The prospects for wool earnings look a little shaky but Cavalier Corporation is confident improved carpet takings will buoy profits in the coming fiscal year.
Managing director Alan Jones says the company's latest venture - a flystrike and lice remedy for sheep called Biovine - also has hugepotential to boost earnings.
Mr Jones told Cavalier's annual meeting yesterday that Biovine had received clearance from the Animal Remedies Board and the Environmental Risk Management Authority, paving the way for field trials to begin.
Cavalier experienced very low margins in its wool business in the last financial year, largely due to low demand from recession in the European textile industry and heavy shrinkage in the valuable Chinese wool market.
Although carpet profits have recovered to pre-Asian recession levels, the company is pinning its hopes on Biovine to eventually provide earnings consistency from wool-growing markets in both Australasia and abroad, where the control of flystrike and lice is a persistent problem.
Mr Jones said while Australian field trials had confirmed the efficiency of Biovine, a year of trials in New Zealand was required and the remedy was two to three years away from commercialisation.
The directors of Cavalier announced a first interim dividend of 6c to be paid on December 10. Yesterday, Cavalier shares were unchanged at 334c.
