(MENAFN Press) (EMAILWIRE.COM, November 26, 2012 ) Austin, Tx --
New Zealand carpet manufacturer Cavalier Corporation reported on Friday that that yearly profits for 2012 would be down, falling to somewhere between 6 and 10 million, due to slow sales in the Australian market.
Upon release of the news, shares of the company fell 12%.
The Auckland-based carpet manufacturer announced that they would look into further cost-cutting measures, as well as growth initiatives, in the hopes of recovering from the company's worst year on record. The combined actions of an increase in wool prices and a slump in the Australasian market combined to lower the profit margin.
Already in 2012, Cavalier has reduced its workforce by more than 250 people, including jobs that were cut when the company consolidated it local distribution and warehousing. The closure of the Onehuga, New Zealand, yarn-spinning plant netted the reduction of 88 jobs. The total workforce was reduced by 30% during the period from July of last year and July 30 this year.
Industry analyst Nachi Moghe, who works with Morningstar, noted that he wasn't surprised by the lower profit margin announced by Cavalier, considering the weak Australian property market and intense pricing pressures found there.
Colin McKenzie, Cavalier's managing director, said the previous profit estimate of between 10 million and 12 million was based on an expected improvement in the market. While the New Zealand did pick up, Australia's remained flat.
"Where we've fallen short is basically in Australian carpet sales, both tiles and broadloom," McKenzie said.
Cavalier hopes to create new product lines, such as synthetic carpets, to sell in New Zealand and basic carpet tile products to sell in Australia.
The company is also looking to partner with some of the larger retail chains to create new sales channels.
"We do see things improving and we will be paying dividends as soon as we can," McKenzie said.