MIDDAY UPDATE: Cavalier cuts FY earnings guidance

Nov. 16 (BusinessDesk) – Shares of Cavalier dropped 6.3 percent after the carpet manufacturer cut its full-year earnings guidance after a slow start in the first quarter and demand in the Australian market that didn’t recover as expected.

The shares declined 11 cents to $1.65 and have fallen 9.8 percent this year.

Normalised earnings are likely to be between $6 million and $10 million this financial year compared to previous guidance of a net profit of $10 million to $12 million, managing director Colin McKenzie told shareholders at their annual meeting.

It posted a net loss of $1.6 million last year, as period it described as the worst it had ever experienced, forcing the company to take $8.2 million of charges to restructure its business, closing a spinning plant and consolidating warehousing and distribution. Wool prices soared during the period.

“We have had a slow start to the new financial year which is disappointing given all the changes we have implemented and the expectation that the worst was finally behind us,” McKenzie said.

NZ dollar extends slide as equity markets weaken, euro zone economy shrinks

The New Zealand dollar weakened against the greenback as global equity markets extended their slide and data showed the euro zone economy continues to shrink, eroding the appeal of growth linked assets such as the kiwi.

The New Zealand dollar fell to 80.93 US cents as at midday, from 81.22 cents at 5pm in Wellington yesterday. The trade-weighted index slipped to 72.75 from 72.88.

Stocks fell on Wall Street after Wal-Mart gave guidance that disappointed investors. The Dow Jones Industrial Average was down 0.3 percent and key benchmarks in Europe fell. Data showed that the euro zone’s gross domestic product dropped 0.1 percent last quarter and a Reuters poll of more than 70 economists predicted the bloc’s new recession will extend until the end of the year and 2013 promises little better than stagnation.

“Another gloomy night in US and European equity markets has dented sentiment towards high risk currencies like the NZD,” said Mike Jones, currency strategist at Bank of New Zealand.

Nufarm assesses Brazilian tax liabilities ruling

Nufarm, the agricultural chemicals manufacturer, said it is assessing the details of an award from Brazil’s Arbitral Tribunal over tax liability arbitration with the previous owner of its Brazilian business.

“The award is lengthy and complex,” Nufarm said. “Based on a preliminary review Nufarm was successful in the major aspect of the dispute, though it did not succeed in respect of all of its claims.”

“Whilst the award confirmed the validity of the indemnities provided by the previous owners of the Brazil business, Nufarm is continuing to work through the application of the award to the specific tax cases,” it said. The company may return to the Arbitral process to seek clarification of aspects of the award.

Shares of Nufarm last traded on the ASX at A$5.40 and have gained 32 percent this year.



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