Cavalier Corporation announces preliminary announcement of June 2013 full year results

The Directors of Cavalier Corporation announce an audited after tax profit for the year to 30 June 2013 of $3.0 million, compared with the $1.6 million after tax loss reported in 2012.

On 18 June this year, Cavalier Corporation advised the market that it will be consolidating its carpet tufting operations by relocating the Onehunga tufting operation of its subsidiary, Norman Ellison Carpets, to its main tufting site in Papatoetoe, Auckland. The restructuring will reduce the manufacturing cost base and improve future results. However, there were extraordinary costs in the form of provisions that had to be recognised at year-end. The tax paid costs associated with the tufting relocation are $4.1 million which has partially been offset by releases of provisions taken up in the previous year to the value of $519,000. Excluding these two one-off adjustments, the normalised operating profit after tax is $6.6 million, compared with the previous year of $ 4.3 million, a 55% increase.

Directors advised in June 2013 that they were expecting normalised earnings for the year ended 30 June 2013 to be at the lower end of the $6 to $10 million after tax range. At the same time, the Directors also advised that restructuring/relocation costs associated with the consolidation of tufting would reduce normalised earnings by $4.0 to $4.5 million after tax. As a consequence, final results as announced are within the guidance ranges previously provided.

Revenue for the Group of $202 million is down 7% on the previous period, with New Zealand and Australian revenue down 9.4% and 5.6% respectively. Australia now represents 55% of total revenue, compared with 54% in 2012.

The normalised earnings improvement of 55% is a move in the right direction and a reflection of management’s efforts to reduce the cost base in in the last couple of years and the slightly better market conditions in New Zealand.

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