Cavalier profit rises 17% on Norman Ellison, carpet tiles

Friday 29th August 2008

Cavalier Corp., New Zealand's only listed carpet-maker after the demise of Feltex, lifted annual profit by 17% after it acquired a business and sold more carpet tiles.

Profit rose to NZ$17.9 million, or 27.1 cents a share, from NZ$15.7 million, or 24 cents a year earlier, the company said in a statement. Sales rose 22% to NZ$250 million.

Profit growth was driven by five months of contributions from Norman Ellison, the Auckland-based carpet company that Cavalier acquired last year. The company expects "a modest increase" in earnings in 2009 though there is a risk from further softening of demand in New Zealand and Australia, it said.

"The integration of Norman Ellison into the group had gone better than expected, with virtually all of the synergies that were identified in place for the new financial year," the company said.

Shares of Cavalier rose 1.1% to NZ$2.78. The stock has climbed almost 15% in the past month, outpacing the NZX 50 Index's 2% advance.

Norman Ellison's assets were poured into a new company, with Cavalier owning 70% and the target's original owners holding 30%. Cavalier issued NZ$5.1 million of shares to its partner to fund the transaction.

Revenue from Cavalier's carpet operations rose 23% to NZ$199 million in the latest year, with its carpet-tile unit lifting earnings 44%. Sales from wool procurement and scouring rose 17% to NZ$57 million.

The company will pay a final dividend of 11 cents a share, up from 10.5 cents a year earlier.

By Jonathan Underhill

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