Cavalier shares fall after earnings warning – layoffs likely
Shares in Cavalier Corp fell 1.8 percent after the carpet-maker warned annual earnings will be at the bottom end of guidance and signalled a $1 million cash hit as it consolidates its tufting operation.
The Australian operating environment "remains very subdued" and normalised earnings will be at the bottom end of the $6 million to $10 million forecast for the year ending June 30, the Auckland-based company says in a statement. It cut the annual guidance in November from expected earnings of between $10 million and $12 million.
The shares fell 3 cents to $1.64.
Net profit will be between $4 million and $4.5 million after one-off costs from shifting the tufting operations for its Norman Ellison Carpets subsidiary to its main site in Papatoetoe, Auckland, from Onehunga. The relocation will see one-off provisions, with a cash impact of about $1 million before the end of the year, which is expected to be recovered within two years.
"The tufting consolidation project – which will significantly reduce the cost base for the key tufting division of the company and allow it to be more competitive, especially in offshore markets – represents the last of the more significant of those initiatives," the company says.
The relocation will result in some redundancies, though Cavalier was not sure how many of its 62 NEC staff will no't be carried over to the Papatotoe site.
In a separate statement, First Union textiles secretary Paul Watson said about 45 jobs are expected to be offered at the Papatoetoe site.
Last year Cavalier closed an NEC yarn spinning plant in Onehunga, laying off about 85 of its 90 staff there.