Wellington, New Zealand, June 7, 2006--Beleaguered carpet maker Feltex is working to reduce its debt and has assured shareholders that market conditions are continuing to improve, according to the New Zealand Press Association.
It said its outlook was unchanged since March, and while third quarter sales and margins had proved difficult, there were signs of improvement in April and May.
The company anticipates its full year EBITDA (earnings before interest, tax, depreciation and amortization) will be $20-21 million for the year to June.
It said that figure would have been closer to $25-26m if the current exchange rates had applied for the full year.
Shareholders showed their approval with the stock rising 15 percent, or 5c to 38, in early afternoon trading today.
Feltex's forecast stripped out restructuring and one-off corporate costs.
The company said its markets were very competitive, and profitability ``had yet to reach the levels that we are seeking,'' but the recent weakness in the New Zealand dollar had helped.
Much of Feltex's business is in Australia.
The company was also looking at ways to reduce its debt and improve plant and asset use.
Feltex was working to get back to historic debt servicing levels, including reviewing the sale of some non-core assets and investigating ways to raise new equity.
It had identified asset sales of up to $25m, and had sold $6m worth of assets to date.
The company said retailer confidence was improving. However, it had taken longer than expected to regain this confidence due to ``disruptive corporate activity'' surrounding the company between last June and February.
During this period, Feltex's ceo Sam McGill resigned after the company's second profit downgrade this year, but initially refused to resign as a director after a disagreement on the terms for his severance payout.
In October, the company axed 235 jobs, mostly in Australia, and this year it abandoned merger talks with Australian competitor Godfrey Hirst after Feltex suggested the apparent``white knight'' investor was more interested in a reverse takeover.
Godfrey Hirst later sold out its nearly 9 percent stake in the company.
In February the company reported a first half after tax loss of $11.83 million--down almost 200 percent on the previous year.
Feltex shares plunged since its troubles began 14 months ago. It listed at $1.70 in 2004 but a string of profit downgrades saw the price topple from $1.50 at the end of March last year to 32c on June 1 this year.
The company was not expected to declare a dividend, a spokesman said.
