Carpet manufacturer Cavalier is expecting increased earnings for the first half of the year, off the back of stronger than expected sales.
Chief executive Paul Alston said despite lockdown restrictions in Auckland and Australia during the six months to December, demand for carpet has been much stronger than anticipated.
“For the five months to the end of November 2020 total New Zealand woollen carpet sales volumes were up 10 percent on last year and associated sales revenue was up 24 percent.”
“In Australia, while woollen carpet sales volumes were down about 10 percent, the associated sales revenue was only down 2 percent… Initiatives in Australia have resulted in an expanded retailer network which is expected to help drive a lift in sales once supply starts moving again.”
The company expected underlying earnings of between $4 million and $5m, compared to $3m this time last year.
Alston said pent up demand, buoyant consumer spending and retailers stocking up on synthetic carpets before they were discontinued had contributed to the increase.
The trading situation also enabled Cavalier to fully repay its bank debt.
The company announced its move away from synthetic carpet manufacturing earlier this year as a response to customer demand.
Alston said while the outlook for the rest of 2021 remained uncertain, New Zealand sales volumes would be well up on last year however total volumes would be down while it transitioned away from non-wool.
In the second half of 2021 the company would launch a new marketing campaign and continue to expand its retail network particularly in Australia.
It would continue to review when would be prudent to resume paying dividends.