Carpet manufacturer Cavalier Corp has issued its second profit downgrade in three months, now signalling a likely full-year loss of $2million.
Cavalier shares plunged almost 10%, to 50c, following the announcement.
Weaker trading conditions in Australia earlier in the year were now also being experienced in the New Zealand market; with both markets having more competitor activity. Cavalier in February had downgraded from an expected $3million-$5million profit for its year to June down to breakeven, before downgrading further to an expected $2million loss yesterday.
For its six months to December trading, Cavalier posted a revenue decline from $98.4million to $84.2million and after-tax profit plunged from $3.51million right down to just $31,000.
Cavalier chief executive Paul Alston said Australian market conditions appeared to be weakening, with soft trading in December and January, prompting revision of expected sales to Australia for the next six months.
He said while the 2016-17 forecast was down, the board was still expecting an improved performance in 2017-18 when the benefit of the significantly reduced wool price and other cost-out measures came through.
The depressed wool price was good for Cavalier in the longer term, but Mr Alston yesterday said it adversely impacted on the performance of Cavalier’s wool acquisition business and earnings from its 27.5% interest in Cavalier Wool Holdings.
