Cavalier Wool Holdings, which is trying to buy the wool-scouring assets of New Zealand Wool Services International, has had a "very subdued year".
While Cavalier Corporation reported normalised tax-paid earnings of $17.3 million - up 4% from $16.6 million the previous year - the group's $2 million share of CWH's normalised tax-paid earnings was down 49%. Cavalier Corp owns 50% of CWH.
In June, the Commerce Commission granted authorisation to CWH to make an offer for WSI's wool-scouring assets. The company had made a $40 million conditional offer.
The commission's decision was appealed by New Zealand's largest carpet manufacturer, Godfrey Hirst, and the High Court granted a stay of the determination pending the hearing of the appeal this week in Wellington.
Last month, Wool Equities Ltd announced it had secured significant funding to make a rival bid for WSI.
Yesterday, Cavalier Corp managing director Wayne Chung said scouring revenue had declined 16%.
That was caused by the shortfall in wool due to the reduction in sheep numbers, the loss of lambs in last September's storms and the absence of greasy wool stocks brought forward from the previous season.
Group revenue for the year was up 4% to $229 million, with strong performances by the company's Australian operations.
Revenue for the company's carpet business was $204 million, up 3% on the previous year. An 11% growth in sales in Australia was negated to a large extent by a 10% fall in sales in New Zealand.
Market conditions in New Zealand for residential carpets and, to a lesser extent, commercial were soft throughout the year, underpinned by historically low new home starts and refurbishments.
Wool prices increased by 80% over the year, with the magnitude and pace of the increase "unprecedented".
The increase led to a 10%-20% lift in the prices of Cavalier's woollen carpets and while the market was slowly coming to terms with the increases, the company was mindful of the risks posed by the comparatively much cheaper synthetic alternatives, particularly at the value end of the market.
"Only time will tell whether wool prices - which are currently at their 20-year highs - will remain at these levels over the longer term, but our view is that they are not sustainable and will ease back in time."
An unchanged final dividend of 11 cents per share was announced, giving a total for the year of 18cps, also unchanged.
