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Cavalier raises 2016 earnings guidance

NZ NewswireNZ Newswire 24/06/2016 Paul McBeth

Cavalier Corp shares jumped to a 19-month high after the carpet maker raised 2016 earnings guidance as its broadloom carpets unit outperformed expectations and it sold an unprofitable carpet tile operation.

Post-tax normalised earnings are expected to be $6 million in the 12 months ending June 30, up from $1m a year earlier, and ahead of the $3m-to-$5m range forecast at the November annual meeting. Net profit will be about $2.4m, including restructuring costs associated with shuttering operations and laying off staff, and the gain on a property sale.

The shares jumped 9.2 per cent to 73 cents, the highest level since November 2014, and had gained 6.7 per cent so far this year. That's in a market weighed down by growing fears among investors that the UK will vote to leave the European Union, with the S&P/NZX All Index down 1 per cent to 1279.34.

Cavalier recorded its worst-ever annual loss last year of $25.7m in 2015 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 is foregoing dividend payments as part of its efforts to improve performance.

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