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Feltex Records Continued Improvement In Earnings

Feltex Records Continued Improvement In Earnings

The Feltex Group recorded a net surplus of $11.4 million for the six months ended 31 December 2003. This represented a $10.2 million improvement on the corresponding prior period, partially due to a 4.2% increase in revenue.

Revenue increased to $173 million, compared with $166 million for the six months ended December 2002, mainly due to the buoyant markets in both New Zealand and Australia. The earnings performance reflects improved margins generated by a successful shift towards higher value products and market segments. Synergy benefits from the integration of Feltex Australia Pty Ltd (formerly Shaw Industries Australia Pty Ltd) continue to flow through the Group’s operations.

The improved half year result also reflects the benefits of the 2002/03 capital expenditure programme, which increased woollen yarn capacity, lowered woollen yarn costs and enabled new, unique products to be manufactured by the new tufting technology acquired in that programme.

As announced earlier this week, the Group’s woven carpet business based in Christchurch is currently being reviewed as it has continued to perform below expectations. Restructuring of this business unit will include the downsizing of the woven operations in line with market demand, and a focus on the lower risk and less volatile market segments.

Following a review of non-core assets, expressions of interest are currently being sought for the purchase of Feltex’s rubber underlay business in Wellington. The sale of the rubber underlay business will not have a material impact on the Group’s results.

The Group is optimistic that the market will remain relatively buoyant for the remainder of the financial year, and will continue to implement initiatives and strategies for future growth and improved performance.

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