Wellington, New Zealand, November 10, 2005--Shares in carpet maker Cavalier Corp plunged 14 percent today after it warned of difficult market conditions. It could see its full year profit fall by as much as 30 percent.
The shares closed down 45c at $2.75 on the news -- a fresh year low.
The company told shareholders at its annual meeting in Auckland that sales, particularly across the Tasman, remain weak.
"The competitive pricing pressures out there have impacted negatively on our earnings,'' managing director Wayne Chung said.
Chung said group earnings fell 36 percent in the first four months of trading.
Based on current demand, the company expects its full year result to June 30, 2006, to be 20 to 30 percent lower than last year's $19.5 million profit.
The final outcome depends on building activity in Australia and New Zealand and the strength of the New Zealand dollar.
Chung said the New Zealand construction sector is at risk as Reserve Bank Governor Alan Bollard attempts to slow the rampant housing market with higher interest rates.
Record low unemployment data out today has economists forecasting Dr Bollard will hike the official cash rate by as much as 50 basis points at his next review on December 8.
Cavalier is not the only local carpet maker in difficulty. Rival Feltex was severely punished in June for releasing the company's second profit downgrade this year.
That downgrade sparked a review of all its operations to claw back value for shareholders.
Feltex shares, which sold at $1.70 each in the June 2004 initial public offering, closed down 6 percent at 50c today.