Wellington, New Zealand, August 18, 2006--As the housing market slowed, carpet maker Cavalier Corporation suffer a 25 per cent drop in its surplus from normal trading activities, according to the Sydney Morning Herald.
Net profit after tax and minority interests rose 2 percent to $14 million for the year to June, up from $NZ13.7 million ($A11.5 million) last year.
However, Cavalier said last year's figures were affected by a $NZ5.8 million ($A4.87 million) write-off in development costs.
It said a better gauge was its operating surplus from normal trading activities.
Excluding its Microbial bio-remedy project, the after-tax surplus on its normal trading activities was $NZ14.7 million ($A12.34 million), down 25 per cent on last year's $NZ19.5 million ($A16.37 million).
The result was in line with company forecasts.
Cavalier attributed the lower result to a housing slowdown and softer market conditions from the latter part of last year.
Group operating revenues for the year were $NZ202 million ($A169.57m), a decrease of 3 percent on the previous year.
Earnings before interest and tax (ebit) was down 17 per cent to $NZ27.4m ($A23m), before Microbial costs.
During the year, Cavalier purchased $7m of new assets and invested $3.6m in its South Island wool scouring business.
Cavalier said a solid performance in its carpet tiles business had helped offset a four per cent decrease in its broadloom carpet revenues.
Carpet revenues were $NZ158m ($A132.6m), virtually the same as the previous year's $NZ159m ($A133.4m).
The company said retail carpet custom had slowed markedly over the past 18 months, initially in Australia and more recently in New Zealand.
In contrast, the demand for contract carpet has remained strong on both sides of the Tasman, but that was less profitable and more price-driven.
Looking ahead, the company said it had budgeted for a five per cent increase in group earnings next year.
It expected the carpet operations to track along similar lines.
There were signs the Australian retail market had bottomed out, but a New Zealand recovery could have some way to go.
"It is likely to be another 12 months before we again see earnings growth in the broadloom carpet business.
The wool businesses were expected to do better after recording an 11 percent fall in sales revenues to $NZ44m ($A36.9m) this year, mostly due to lower wool prices.
Cavalier said it continued to underwrite its Microbial project while it explored "certain avenues for enhancement".
It intended to write off all expenditures in the project as they occured.
