Wellington, New Zealand, June 20--Carpet maker Feltex Carpets Ltd. said Monday that its board is making senior management changes and will conduct a "wide ranging" review of all of the company's operations, following recent "unsatisfactory" financial performance.
The New Zealand-based company said in a statement that Sam Magill, its chief executive, will step down.
Feltex added that it now expects its net profit for the fiscal year to June 30 to be between NZ$11.5 million and NZ$12 million, "prior to restructuring costs" arising from the management and operations review.
The new earnings forecast is lower than the NZ$15 million to NZ$16 million the company said it expected in April.
It is also lower than the NZ$23.9 million Feltex forecast in its prospectus when it listed on the stock exchange a year ago.
Feltex's shares have been near all-time lows since it said in April that its full-year profit was likely to be at least 30% lower than its prospectus forecast. The company five weeks earlier said it could meet profit expectations.
The company's latest statement said its fourth quarter earnings are likely to be between NZ$200,000 and NZ$700,000 before restructuring costs.
That compares with a third quarter loss of NZ$880,000, and while the company noted that it is a "small turnaround," it has not been to the level it expected in April.
"The board and I are only too aware that this announcement will be a disappointment to investors," Feltex chairman Tim Saunders said in the statement.
"We are unhappy with the company's performance, and are taking a number of measures to address it," he added, noting that company won't pay a final dividend.
Saunders said that since March the company has experienced "further tightening" of market conditions in Australia, and the New Zealand residential market has also "started to soften."
He said the company's chief executive will step down following the company's annual meeting in December.
Saunders added that a search for a successor has begun, and "it will be an external appointment and will take place in conjunction with the review of the senior management structure and team of the company."
Feltex remains committed to its marketing strategy of increasing sales in the premium and mid-value segments of the market, Saunders said.
The strength of the New Zealand and Australian dollars against their U.S. counterpart has also hurt the company because imported carpet has been more competitive, Saunders said.
All of the company's operations will be reviewed, Saunders said, including its cost structures, location of its plants, and overall production capacity.
"The company must continue with its market-focused strategies but must become more flexible and innovative with production," Saunders said.
