Carpet company cautious

UPMARKET carpet manufacturer Airea said it is looking forward with "cautious optimism" after six months of improved profitability and cash generation.

The Wakefield-based company, whose carpets are popular with rock stars and footballers, said it made considerable progress over the six months to the end of December despite "some of the most difficult market conditions for many years".

Airea said after exceptional costs, it made an operating profit of 660,000 compared to a 9m loss a year earlier. Cost cuts made a year ago helped to drive profitability, the group said.

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However, its sales slumped 27.6 per cent, mainly by a decision to exit loss-making contracts and rationalise its product range.

Airea said its residential Ryalux brand is benefiting from a revamp of its ranges and investment in new point-of-sale displays, helping it continue to "regain its reputation for innovation and design".

Its commercial business, Burmatex, which fits out larger buildings ranging from schools to office blocks, won major commercial contracts worth 10m over the next two years. Airea said this "demonstrates the development of the Burmatex brand within the architect and specification market".

Both brands benefited from a "focused approach to pricing", which helped to lift sales margins.

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"We look to the future with cautious optimism," the group said. "Retail footfall in the residential sector continues to be a source of concern and the commercial sector is showing little sign of market recovery.

"Nevertheless we now have the products that people wish to buy and the cost base to trade profitably in a very difficult market."

Airea did not recommend a dividend.

Earlier this week retailer Carpetright warned over profits after it said sales had failed to recover following snow-hit January trading.

It came as a blow to the group after tentative signs of a revival at the end of 2009.

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Carpetright said comparable sales across the UK and Ireland rose 1.4 per cent in the seven weeks to March 20, down again on the 2.3 per cent growth seen in the third quarter.

"The pace of recovery seen towards the end of 2009 has not been sustained and whilst group profits for the year to 1 May 2010 will be considerably ahead of last year, they are likely to fall below current market expectations," said Carpetright.

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