Cavalier Reports Increased Profit for First Half FY21
Cavalier Corporation Limited (NZX: CAV) has reported a strong year on year uplift in profitability as it benefits from higher woollen carpet sales, the sell down of its synthetic carpet stock as it exits the non-wool sector and the gain from the Auckland property sale and leaseback.
Profit after tax increased strongly to $4.3m, up $5.5m on the prior year, with a $3.0m improvement in underlying business performance and a $2.5m net gain on the sale and leaseback of the Auckland property.
Results were at the upper end of the guidance range provided in December 2020 with normalised EBITDA up 61% on the previous comparable period to $4.8m1 (guidance of $4.0m to $5.0m). Revenue was down slightly (6%) year on year to $60.3m. Australian carpet sales volumes were impacted by supply chain disruption and COVID lockdowns, however, are expected to improve as supply chain disruptions and pandemic effects reduce. Elco Direct, Cavalier’s wool buying business, was also impacted by subdued offshore demand for New Zealand wool and while volumes were up 12%, the average selling price was well down.
Following the Auckland property sale and with the bulk of synthetic carpet stock sold, all borrowings were repaid, with the Company holding a significant cash surplus of $26.3m as at 31 December 2020. Prudent capital management remains a priority as the Company invests into resetting the business, commencing the new strategy and navigating the economic recovery post-COVID. No interim dividend has been declared.
Cavalier has commenced its transformation strategy to become a global leader in designing and creating desirable, safe, sustainable and high performing natural interior solutions. In line with this, the Company is exiting the non-wool sector and has right sized the organisational structure to meet future manufacturing needs. Shareholder approval on the sale and leaseback of the Auckland property in December 2020 has provided the financial resources to continue executing transformation plans, with other capital raising options to be considered, if required. Key initiatives in 1H21 included the launch of the new Bremworth brand for Cavalier’s carpet business; the rollout of the Lifestyle (affordable wool) collection ranges and other uniquely designed products, providing greater choice for consumers; and an expansion of the retailer distribution networks in both New Zealand and Australia....
For the Full Report and Results please see the PDF's below.
1 Normalised EBITDA excludes non-trading adjustments of $1.4m, comprising net gain on sale and leaseback of the property of $2.5m and restructuring costs of $(1.1)m, with a reconciliation of normalised to GAAP results set out on page 24 of the accompanying 1H21 report.