The company expects demand for carpet to lift in New Zealand with increased building activity, helped by Christchurch rebuilding work and a general uplift in real estate turnover.
The latest normalised after-tax earnings outlook remained in the $6 million to $10 million range.
For the half-year to December, Cavalier reported earnings before interest and tax (before restructuring costs) of $496,000, down 92% on a year ago.
The result included, net of tax, $149,000 of redundancy costs and a $576,000 write back of over-accrued restructuring costs from the 2012 financial year.
The company described the results as disappointing but not unexpected.
Group revenue for the six months was $101 million, a decrease of 6% on the $108 million the previous year.
Return on average shareholders' equity for the six months was 2.2% and earnings per share were 3c (both normalised and annualised), compared with 8.8% and 12.5c respectively the previous year.
It had been a difficult six months for the company's carpet business which produced a segment result before restructuring costs of $1 million on revenue of $88 million, compared with $6.7 million on revenue of $92 million the previous year.
There were signs the economy was picking up in New Zealand, however sentiment in Australia was ''more worrying'' and the Australian economy appeared to be slowing down.
Feedback on Cavalier's new synthetic carpet range was encouraging and it expected sales before the year's end.
There had been ''significant reduction'' in headcount in the previous 12 months and the business had been reorganised to operate more efficiently. The reduced costs would flow through into future earnings.
Directors were not recommending an interim dividend payment, saying that while the company was in a much better financial position with ''considerably less'' interest-bearing debt, there needed to be a lift in earnings to justify payment of a dividend.
However, if earnings improved as forecast and the outlook remained positive, directors expected to declare a dividend with the announcement of the full-year results in August, subject to capital requirements and the cost of any further restructuring.
In terms of market demand, Forsyth Barr investment adviser Haley van Leeuwen said it was interesting New Zealand customers seemed to be moving away from traditional woollen carpets in favour of new synthetic carpet products, whereas the Australians were ''moving in the opposite direction''.
Currency still represented a major risk for the company, with the Australian market being a major export market.
Every 1c movement in the AUD/NZD exchange rate was estimated to affect Cavalier's pre-tax profit by about $700,000.
