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Cavalier bounces back to full-year profit

NZ NewswireNZ Newswire 26/08/2016 Jonathan Underhill

Cavalier Corp, 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 per cent.

Profit was $3.1 million in the year ended June 30, from a loss of $25.7m a year earlier, the Auckland-based company said in a statement. That's the biggest profit since 2011.

"Normalised' profit of $6.3m exceeded the guidance of $6m it gave in June. Revenue fell to $190m from $215.7m.

Cavalier didn't declare a dividend even though it flagged at last year's annual meeting 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.

On Friday it said net bank debt had been reduced to $37m from $54m, 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".

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

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