Cavalier restructure costs 65 jobs
Cavalier Corp, the carpet maker which is restructuring its business to boost profitability, will consolidate its manufacturing operations to Napier and Whanganui and close its Christchurch plant.
The move is expected to cut a net 65 jobs, and cost between $4 million to $4.5 million in the 2015/16 financial year for employment payments, and the relocation of equipment, the Auckland-based company said.
The company is looking at asset sales, job cuts and outsourcing to reduce debt and bolster profits.
Its shares have gained 60 per cent over the past six months, outpacing a 17 per cent gain in the broad S&P/NZX All Capital Index.
In the latest restructure, Cavalier will consolidate its woollen yarn spinning operations in Napier and Whanganui to a single hub in Napier, and scale back its semi-worsted yarn spinning operation in Whanganui. It will also relocate its felted yarn operation from Christchurch to Whanganui and close the Christchurch plant.
"The consolidation of the group's yarn spinning operations will significantly reduce the cost base of all yarns produced allowing the business to be more efficient and competitive," said chief executive Paul Alston.
"This aligns with the overall strategic plan and will aid in returning the business to acceptable levels of profitability."
Southern secretary of the First Union, Paul Watson, said the move could result in a total of 104 redundancies.
"This restructure is going to leave workers and their families reeling and the impacts will be felt across the community," Watson said.
The NZX on Tuesday asked Cavalier for an explanation for a 27 per cent jump in its share price in under a week.
In its response, Cavalier said it continued to meet its obligations, and the only thing it was aware of was a report published by Vulcan Capital on April 7 which advised investors to buy the shares at 57 cents.
Today, the stock slipped 1.5 per cent to 68 cents.