Preliminary announcement of results for year ended 30 June 2016
Cavalier is pleased to announce a normalised profit after tax of $6.3 million for the financial year ended 30 June 2016
Cavalier is pleased to announce a normalised profit after tax of $6.3 million for the financial year ended 30 June 2016.
Net profit after tax was $3.1 million following one-off costs and impairment of plant and equipment for consolidation of manufacturing operations and other restructuring, and a one-off gain from the sale of non-core property in Sydney.
The results are slightly up on the positive earnings guidance issued in June, largely due to the broadloom carpet business finishing the year more strongly than expected and lower than anticipated costs relating to the consolidation of yarn spinning operations.
The results are a significant improvement on normalised profit after tax of $1.2 million and our reported loss of $25.7 million due to significant asset write downs in the previous year.
The improved performance reflects the significant and ongoing transformation we are undertaking with a focus on debt, revenue growth and cost reduction.
We have seen strong performance from our core broadloom carpet operation.
Tough, but essential, steps have been taken to right-size the business by restructuring our New Zealand sales and support functions and commencing the consolidation of our carpet yarn spinning operations.
We have had good returns from 50% owned wool scouring business, Cavalier Wool Holdings.
The Company has reduced net bank debt by $17 million (from $54 million to $37 million) over the financial year. Reducing debt is essential to ensure the business stays on track and allows us vital headroom to invest in our core business.
The Directors advised at the November 2015 Annual Meeting of shareholders that dividend payment will resume as soon as they are in a position to confirm an ongoing improvement in underlying performance and have debt firmly under control.
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 NZD:AUD exchange rate also remains at close to its all-time high, a significant concern to Cavalier as an exporter.
As a consequence, the Company will not be paying a dividend for the 2015/16 year.
In FY17, Cavalier Corporation is focusing on its hero brand Cavalier Bremworth to deliver business growth. Cavalier Bremworth is a New Zealand brand that is synonymous with quality and trust. Through our new World of Difference brand positioning, we are taking this strong foundation and building on it to create a lifestyle brand. One that is contemporary and appealing to our target market.
In line with this, our market re-launch and revised marketing have been extremely well received; our new television commercial is recently live and generating interest and talkability, our social media presence is driving customer and industry engagement and our proposed new in-store retail units are being keenly sought by the trade.
We’ve also sharpened up our product offerings to reflect this new positioning. We recently launched a new carpet that’s made in South Auckland using fibre from 100% recycled nylon. This received nationwide media coverage.
Our customers can expect more of this sort of innovation along with the best wool carpets available.
It is our expectation that it is through delivering to our customers we can better deliver to our shareholders.
We look forward to updating shareholders on our progress and providing earnings guidance at the Annual Meeting scheduled for 22 November.
Chief Executive Officer
For and on behalf of the Board of Directors
26 August 2016