Cavalier puts shakeup pain behind it

Carpet maker eyes natural wool demand

New Zealand carpet maker Cavalier Corp is emerging f rom a “tough” period after an influx of cheaper synthetics forced it to restructure its business to compete. It has streamlined its operations and is stepping up investment in innovation and marketing as it eyes rising consumer demand for natural woollen products.

The carpet market has undergone rapid change over the past 20 years as wool carpets in New Zealand fell from about 80 per cent of sales to 15 per cent as cheaper synthetics made inroads.

In response, Cavalier sold underperforming assets like its carpet tile business in Australia, began manufacturing its own synthetic range, and consolidated its woollen felting and yarn spinning operations.

In its latest financials, Cavalier lifted first-half profit in the six months to the end of December 2017 as costs fell and margins improved, allowing it to reduce debt, and chief executive Paul Alston is expecting the trend to continue.

“Out to the remainder of the year, we are confident that we are going to improve again and going into the next financial year we are pretty confident we are going to grow further,” he told BusinessDesk at the company’s tufting factory in Papatoetoe, Auckland, where its head office is based.

“Last financial year for Cavalier was tough,” Alston conceded.

The company underwent “massive” change, consolidating its Whanganui woollen yarn spinning plant over to its Napier operations, and relocating its Christchurch woollen felting plant to the larger site in Whanganui.

While the physical move went according to plan, the company underestimated the disruption.

As well as more streamlined manufacturing operations, profitability is also being helped this year by the flow-on effect of a low wool price.

The benefits can take up to 18 months to flow through to carpet sales, so Cavalier began to feel the impact only from the start of the 2018 calendar year.