Feltex furnishes rich half-year profit

By GEORGINA BOND

Recently relisted carpet maker Feltex topped its full-year forecast yesterday, posting an $11.2 million profit for the year to June, which it expects to double this financial year.

The result was almost double last year's $6.8 million result and exceeded forecasts for the top 30 company by $1.1 million.

Chief executive Sam Magill said the company expected a net profit of $23.9 million this financial year, underpinned by operating profit of $51.7 million. Enduring growth in the commercial market would offset any cooling in the residential market.

Feltex was now keenly focused on the more profitable segments in the transtasman residential and commercial markets, he said.

Excluding one-off items, including the Christchurch woven plant redundancies and a write-off of secured bond issue costs, net profit after tax was $27.2 million.

The result may have provided a credibility boost after the company's disappointing sharemarket listing in June - returning after 20 years. Feltex shares listed at $1.62 - a 4.7 per cent discount to the $1.70 issue price. Yesterday, the share price rose to $1.74, before closing at $1.70.

Magill said the profit was reached on revenue of $328 million, up $14 million on last year due to favourable market conditions, extra local spinning capacity, better-than-expected sales of new products and sustained sales of higher value products.

Dramatically increased operating profit of $46 million (up 48 per cent) reflected greater margins from a superior sales mix, cost savings from more local yarn production and improved capacity on the back of last year's capital expenditure programme on new tufting technology.

Sales slipped below forecast by $7.7 million, blamed mainly on the dollar and below-forecast sales in April and May - particularly in its volume segments.

An unimputed final dividend of 6c will be paid on October 4.

The company's $4.8 million purchase of its Foxton manufacturing site in June is expected to improve future earnings, with property rental savings offsetting depreciation and financing costs.