WSI expects to profit from wool market recovery

Tuesday 7th December 2010

Wool trader Wool Services International is forecasting an increase in annual profit next year to a record high as markets recover and production increases.

Turnover was ahead of the same time last year, and the company expected its result to be "comfortably" higher than the net profit of $2.23 million for the year ended June 2010, managing director Michael Dwyer said.

"As is traditional, the second half of the year usually produces greater earnings than the first half," he told shareholders at the annual meeting.

"I am therefore confident of achieving a record result for the full 12 months."

Last year, WSI reversed an annual loss of $4.4m.

The company had increased production from its wool scours and launched its Purelana marketing and supply initiative and Red Band brand, while problems such as slow demand in Europe and high levels of inventory were no longer an issue, Mr Dwyer said.

National wool production, which had been in decline for years, appeared to be stabilising although availability remained an issue.

Two years ago, WSI was concerned that if the price did not improve dramatically, farmers would stop producing wool. The company had focused on marketing to help improve the price of wool, and was taking part in the international Campaign for Wool which aimed to increase the use of wool products above other textiles.

Demand was recovering in Europe and Australasia, and was strong in Asia.

"Despite the efforts of some who would paint the NZ wool industry as one in crisis, our view is that it is in excellent shape, indeed it has not looked better for many, many years," Mr Dwyer said.

A question mark remained over WSI's largest shareholder, 44% owner Plum Duff, owned by Timaru businessman Allan Hubbard's Forresters Nominees which had been placed into statutory management.

At least six parties had expressed an interest in buying the stake, Mr Dwyer said.

"While we're watching developments with interest, the matter has no effect on the running or stability of WSI.

"It is likely of course that, at some point in the future, we'll have a new majority shareholder."

Shares in WSI last traded on December 1 at 38c.

NZPA

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