Cavalier shares tumble to more than 20-year low, as wool trade woes continue
By Suze Metherell
Nov. 11 (BusinessDesk) - Shares of Cavalier Corp fell to the lowest in more than two decades as the carpet maker fails
to lift earnings in a competitive market against cheaper overseas imports as high wool prices crimp margins.
Late last month the Auckland-based company flagged normalised annual profit in the 2015 financial year will probably
fall short of its forecast for a "modest increase" to the $5.8 million result it posted in 2014, citing a strong kiwi
dollar against its Australian counterpart and high wool prices.
Cavalier has restructured its businesses and introduced a synthetic carpet range as it battles to retain market share
against increased competition from cheaper synthetic imports, while margins are being squeezed by rising wool prices and
lower sheep numbers, and export earnings are crimped by a strong New Zealand dollar.
The stock fell as low as 73 cents in morning trading, its lowest since April 1991, according to Reuters' data. The
shares recently traded at 75 cents, and have tumbled 55 percent since the start of the year, underperforming the NZX All
Index's 11 percent gain in the same period, which is trading at the highest it has been since 2007, before the global
financial crisis.
"Investors will be pretty disappointed given the market is making record highs and Cavalier is making record lows," said
Grant Williamson, director at Hamilton Hindin Greene. "The cheaper imported carpets are really playing a major part in
why Cavalier are struggling at the moment. They are certainly finding it very difficult to compete."
In October the company agreed to water down its stake in subsidiary Cavalier Wool Holdings as part of a merger with New
Zealand Wool Services International to create a national scouring monopoly, in a bid to insulate the sector from the
threat of overseas scourers, particularly those in China.
(BusinessDesk)