Paul Alston: Cavalier Corporation post yearly results, plan for major pivot


Manage episode 273157320 series 2098282
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Cavalier Corporation has reported a statutory net loss after tax of $21.5m with profitability impacted by the Covid-19 lockdown, particularly in April and May.
Revenue of $118.0m was down 13 per cent on the prior year, with sales reduced significantly in April and May (compared to the same months in the prior year) as a result of the Covid-19 shutdown.
The revenue impact was mainly felt in New Zealand where annual sales volumes were down 17 per cent on the prior year, with Australia finishing the year down just 5 per cent.
Since emerging from the lockdown, sales volumes have been stronger than initially anticipated.
''Partly, this has been led by pent-up demand and consumers spending money on their homes in lieu of other discretionary spends, as well as sales of synthetic carpets as retailers have been stocking up ahead of Cavalier's transition away from these fibres,'' the company said.
Normalised earnings before interest, tax, depreciation and amortisation (Ebitda) was $2.3m, excluding non-trading adjustments of $11.2m pre-tax which were primarily related to Cavalier's strategic transformation and company reset.
These are non-cash adjustments and had no effect on the underlying operations or trading of the business, the company said.
While some operating expenses were able to be reduced during the shutdown period, Cavalier has a number of fixed costs which were still incurred during this time.
The business was able to continue paying all salaried and waged staff throughout the shutdown period, supported by the Government's wage subsidy of which 46 per cent of the $2.8m claimed was recognised in the FY20 results.
The remaining $1.5m will be recognised in the current financial year.
Net debt reduced to $14.5m as at June 30, and has further reduced to $7.2m as at August 31 due to stronger than expected trading in the new financial year and the accelerated sell-down of remaining synthetic stocks.
The chairman of Cavalier, George Adams, said the focus for the last 18 months has been on the development of a solid strategic plan to differentiate Cavalier's positioning and to create a sustainable and prosperous future for the company.
''Over the next 10 years, Cavalier's vision is to become a global leader in designing and creating desirable, safe, sustainable and high-performing natural interior solutions. Swift debt reduction coupled with the sale of the Auckland building has been integral to providing a strong financial platform for the company to execute its plan.''
Total sales revenue for FY21 is expected to reduce as Cavalier exits its synthetic plastic carpet business, and as a consequence of Covid-19.
Shares today were trading at 37c, down from a 12-month high in July of 43c.

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