The changes were reported very negatively on TV 1 news tonight. It will be interesting to see if this will panic small investors causing a dip in SP. May be an opportunity to pick up a few more in the short term. We shall see.
Lets be clear, it will wipe out the profit this year almost entirely but will probably be treated as an extraordinary item below the profit line so won't impact normalised profit, (a term I personally despise) but the new guard are dispensing with manufacturing facilities that are obviously well past best practice and right sizing production capability for the future in the most efficient way and the payback period of just over 1 year is there for all too see.
Who wouldn't take a $4.5m one-off hit to generate ongoing annual efficiencies that look something like $3.5 - $4.0m. This is what real progress looks like when the new broom cleans out lots of old dead wood...(disposal of dead wood and eradication of dead wood practices and manufacturing methodologies is never free).
Thanks for such an in-depth answer, great post.
There certainly has been a quick turn around between new management and downsizing. I hope the new faces within CAV management continue to produce such good efficiently
Originally Posted by Gunny
The changes were reported very negatively on TV 1 news tonight. It will be interesting to see if this will panic small investors causing a dip in SP. May be an opportunity to pick up a few more in the short term. We shall see.
Gunny
This will be very interesting to see if a negative news story on prime time will impact the sp significantly.
I'd be picking up more.
The changes were reported very negatively on TV 1 news tonight. It will be interesting to see if this will panic small investors causing a dip in SP. May be an opportunity to pick up a few more in the short term. We shall see.
Gunny
TV News' first reaction to such stories always seems to be the "human interest" angle rather than the business implications. Understandable, I suppose, given that they're not aiming at a specific "business" audience at that time. I doubt that their story will have much influence on the market today.
Roger - almost without fail Cavalier incur restructuring / rationalisation / closures costs ....and excluded from 'normalised' earnings (as non-recurring or discontinued operations).
So regular (recurring) things hare 'normal'
Wonder what next years 'non-recurring' costs will be?
Inevitability there will be one - it's normal in these types of business these days
Whatever it gives management and shareholders the warm fuzzies so its all OK
Last edited by winner69; 14-04-2016 at 12:18 PM.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
This latest drop in price came a day before the restructure announcement ..Hmmm.To be fair those people with their jobs on the line would probably feel or heard that something was going on and this info would be hard to keep under wraps until the announcement...
So pre-announcement selling by a small number of investors may have faked themselves out as the TA is bullish ...That selling did dent the more sensitive indicators but no real damage resulted....For TA damage to occur the new breakout had to fail and so far this hasn't happened and it looks like the 66c support could be the new floor.
Disc: Still Holding CAV
My morbid fascination with companies like Cavalier continues (companies that make stuff for houses and buildings because I know an awful lot about them) - save me please
Chart is CAV share price with the big dots each time they made a big announcement about restructuring, closing plants, buying and selling bus and all that sort of stuff
Each announcement said it will us cost us $X but in following years we will make $X+ more ...and we remain committed to manufacturing woollen carpets in NZ
To me each restructure is just another step on the way to the inevitable - because they don't seem to want to (or are incapable of) reinvent themselves in times that are a changin
Good stories eh .... chart doesn't say so
The CEO on the radio this morning out that years ago 70% of carpet sold in NZ was woollen but that has dropped to 10% currently ...hmmm
One would never invest (medium/long term) in CAV on fundamentals - better to punt on the cyclic changes in the hopes and warm fuzzies and just follow the crowds and get out before they realise that that hoping is not really a good strategy
But then again this time is different isn't it
Last edited by winner69; 14-04-2016 at 12:39 PM.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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Originally Posted by Roger
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