Feltex is back in the black

Feltex Carpets, which plans to list on the stock exchange, has reported a sharply improved net result of a $5.7 million profit for the June year compared with an $18.28 million loss a year earlier.

Sales fell to $304 million from $313.6 million.

Pretax profit was $5.68 million, compared with an $18.2 million loss.

The result exceeded projections made in the prospectus in May which forecast a surplus of $4.2 million to $5.3 million.

Chief executive Sam Magill said the improvement reflected realisation of benefits from the merger of Feltex Carpets and Feltex Australia (formerly Shaw Industries Australia) in May 2000 and buoyant market conditions.

Results last year had been adversely affected by the contraction in demand in Australia after the Sydney Olympics, the introduction of GST, post-merger restructuring and strikes.

Earnings before interest, taxation, depreciation and amortisation (ebitda) increased from $13.2 million to $31 million in the latest year.

Strong growth arising from market conditions in New Zealand and Australia was offset by two factors - the effects of the sale of the group's 51 per cent share in Andersens Home Furnishing in April last year ($19.2 million); and the strengthening of the New Zealand dollar against the Australian dollar.

The combined effect of these two factors was $41.6 million.

Revenue was also affected by the relocation of some wool spinning equipment from Australia to New Zealand after a decision to consolidate some of the group's spinning operations in New Zealand.

The company's improved performance enabled capital expenditure of $10.7 million on new equipment and improvements, of which the major proportion was invested in new tufting and spinning equipment acquired and commissioned during the year.

- NZPA