off in the demand for carpet, particularly in Australia -- although that trend was now extending to New Zealand.

Trading conditions in the contract flooring business, where Cavalier operates broadloom and tile carpet businesses, fared better, although margins came under pressure as carpet manufacturers diverted their surplus capacity into this segment of the market.

Revenue for Cavalier's wool businesses was $18.3m, almost unchanged on the same period a year ago.

The high New Zealand dollar and a lack of demand for New Zealand wool took their toll on wool prices, Cavalier said.

Looking ahead, Cavalier expected full year operating earnings to be 20-30 per cent lower than last year's $19.5m figure.

- NZPA