Carpet tiles lift Cavalier's earnings in weak market

By Errol Kiong

Carpet maker Cavalier has laid down a 14 per cent rise in full-year earnings, aided by the part acquisition of Norman Ellison Carpets this year.

Net profit after tax for the year ended June 30 was $17.9 million, up from $15.7 million last year. The result includes the five-month contribution from Norman Ellison Carpets, in which the company took up a 70 per cent stake last February.

Total revenue for the year was $250.1 million, up 22 per cent.

Excluding Norman Ellison's contributions, earnings and revenue were up 9 per cent and 10 per cent respectively on last year.

The company's carpet operations brought in $199 million, up 23 per cent on the previous year's $161 million. Norman Ellison accounted for $24 million - or 12 per cent - of that.

The broadloom carpet sector was affected by the downturn in the housing sector in Australasia, but Cavalier's carpet tiles operations saw a 21 per cent lift in revenue and 44 per cent lift in earnings.

The company said market conditions for commercial flooring were strong and were expected to continue for at least another year.

Cavalier's wool operations, which consist of wool procurement and wool scouring, posted a revenue increase of 17 per cent to $57 million. Profit before corporate costs, interest and tax for the wool operations was $5.6 million.

Managing director Wayne Chung said the main challenge facing the company next year was the soft market for residential carpets in New Zealand and Australia.

But favourable market conditions for its carpet tile operations, the weaker kiwi against the aussie, and a full-year contribution from Norman Ellison, should provide some buffer.

Chung said the company's budget for the 2008-2009 financial year showed a modest increase in earnings, but it was too early to provide an outlook, given market volatility.

A fully imputed final dividend of 11c a share was declared, taking the total dividend to 20c.

Cavalier shares closed at $2.81, up 6c.

- NZ Herald

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