Tougher times mean profit drop for Cavalier

Cavalier yesterday reported a 35 per cent fall in its June bottom-line net profit to $13.7 million, saying it will struggle to match the 2005 result this year..

As signalled earlier this month, the result was affected by the $5.8 million write-off of development costs associated with the bio-remedy project Microbial Technologies.

Without that, the operating surplus would have been down 7 per cent to $19.5 million. The result was on operating revenue of $207.8 million, up from $198.6 million. Operating surplus before interest, tax and minority interests for operating activities fell 4 per cent to $33 million. Earnings per share fell to 21.0c from 32.7c.

Managing director Wayne Chung described the year as "difficult" after three years of record earnings.

"It was the result of a slowing-down in residential carpet sales, particularly in Australia, and by the difficult trading environment for our wools operations," Chung said.

He said the tightening cycle in Australia and New Zealand was well under way - driven by interest rate increases designed to slow the domestic economies and reduce inflationary pressures.

That had slowed the residential carpet market in Australia and, lately, NZ.

"For the time being, the business environment is looking tougher, and we will do well to match the 2004/05 earnings."

The company declared a final, fully imputed dividend of 14.5c.

- NZPA