Cavalier's annual profit falls 13% 22 Aug 2014
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- Government Widens Drought Assistance News
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
Cavalier's annual profit falls 13 percent, signals "modest increase" in 2015 earnings
By Suze Metherell
Aug. 22 (BusinessDesk) - Cavalier Corp, the listed carpet maker, posted a 13 percent drop in earnings last year, as a high currency crimped export sales and margins were squeezed by rising wool prices and increased rivalry.
Profit fell to $5.8 million in the 12 months to June 30, from $6.6 million the year earlier which excluded $3.6 million of restructuring costs, the Auckland-based company said in a statement. In June the company flagged a profit range of between $5 million and $6 million, down from its previous guidance. Revenue fell 1 percent to $201 million.
Cavalier has restructured its businesses and introduced a synthetic carpet range as it battles to retain market share against increased competition from cheaper synthetic imports, while margins are squeezed by a rising wool prices and lower sheep numbers and export earnings are crimped by a strong New Zealand dollar. The company said today it is forecasting only a "modest increase" in earnings for the coming 2015 financial year.
"Upsides include a full year's benefits from the consolidation of tufting which we completed in 2014, continuing growth in synthetic and felted carpet sales, launch of new products that had been scheduled for 2015, growth in rest of world markets and lift in wool grease prices," managing director Colin McKenzie said in the statement. "Downsides include the impact of continuing increase in wool price on woollen carpet margins, continuing soft market conditions in Australia for both residential and commercial carpets and continuing strong New Zealand dollar adversely affecting the conversion of our Australian dollar-denominated sales into New Zealand dollars."
Cavalier's board decided not to pay a final dividend, citing its recent earnings downgrades and the company's requirements for cash flow and capital. It paid a 3 cent dividend in the first half of the financial year. The board will keep the dividend policy under review and update shareholders at its annual meeting on Nov. 25, it said. It also plans to provide an indication of the full year outlook at the meeting.
Cavalier's carpet revenue slipped 3 percent to $163.6 million on flat volumes as a stronger New Zealand dollar crimped Australian sales. Earnings at the unit rose 31 percent to $8.4 million, excluding $5 million of restructuring costs the year earlier, as a result of efficiency gains from the consolidation of tufting during the year, the company said. Staff employed by the carpet unit fell to 643 from 678 a year earlier.
While it recorded a pick up in the New Zealand market, with increased sales, margins and profits, the lower-priced segment of the market "remains very competitive," Cavalier said. Volumes of its synthetic Habitat Collection carpets exceed expectations and growth in high-end felted wool carpets were encouraging off a small base, it said.
In Australia, the weaker economy kept volumes and margins under pressure amid intense price-based rivalry although volumes of its Habitat synthetic range were above its intial targets, it said. The stronger New Zealand dollar weighed on Australian revenue and margins as did stock clearance activity as the company reduced its portfolio of products.
The company's wool business, which includes wool buyer Elco Direct and a half share in wool scourer CWH, increased revenue 22 percent to $42.3 million, while earnings slipped 0.8 percent to $1.4 million. Staff numbers fell to 26 from 34 a year earlier. CWH was impacted by a "dramatic reduction" in the wool grease price, which has fallen by almost 61 percent since the beginning of 2013, as demand dropped due to a disease affecting the Asian shrimp industry, where wool grease is used in the manufacture of shrimp feed.
"With the disease now under control, demand is anticipated to recover, and we are expecting wool grease price to gradually increase in the next financial year," McKenzie said.
The wool business was also hurt by a drop in the volume of wool available for scouring as sheep numbers decline. Cavalier is committed to further rationalisation for the industry to ensure wool scouring in New Zealand remains competitive, McKenzie said.
The company said its Radford Yarn Technologies business benefited from increased demand for felted yarns as Cavalier seeks to boost sales of those products.
Shares of Cavalier last traded at $1.03, and have declined 40 percent this year.
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more