Wellington, New Zealand --Troubled carpet maker Feltex has reported a drop in first-half profit of nearly 200 per cent, but was cautiously optimistic about its outlook following a drastic restructure, according to Stuff.co.nz.
Feltex posted a net after-tax loss of $11.83 million for the six months to December 31, compared with a $12.97m profit for the same period a year earlier--a difference of 191 percent.
The result was hit by one-off restructuring costs of $15m.
Shares in Feltex dived 4 cents, or 8 percent, to 46 cents on the news--just above a low of 39 cents struck in June last year when Feltex's problems first came to light.
Earnings before interest, tax, depreciation and amortization (ebitda), plunged 71 per cent to $7.1m. Last year's result was re-stated in line with new international financial reporting standards.
Feltex blamed the fall in sales on weaker economic conditions, including consumer confidence and new building and renovation levels in the commercial and residential markets.
In New Zealand, sales decreased by $6m, while sales across the Tasman fell by $15.5m.
Feltex said that while restructuring costs had hurt its bottom line in the first half, the initial benefits were already beginning to flow through in terms of improved operational efficiencies and reduced inventories.
Feltex reduced its inventory by $12.5m during the period, slowing production at all plants.
Other key restructuring initiatives included the appointment of a new management team and new chief executive, Peter Thomas; rationalization and consolidation of all woollen yarn manufacturing to New Zealand, and the closure of Feltex's Braybrook plant in Melbourne; rejigging Feltex's Christchurch operations to focus on the niche woven carpet market; and the reorganization of the company's marketing and sales divisions.
In October, Feltex laid off 205 Australian and 30 Christchurch workers, on top of 46 previously announced management redundancies.
At the time Feltex said the restructuring was expected to result in annual savings of $11m, against a one-off cost of around $11.5m.
Looking ahead, Feltex said that while market conditions remained challenging, progress was being made.
Feltex said the outlook for the New Zealand economy was a concern. In Australia, however, where Feltex generated 75 percent of its sales, the carpet maker was "cautiously optimistic."
"Following the extensive restructuring over the recent period, the company is now in a far better position to deal with the current depressed and intensely competitive carpet market and the prevailing weather and economic conditions," a Feltex spokesperson said.
