Cavalier returns to full-year profit after year-earlier impairments

Cavalier Corp [NZX: CAV], the carpet maker, returned to profit in 2016 after a year-earlier loss from assets impairments although sales in the latest period were down 12 percent.

Profit was $3.1 million in the year ended June 30, from a loss of $25.7 million a year earlier, the Auckland-based company said in a statement. That's the biggest profit since 2011. "Normalised' profit of $6.3 million exceeded the guidance of $6 million it gave in June. Revenue fell to $190 million from $215.7 million.

Cavalier didn't declare a dividend even though it flagged at last year's annual meeting in November 2015 that payments would resume as soon as directors were sure of an ongoing improvement in the company's underlying performance and debt was under control. The high kiwi dollar also argued against a resumption of dividends, it said.

"While very good progress has been made, there is still much to be done to complete the transformation through investment in our long-term future," the company said.

Cavalier recorded its worst-ever annual loss last year as it wrote down assets and restructured its business to boost future earnings. The company has changed its chief executive and chairman, sold assets, cut jobs, outsourced some operations, reduced debt and stopped paying dividends as part of its efforts to improve performance.

Today it said net bank debt had been reduced to $37 million from $54 million, while the company had taken "tough, but essential steps" to right-size its business. It didn't give any guidance for the 2017 year, although chief executive Paul Alston said while Cavalier is still transforming, the outlook "is positive".

Net cash flows from operating activities fell to $1.9 million from $5.4 million, it said. Notes to its accounts show New Zealand revenue gained in the latest year, to $105.7 million from $101 million, while sales in Australia dropped to $76 million from about $107 million and for the rest of the world, revenue rose to $8.3 million from $7.9 million.

Cavalier rose 1.1 percent to 89 cents and has jumped 44 percent this year.

(BusinessDesk)

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