Slow Aussie sales see Cavalier's profits fall

Last updated 09:29 17/11/2012
Colin McKenzie
Cavalier managing director Colin McKenzie says the New Zealand market has held up, but Australia's had disappointed.

Relevant offers

Carpet maker Cavalier Corporation says its full-year net profit will now fall between a "worst case" $6 million and $10m, thanks to sluggish sales across the ditch.

Its NZX shares slumped 12 per cent yesterday, to $1.55, on the news.

At its annual general meeting in Auckland the company signalled further "cost reduction" and growth initiatives as it recovered from its worst year on record - when wool prices spiked and demand in its key Australasian markets slumped.

The year saw Cavalier consolidate its local warehousing and distribution and announce the closure of its Onehunga yarn-spinning plant, cutting 88 jobs. Headcount fell by 262, almost 30 per cent, between July 2011 and July 30 this year.

Morningstar analyst Nachi Moghe said he was not surprised by the profit downgrade, given the weak Australian property market and pricing pressures there.

Cavalier managing director Colin McKenzie said its previous profit guidance of between $10m and $12m was partly based on a modest improvement in the market, but while New Zealand had held up, Australia had disappointed.

"Where we've fallen short is basically in Australian carpet sales, both tiles and broadloom."

Cavalier predicted there would be little growth in the Australian non-residential market, while demand in residential was probably at the lower end of the market - where Cavalier was not dominant.

It expected sales in New Zealand and to the rest of the world would improve in the second half of the year, but McKenzie said growth in Australia would depend on its own product and customer initiatives.

Cavalier planned to enter new product ranges, including synthetic carpets in New Zealand and entry- level carpet tile products in Australia.

It would also turn to new sales channels, such as selling its carpet tiles through retail chains, he said.

"We do see things improving and we will be paying dividends as soon as we can."

It would give more detail on its cost-reduction initiatives in the next few months.

Ad Feedback

- The Dominion Post

Special offers
Opinion poll

What do you make of the proposed conference centre/hotel for Wellington?

Great - a big boost for the local economy

Nice - one of many projects needed

Argh - a white elephant in the making

First priority should be airport runway extension

Not sure at all

Vote Result

Related story: Convention centre to get OK

Featured Promotions

Sponsored Content