Cavalier bounces back from Friday's plunge

Carpet-maker Cavalier Corporation has bounced back from a 12% plunge last week after a cut in earnings guidance.

Cavalier shares (NZX: CAV) are up 7.1% to $1.66 on light trading this morning, after starting the year at $1.93.

By 3pm, the shares had eased to $1.63.

Managing director Colin McKenzie told shareholders at last Friday's annual meeting a slow start to the first quarter and a subdued Australian market led to the earnings guidance cut.

It is now predicting normalised, tax-paid earnings of between $6 million and $10 million.

The company will not pay an interim divided but has indicated it will pay a final dividend if earnings gather pace in the second half, as expected.

Mr McKenzie told NBR ONLINE the company will announce further cost-cutting measures before Christmas.

Broking firm Forsyth Barr upgraded its recommendation from hold to accumulate after Friday's meeting.

"Cavalier is making progress in repositioning its carpet busines in respect of its cost structure, capacity and product portfolio," ForBarr analyst John Cairns says in a research note.

dwilliams@nbr.co.nz

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