NZX-listed carpet manufacturer Cavalier Corp said the yarn spinning plant of its subsidiary, Norman Ellison Carpets, will close in a month's time, with the loss of around 70 jobs.

Staff at the Onehunga, Auckland, plant were given the news this morning.

"This decision was not taken lightly and came after a very thorough review process involving all of the group's three woollen yarn spinning plants," Cavalier said in a statement.

In April, Cavalier signalled that its earnings for the current financial year would be affected by one-off restructuring costs as it repositioned its broadloom carpet business.


The company said at the time that the impact of the restructuring was difficult to project, but that if the estimated cost of all the initiatives was taken into the current year, it would reduce Cavalier's underlying earnings of between $3-5 million to a loss of $1m to $3m.

The closure of the spinning plant would result in a significant reduction in operating costs for the broadloom carpet business and was an integral part of the comprehensive business improvement programme aimed at delivering $10m to $12m profit after tax in the 2012-13 year, it said.

Cavalier said the Norman Ellison business and brand would not be affected by the move.

"This decision is about reducing over-capacity in the yarn spinning operations that support the group's broadloom carpet manufacturing operations," Cavalier said.

Norman Ellison ill continue to make carpet at its Onehunga tufting plant. The spinning plant will close on July 26.

Cavalier shares last traded at $1.54, down from $3.75 this time last year.