Feltex profit up, with a warning

By GEORGINA BOND

Carpet maker Feltex has nearly doubled its first quarter profit, but warns that it will have to lift prices to combat the strong dollar and the rising price of oil.

Net profit for the three months to September was $4.4 million, up 80 per cent on the same period last year. The result came on slightly lower revenue of $79.1 million - down from last year's $80.5 million.

However, operating profit rose from $8.7 million to $10 million, thanks to a focus on selling higher-value carpets, new tufting technology and cost control.

The rising kiwi weakened the value of sales in Australia - the company's biggest market - by $2.5 million.

Closing the company's rubber underlay operations in the previous financial year also reduced sales by $1 million.

Feltex planned to raise prices to recover higher raw material costs stemming from surging oil prices, it said yesterday.

Last month, chief executive Sam Magill told shareholders at the company's annual meeting that any further appreciation of the kiwi against the Australian dollar would reduce full-year profits.

Provided this did not happen, other initiatives should allow the company to double last year's $11.2 million full-year profit to $23.9 million in the year to June.

Feltex shares closed at $1.57 yesterday, 7.6 per cent lower than their $1.70 issue price in June.

The company raised $243 million in May, and returned to the stockmarket after an absence of nearly 20 years.

Shares sold at $1.62 on the first day of trading and have continued to drop.