Cavalier Corporation grows profit by 28 percent to $13.2 million

By NZPA

Friday 23rd August 2002

Carpet and wool scouring business Cavalier Corporation posted a 28 percent rise in June year profit to $13.15 million.

The results covered Cavalier's first full year of operation following the restructure of its wool business, and the repayment of $25.2 million surplus capital.

Operating revenue rose by 29 percent to $161.2 million, largely due to an increase in activity in the carpet business, and a full 12 months' turnover from Hawke's Bay Woolscourers, compared with eight months in the previous year.

Operating surplus before interest and tax (ebit), on ongoing activities, was $22.4 million, up 30 percent on last year's overall ebit of $17.3 million, which had been affected by the one-off cost of closure of the wool trading operations, managing director Alan James said in a statement.

Net cash flow from operating and investing activities was $17.2 million, including an $18.5 million inflow from operations, and an outflow of $1.3 million from investing activities.

The carpet operation manufactures and markets carpets under a range of brands, including the Cavalier Bremworth brand from which the carpet operating company takes its name.

The wool operation comprised Cavalier's 76 percent share in Hawke's Bay Woolscourers and wholly owned private wool-buying company, Elco Direct.

Hawke's Bay Woolscourers and Elco Direct have Cavalier Bremworth as a major customer.

The carpet operation's sales revenue rose 12.3 percent to $108.9 million, with most of the growth occurring in the second half, the company said.

However, pre-tax earnings were flat at $19.9 million, as the result of an inability to recover cost increases through pricing in the very soft market that prevailed in the early part of the year, and a bias towards lower margin products, Mr James said.

Wet weather in spring and autumn in the North Island reduced the volume of wool available for the company's wool scouring operations.

Hawke's Bay Woolscourers' profit of $3.7 million was below expectations as a result.

"For the wool operation, we are hoping that a return to more normal weather patterns will allow us the opportunity to realise the full potential of the scouring operation and, thus, improve on last year's result," he said.

Cavalier has also undertaken blowfly field trials in Australia through its Microbial Technologies Ltd.

Cavalier will pay a final fully imputed dividend of 17.5 cents per share on October 11, bringing the total dividend to 36cps, a 5 percent increase on the previous year's dividend.

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