Cavalier reports $21.5m net loss for year
CARPETMAKER Cavalier Corp has reported a statutory net loss after tax of $21.5 million for the year to June 30.
In its announcement to the market, the company said its results reflected the ‘‘resetting’’ of the company as it began a new strategy, as well as softening trading conditions in the first half of the year, which were further worsened by Covid19 in the second half.
In July, the company announced it was ditching synthetics in favour of wool and other natural fibres, citing ‘‘negative impacts on people’s health and the planet’’.
It unveiled a new transformational strategy, saying it would transition away from the manufacture and supply of synthetic fibre carpets over the next 12 months and existing synthetic stocks would be sold down.
Revenue for the year was $118 million, down 13% on the previous year, sales falling significantly in AprilMay, compared with the same period last year, due to the Covid19 shutdown.
Since emerging from the lockdown, sales volumes had been stronger than initially expected. That had partly been led by pentup demand and consumers spending money on their homes rather than on other discretionary items, as well as sales of synthetic carpets as retailers stocked up ahead of Cavalier’s transition away from those fibres.
Normalised earnings before interest, tax, depreciation and amortisation (ebitda) came to $2.3 million, excluding nontrading adjustments of $11.2 million pretax, which were primarily related to Cavalier’s strategic transformation and company reset.
Net debt fell to $14.5 million as at the end of June and had further reduced since yearend to $7.2 million as at the end of August.
The business was able to continue paying all salaried and waged staff throughout the shutdown period, supported by the Government’s wage subsidy, of which 46% of the $2.8 million claimed was recognised in the fullyear results. The remaining $1.5 million would be recognised in the current financial year.
Cavalier said it had a comprehensive plan to increase value for shareholders through developing the wool flooring market, building demand for Cavalier’s woollen carpets and rugs, strengthening its presence in retail channels through expanded distribution and seeking other opportunities in the interior solutions sector.
Since yearend shareholders had approved the sale and leaseback of Cavalier’s Auckland property, which would put the company into a debtfree position and provide it with the financial strength to execute its transformational plans at pace.
Recent increases in woollen carpet sales had been encouraging, particularly in Australia.
Total sales revenue for the 2021 financial year was expected to fall as Cavalier exited its synthetic carpet business as well as due to Covid19.
Investment costs would be incurred as its manufacturing and sales base was reset to reflect the new sales focus, and marketing spend and people costs would increase significantly to support the new strategic direction and enhance its market presence.