Sales volumes down for carpet maker

The recession hit the residential carpet market quickly and severely and sales are expected to remain flat, Cavalier Carpets said today.

The company told shareholders at its annual meeting that earnings for the first four months of the year were down 30 per cent on last year but last year's figures were strong.

"Against budget, I'm pleased to report that we are 5 per cent ahead, and we see no reason to deviate from the earnings outlook we gave shareholders in the annual report at this stage," managing director Wayne Chung said.

The company expected 2009/10 earnings to be in the range of $13.5 million to $15.5m. Normalised tax-paid profit was $13.7m in the year to June 30, 2009, down 24 per cent on the previous year.

James also paid tribute to Tony Timpson, who retired from the board today.

Timpson founded the Cavalier Bremworth broadloom carpet operation in 1972 with Grant Biel and the company listed in 1983.

Timpson was managing director from July 1984 to August 1993 before taking over the chairmanship. He is a substantial security holder in the company.

The company said that during the year to June 30, 2009 it enjoyed normal trading conditions in the residential carpet market in the first quarter, then volumes turned down severely and were down 20 per cent on the previous year in the latter part of the year.

Residential carpet sales account for 60 per cent of broadloom carpet turnover.

The carpet tile business, however, held up remarkably well. The company has also participated in a rationalisation of the scouring industry and has worked hard to reduce costs.

Commenting on the 2009/10 financial year, Chung said he expected residential carpet sales to remain flat and commercial sales to soften.

Improvements in productivity and earnings were expected in the souring business.

- NZPA