Despite reporting a reduced annual profit, carpet- maker Cavalier Corporation expects to see some market recovery next year and says it is well placed to capitalise on that.
The company said yesterday that restructuring of its wool business dragged net profit down 22 per cent to $10.2 millionfor the year to June 30. A net profit of $13.1 million was booked for the previous financial year.
Unusual items included a $2.8 million (tax paid) loss associated with the discontinued wool trading operation E. Lichtenstein and Co.
Cavalier's main businesses now are the Cavalier Bremworth carpet operation, the Elco Direct wool procurement business and Hawkes Bay Woolscourers, in which Cavalier owns a 76 per cent share.
Cavalier declared a fully imputed final dividend of 16c a share, up from 14c a share the previous year. The total annual dividend is equivalent to 30c a share on Cavalier's old capital base and 34.3c a share on its new reduced capital. On June 30 the company cancelled one in every eight shares following the return of $25.2 million of capital to shareholders.
Despite this, earnings per share fell to 28.5c from 36.4c.
Cavalier described the past year as a transitional one and said it was necessary to look beyond the reported earnings and to focus on the earnings from continuing businesses and on the large positive cash flows from the funds released by closing the wool trading business.
The company said its position in the carpet business was strong but the market was weak at present.
"We are expecting to see some market recovery in the current financial year, but timing and quantum are difficult to predict," it said.
