“The challenging trading conditions noted early in 2019 are continuing and sales, particularly of low-margin synthetic carpets, continue to be affected with volumes down by approximately 10% year-on-year,” chief executive Paul Alston told the annual shareholders’ meeting.
The company is forecasting a bottom-line loss of $1.1-$1.6m for the six months ending December, with earnings before interest, tax, depreciation and amortisation of $1.2-1.9m, down from $4.6m in the corresponding six months last year.
The actual outcome will be worse than it looks since the change in the lease accounting standard will boost ebitda by about $1m.
Ebitda will also be after about $800,000 in business development costs – Alston says the company is transitioning to a design-led, wool-focused business.
Sales are expected to be down about 10% to $61-$64m from $70m in the corresponding six months last year.
“Anecdotal feedback is that other suppliers are also experiencing the same challenges,” Alston said.
“Demand for Cavalier’s premium wool carpets continues to grow and whilst these are a small part of total sales they provide a significant contribution to group profits.
“While our performance in today’s more challenging market is disappointing it further enforces our need to transform our business and focus on our areas of strength, particularly premium wool flooring, which provides better margins and growth opportunities.”
Cavalier shares fell 6.9% to 27 cents, taking their 12-month decline to 55%. – BusinessDesk