Cavalier hopes for better second half

By Phil Boeyen, ShareChat Business News Editor

Wednesday 14th November 2001

Manufacturer Cavalier Corp (NZSE: CAV) is forecasting a tax-paid profit of more than $12 million for the current year despite its carpet business getting off to a slow start.

MD Alan James told shareholders at the company's AGM on Wednesday that the carpet business has been soft in the first quarter following the current world economic slowdown, with sales down around 7% on last year.

"However, events of September 11 notwithstanding, business has been looking quite strong since, at least in NZ and Australia. Asia and other world markets remain subdued."

"Unfortunately, margins are somewhat down as well, with manufactured costs under pressure from reduced volumes and what has been a rising trend in wool prices.

Mr James has estimated that the company's carpet earnings could be down by as much as 25% on last year, but says the first half last year was a peak period and the company wasn't expecting to match it.

"I think that in the second half, we will begin to catch up on last year. The January to June period of this year was very slow, and if current trends continue, the first half of 2002 should be better.

"I would like to think that we can get within 10% of last year's result by year end."

Cavalier says its wool businesses are going well and, with the benefit of a full year's contribution from Hawkes Bay Woolscourers, should contribute more in tax-paid earnings than last year.

"At this stage, our best estimate for the full year would be for tax-paid earnings of a little over $12 million, or about 40 cents per share. I think that would be quite a good result, given the present world economic situation," says Mr James.

For the year ended June 2001 Cavalier recorded an operating surplus after tax and minority interest of $10.2 million, but that result included $2.8 million for operating losses and restructuring costs associated with discontinued wool trading operations.

The company has declared an interim dividend of 7 cents per share, to be paid next month.

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