Cavalier first-half profit soars 140% on cost cutting; trims annual earnings guidance
Cavalier Corp. [NZX: CAV], the listed carpet-maker, more than doubled first-half profit as it clamped down on costs, though it cut its forecast annual earnings as it restructures its carpet tile unit and contends with a strong currency crimping export returns.
Net profit jumped to $3.4 million in the six months ended Dec. 31 from $1.4 million a year earlier, the Auckland-based company said in a statement. Sales increased 1 percent to $101.8 million as cost of sales declined 4.4 percent to $73 million.
Cavalier lowered its forecast for annual normalised earnings to between $6 million and $9 million, from previous guidance of $8 million to $10 million, and compared with normalised earnings of $6.6 million last financial year.
The carpet maker has cut costs, including closing operations, reducing brands and sacking staff, in the face of stiff competition from cheaper synthetic carpets and a sharp spike in the price of coarse wool, which has impacted margins.
Sales in New Zealand gained 9.7 percent to $45.4 million, while Australian revenue fell 6.4 percent to $52.9 million as returns were crimped by a rise in the New Zealand dollar. Australia makes up 52 percent of total revenue, down from 56 percent in 2012.
Cavalier shares fell 1.2 percent to $1.68 and have dropped 1.2 percent this year, lagging a 4.1 percent gain on the NZX All Index, a capital measure of all domestic stocks, over the same period.