Carpet maker Cavalier Corporation is finding it extremely tough, with trading plunging 18% in the four months to October.
The struggling company is forecasting its full year profit could fall by as much as half.
Managing director Wayne Chung reiterated that Europe's debt crisis has led to a large number of major commercial projects in Australia and New Zealand being deferred, affecting carpet tile sales.
Residential carpet sales in Australia have also slowed, while in New Zealand the low level of building activity has severely curbed demand.
That has been exacerbated by higher wool prices, making mainly imported synthetic carpets much cheaper.
While it's seeing some early signs of improvement in the commercial market, Cavalier is picking a full year profit of between $8.5 million and $10.5 million, a decrease of half compared with last year's $17.3 million profit.
The company is taking some heart that lower interest rates across the Tasman and the eventual reconstruction of Christchurch will boost its prospects.