13% drop in Cavalier profit

Difficult trading conditions in Australia and a strong New Zealand dollar have affected carpet manufacturer Cavalier Corporation's result for the year to June.

The company posted a ''disappointing'' 13% decrease in normalised profit from $6.6 million to $5.8 million, while revenue was down 1% from $201.7 million to $200.6 million.

Despite the challenging operating conditions, the group managed to record improved earnings for its carpet and felted yarn operations, while achieving a profit in line with the previous year for its wool acquisition business, managing director Colin McKenzie said in a statement.

Carpet revenue for 2014 was $164 million, down 3% on the previous year's $169 million, with volume largely unchanged and the reduction in revenue mainly due to the stronger New Zealand dollar on Australian sales.

The New Zealand carpet-market had continued to improve on the back of the strengthening New Zealand economy and carpet sales were marginally up on the previous year.

However, the lower-priced segment of the New Zealand market remained very competitive.

The group's share of tax-paid earnings of Cavalier Wool Holdings for the current year was $2 million, a 59% drop on the previous year's record of $5 million.

The drop was attributed mainly to the ''dramatic'' reduction in wool grease price, which had fallen by almost 61% since the beginning of 2013, and a reduction in the volume of wool available for scouring.

Wool scouring in New Zealand continued to be adversely affected by excess scouring capacity with sheep numbers continuing to decline.

CWH remained committed to further rationalisation in the industry.

Cavalier Corporation's 2015 budget was showing a ''modest increase'' on earnings. No final dividend would be paid for the 2014 financial year.

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