Cavalier Corporation is forecasting underlying earnings of $8 million to 10 million for the full 2014 year, although it says the year-end position is difficult to predict.
The listed carpet-maker told shareholders at its annual meeting it had had two difficult years, with profits falling well below traditional levels. That had forced it to change many aspects of its business.
But Cavalier chief executive Colin McKenzie said the problems were largely behind the company.
The start to 2014 had been patchy but the company was getting good signals that markets on both sides of the Tasman were picking up.
"New Zealand is showing signs of recovery. Obviously we're the last building material, if you like, to go into a new home, so our lead time from the start of construction, we're probably six months behind other building products," Mr McKenzie said.
"But certainly things are picking up in New Zealand, and in Australia, particularly in the residential side, the market is also showing signs of improving."
Market researchers in Australia were predicting double-digit growth in the residential market in the next two to three years, he said.
Drought had hit the volume of wool in the market and a lack of supply had driven up wool prices. However, that was starting to correct, Mr McKenzie said.
"We have had forward contracts for supply, so we've covered ourselves reasonably well, and we think there will be a further correction as more wool comes on to the market with summer shearing.
"So we've managed our way through this but we wouldn't want to see prices spike like they did in 2010-11. It's no good for anyone."
Cavalier had also introduced a high-end synthetic offering under the Cavalier Bremworth brand, a new range called Habitat, which had been in the market for about five months and has exceeded the company's expectations.
Mr McKenzie said it would introduce new synthetic and wool products in the coming months, and was looking to expand further in the United States, Asia and European markets.
