Cavalier posts 60pc lift in interim profit

By NZPA

Friday 14th February 2003

The housing boom in Australia and New Zealand has seen carpet maker Cavalier Corp lift its half year profit by 60 percent.

The company has reported an interim profit to December 31 of $9.218 million on a total revenue of $95 million. That compared with $5.753 million on a revenue of $78.5 million for the same period last year.

"Our best estimate for the full year now is for a tax-paid operating surplus of about $17 million provided there is no dramatic change in the operating environment," the company said in a statement.

Directors declared a fully imputed second interim dividend of 7.5c per share (compared with 5.75c per share last year after adjusting for a two-for-one share split).

Earnings before interest and tax (ebit) for the period were $15 million, an increase of 51 percent on the December 2001 half.

The company, which exports more than half its products , noted a "very strong contribution" from the Cavalier Bremworth carpet operation, where ebit of $13.8 million was up 41 percent on the previous year.

"The level of demand for Cavalier Bremworth products has been extremely high on both sides of the Tasman. A combination of buoyant market conditions and ongoing market share gains has seen demand stretch our capacity to supply."

The company saw a maiden ebit of $1.1 million from its Ontera Modular Carpets carpet tile subsidiary in Australia and a similar contribution from its wool operations, which were up by $0.5 million or 85 percent on last year.

Cash flow was strong, and operating and investing activities netted a combined surplus of $10.1 million, after allowing for the acquisition of the shares in Ontera Modular.

Return on shareholder funds was just under 22 percent, which the company said compared favourably with 14.4 percent for the first half of last year and 16.6 percent for the full year to June 2002.

Directors said the immediate outlook for Cavalier was very positive and expected margins for the second half of the year to be similar to the first half.

They said there was an expectation the current strength of the New Zealand dollar against its Australian counterpart could dampen profit margins for the carpet business in the second half of the year and beyond.

But the company did not expect that to be the case, as it raised prices in Australia and enjoyed significant cost benefits against the US dollar for raw materials.

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