Bremworth carpet wool (file image). Photo: Bremworth
Wool carpet maker Bremworth says flooring giant Godfrey Hirst has eaten into its market share as it struggles to meet demand after damage to its Napier yarn plant from Cyclone Gabrielle.
The cyclone disruption resulted in a doubling of the company's half-year loss to $1.7 million, while revenue fell 17 percent to $39m.
Chief executive Greg Smith told investors it has led to severe capacity constraints with supply unable to meet demand.
He said Godfrey Hirst - owned by the world's largest flooring company Mohawk Industries - has capitalised on the situation.
"In saying that, they are also, facing some headwinds with other parts of their business. So their woollen business has grown and they've taken some share from us because of the fact that our retailers have not been able to be sure of us [being] able to meet their demands," Smith said.
"So they've quite frankly just had to switch, which is disappointing on one hand, but we have very good relationships with these retailers and once our stock position is rebuilt, we know that ... those sales will come back to us."
However, Bremworth was optimistic about the future, expecting a return to full production in the fourth quarter.
The company has been rebuilding its yarn supply by shipping wool overseas for processing before being brought back for making into carpets.
"A return to yarn production in Napier would offer further security to our supply chain," Smith said.
He said the first stage of its Napier rebuild, which involved the reopening of its dye house, was complete.
Smith was also optimistic about its new supply model.
"The hybrid yarn supply model could provide a significant competitive advantage over our largest competitors," he said.
Smith said it would offer a lower fixed-cost base, remove prior capacity constraints, allow Bremworth to return to commercial business and grow its market beyond Australia and New Zealand.
