Outlook improves at carpetmaker

Carpetmaker Cavalier Corporation says it’s revamping its export focus and product range after a return to profit following two years of factory closures and restructuring.

The developments come after a difficult year when chief executive Paul Alston warned of breaching bank covenants if the wool market didn’t improve.

Alston said the company would be announcing new products in coming weeks, and was currently ramping up its sales pitch for rugs, prompted by the trend to hard floorings in modern homes. It was also embracing online sales.

On the export front, Cavalier was bringing its overseas sales force back to New Zealand control, Alston said.

The company’s consolidation over the past 18 months included moving the Christchurch felting plant to Wanganui and consolidating yarn spinning operations in Napier.

Cavalier still employs about 500 people in its wool purchasing, scouring, yarn, design and broadloom carpet manufacturing.

The recent debt reduction and restructuring produced earnings before interest tax and depreciation of $4.4 million for the six months ending December 2018, compared with a $2m loss for the previous corresponding period.

After allowing for tax, the latest bottom-line profit was $1m. It was achieved on turnover of $75m – with $41m of sales in New Zealand and $30m in Australia.

Alston said Cavalier’s financial position improved in late 2017, with reduced debt.

Sales had been softer due to a loss of confidence in supply, but the business was now working with retailers to instil confidence, and there had been a lift in sales of high-end, high-margin wool products.

Alston said the latest profit result showed positive progress after tough decisions. But the company was not yet in a position to resume dividends.