Feltex falls again as profit turns to loss

The bad times keep rolling for carpet manufacturer Feltex Carpets.

Rivalry and increased costs reversed profit for the three months to March from $2.4 million into a loss of $888,000, it said yesterday.

The earnings were brought forward several weeks after the company's April 1 profit warning slashed 30 per cent off its sharemarket value.

But the figures did little to reassure the market.

Feltex shares - the worst performer on the stock index this year - fell a further cent to end the day at 85c, continuing the fall from its $1.50 pre-warning price.

Feltex has faced anger and calls for explanation from investors and analysts since the warning which came within weeks of its February 23 interim results when it said it was on track to meet earnings and profit forecasts made in last year's initial public offering prospectus.

Feltex chairman Tim Saunders said yesterday that the board moved as quickly as it could to downgrade full-year earnings.

"We got the work done over a period of three days. We got it out. There was no buggering around," Saunders said.

The company is sticking to its revised full-year earnings guidance of $15 million to $16 million, up to $9 million lower than its previous forecasts.

Operating revenue fell 60.5 per cent to $3.4 million as sales in the second half of the quarter failed to rebound from lacklustre levels in January and February.

Feltex was struggling to boost prices in its largest market, Australia, where confidence had slowed amid increased competition.

Last month the Carpet Institute of Australia reported that tufted carpet imports from markets other than New Zealand rose around 17 per cent during the second half of last year.

Further price rises for synthetic raw materials were communicated to the company on March 31, the company said in a statement, but gave no further details.

Skilled labour shortages had hampered its ability to complete commercial contracts, and a drop in consumer confidence in Australia and increased marketing costs were also hurting earnings.

The effect of the strong New Zealand dollar on the group's Australian sales negatively impacted revenue by $2 million and operating revenue by $54,000.

The company posted a first-half profit of $12.2 million.

Looking ahead, Feltex said it had invested in new styling and ranges of carpet, which had received positive feedback from retailers.