Feltex focus on premium sales

Feltex Carpets is finding the profit in the industry as it heads upstream in the carpet market.

Sales for the half-year were down but profits were up, showing it is capturing a greater share of the premium end of the market.

The country's largest carpet maker raised its interim dividend to a fully tax-paid 6c when it disclosed the figures yesterday, up from the 5.2c forecast in its prospectus. This amount was not tax paid.

For Australian-based chief executive Sam Magill, the result offered a "platform of stability" in the face of doubts about the company's ability to meet targets since it relisted on the sharemarket in June after 20 years.

Shares first traded at an 8c discount at $1.62 on the first day of trading, and have fetched between $1.75 and $1.51 since. Yesterday, they closed down 5c at $1.64.

"The only time the market will believe us is when we deliver," said Magill.

"We're not a sales-driven organisation. We want to maximise our profits on the sales we generate.

"Our focus is on improving the mix of the business and as long as we continue to see results we will continue with that strategy."

However, Magill warned that carpet demand over the next half would present challenges, particularly in the volume segments of the Australian residential market, such as the apartment sector.

"We anticipate a reduction in group sales in these segments."

But this was expected to be partly offset by higher sales of its premium residential brands and increased commercial sales.

Like most manufacturers, Feltex's earnings were being crimped by the strong dollar, which adversely affected the translation of Australian sales by $6 million.

The NZ dollar rose 5.6 per cent from a year earlier to 92.29 Australian cents at December 31.

Magill said the high dollar meant full-year sales would not meet the $348.2 million projected in its IPO prospectus issued in May.