Carpet manufacturer Cavalier cut its full-year earnings guidance after a slow start in the first quarter and demand in the Australian market that didn't recover as expected.
Normalised earnings are likely to be between $6 million and $10 million this financial year compared to previous guidance of a net profit of $10 million to $12 million, managing director Colin McKenzie told shareholders at their annual meeting.
It posted a net loss of $1.6 million last year, a period it described as the worst it had ever experienced, forcing the company to take $8.2 million of charges to restructure its business, closing a spinning plant and consolidating warehousing and distribution.
Wool prices soared during the period.
"We have had a slow start to the new financial year which is disappointing given all the changes we have implemented and the expectation that the worst was finally behind us," McKenzie said. "We were predicting that the Australia market suffered a temporary setback, and that we would experience gradually improving conditions throughout the year - unfortunately there was no improvement during the first quarter."
Cavalier closed down 21c yesterday at $1.55.
Chairman Alan James told shareholders that there would be no interim dividends paid by the company for now.
"We will be hoping to declare a final dividend, the quantum of which will depend on the full-year's earnings," he said.
Cavalier cut inventory by 14 per cent to $62.9 million in the year ended June 30 and said it was forecasting "further sizeable inventory and debt reduction" during the remainder of this financial year.