Restructuring hits Cavalier profit

By Phil Boeyen, ShareChat Business News Editor

Monday 19th February 2001

The costs of closing some of its wool businesses has seen Cavalier Corporation's (NZSE: CAV) half-year profit drop by more than 30% in the six months to the end of December.

Cavalier has recorded an interim profit of $4.8 million, down from the previous year's $6.7 million. Sales fell to $104.4 million from $112.9 million.

The company says the lower profit is after taking a $2 million hit in one-time closure costs of the Lichtenstein wool trading and wool scouring operations at Onehunga.

It says restructuring of the wool operations has gone according to plan, and it has absorbed most of the bulk of the anticipated restructuring costs in this half year.

"Lichtenstein scouring plant has been sold, redundancy costs have been covered and 75-80% of trading contracts outstanding when we announced exit from wool trading last year has been fulfilled," the company says.

Cavalier continues to have exposure to the wool business through Elco Direct and a 51% stake in Hawkes Bay Woolscourers. The company says these should not only be profitable, but also provide excellent return on funds employed.

The carpet operation has continued to deliver outstanding results according to the company, with operating revenue at $51.9 million, slightly ahead of the previous year.

A fully imputed second interim dividend of 10 cents per share will be paid.

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