KEY POINTS:
Cavalier Corp has reported a $17.9 million net profit after tax in the year to June 30, up 14 per cent from the same period last year.
The carpet maker said the downturn in the housing sector was affecting its business as consumers have less money for discretionary spending because of higher food and petrol prices.
"Despite these conditions, our residential sales in Australia remained strong, especially in the premium segment of the market," the company said.
New Zealand sales did not fare as well.
The profit included five months of contributions from Norman Ellison Carpets. Excluding that to get a like-for-like comparison the profit after tax was up 9 per cent.
Revenue rose 22 per cent to $250 million, and excluding Norman Ellison it was up 10 per cent.
Earnings before interest and tax rose 18 per cent to $33.19m.
The integration of Norman Ellison Carpets was better than expected and the synergies from putting the businesses together are in place for the new financial year.
Market conditions for commercial carpets remained strong, but there has been a move away from broadloom carpet to carpet tiles in that market.
The company said the wool industry was going through difficult times with low returns for wool growers.
The move to dairying by some wool farmers would reduce supply of wool in the future and this was a challenge for the company.
"The main challenge facing us in the 2008/2009 financial year is the soft market conditions for our residential carpets in New Zealand and Australia," the company said.
But the year would have a full contribution from Norman Ellison and the New Zealand dollar was weaker against the Australian dollar.
"Our budget for the 2008/09 financial year shows a modest increase in earnings, but these could dissipate if there were to be any further softening in the residential carpet markets in New Zealand and Australia."
The company would update shareholders at its annual meeting in November.
Directors declared a fully imputed final dividend of 11c a share, which was an increase of 0.5c on the same time last year. The final dividend will be paid on October 3.
- NZPA
