Value of Feltex shares slump by a third after profit warning

Feltex Carpets shares lost over a third of their value today after it issued a profit warning.

The carpet maker said its full year profit forecast could be up to $9 million below previous forecasts due to a tougher sales environment in Australia and New Zealand.

Net profit after tax is now projected to be between $15m and $16m for the year ending June 30, 2005. This is between $8m and $9m less than the previous projection, the company told the stock exchange.

Some $76 million was wiped off Feltex's value as its shares plunged to 99c shortly after the announced from $1.50 yesterday.

The shares were issued at $1.70 last June and first listed at $1.62.

Fellow carpet maker Cavalier was also affected, losing 15c to $3.65 in the first hour of trading on the sharemarket today. Others in the building sector likely to be affected by the same kind of issues hitting Feltex were also knocked back. Fletcher Building fell 14c to a two-month low of $6.50 while Nuplex Industries dropped 7c to 490.

Forsyth Barr Frater Williams broker Richard Burton said Feltex's statement had caught the market by surprise. Just over a month ago when the company held a briefing for an analysts there was no wind of the downturn, he said.

Feltex was a volume business and when these came off as they obviously had done, then it quickly came off the bottom line, Mr Burton said.

- NZPA