FY17 earnings guidance update

7 Grayson Avenue, Papatoetoe, PO Box 97040, Manukau City, Manukau 2241, New Zealand
Phone 64-9-277 6000 Fax 64-9-279 4756

7 February 2017

FY17 earnings guidance update

The Board of Directors of Cavalier Corporation advises that the normalised profit after tax for the
16/17 year is now forecast to be close to break-even, below the $3.0 to $5.0 million normalised
profit after tax guidance given to the market in November last year.
The reduction in forecast reflects difficult trading conditions in Australia and an increasingly
depressed wool market.
Market conditions in Australia appear to be weakening, with very soft trading in December and
January resulting in a revision of Australian sales volumes for the next six months. Weaker
Australian economic conditions have also pushed up the NZD/AUD cross rate, another factor
adversely impacting on the forecast revision. However, the Company’s belief in Australia as a key
market, where opportunities for growth are significant, remains unchanged.
While the recent significant drop in the wool price is good for Cavalier in the longer term, the
depressed wool market impacts volumes through the newly-merged scouring operation and the
profitability of our wool buying business in the short term. The duration of China’s reduced demand
for wool is uncertain.
This year, Cavalier has invested heavily in consolidating its manufacturing operations and
reinvigorating its brand. We have introduced new products late in the last calendar year and began
updating and modernising our in-store presence and consumer-facing marketing material. These
investments will deliver improved results in the 17/18 year. The significantly reduced wool price and
higher NZD/USD exchange rate on the cost of carpet manufacturing will also benefit the results.
Improved returns from the merged scouring operation are also expected to flow into the 17/18 year
as synergies are progressively realised from the consolidation of operations.
In summary, the 16/17 year is a year of investment, consolidation and restructuring. We are
confident that the benefits of the work done this year and changes in the macro environment will
flow through into improved results in future years.


Paul Alston
Chief Executive Officer
For and on behalf of the Board of Directors

For more information regarding this announcement, please contact Paul Alston on 021 918 033 or
09 277 1135.