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WSI first-half profit sinks 41%

Tuesday 7th February 2012

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NZ Wool Services International, whose wool scouring business is the target of Cavalier Wool Holdings, reported a 41 percent fall in first-half profit as the deterioration of the global economy and a strong New Zealand dollar sapped demand.  

Net profit was $1.8 million in the six months ended Dec. 31, compared to $3.1 million in the same period a year earlier, the Christchurch-based company said in a statement. Revenue climbed 27 percent to $107.6 million on rising prices and falling volumes.

“Although the dollar turnover for the period was higher than last year, weakness re-surfaced in the world economy, particularly in Europe,” the company said.

“A declining wool clip, the deteriorating world economy and a high NZ dollar pose difficulties beyond our control and for these reasons the company has invested in new research that we believe will have a positive impact during the next financial year and longer term,” it said.

WSI’s directors announced an interim imputed dividend of 1.5 cents a share, or $1 million.

The company’s shares were unchanged at 42 cents apiece in trading today.

WSI’s scouring unit reported smaller demand than the same period a year earlier, as Chinese demand for greasy wool grew with record-high prices, it said.

Its scouring business has been the target of CWH, which is half-owned by carpet maker Cavalier and 25 percent each by Accident Compensation Corp and private equity investor Direct Capital Investments, which has been authorised by the Commerce Commission to set up a monopoly.

If CWH is successful in taking over WSI, it will sell the wool trading division as a going concern.

The assets came up for grabs because its two biggest shareholders, Plum Duff and Woolpak Holdings, with a combined 64 percent holding, are in receivership. Both companies have ties to the deceased Timaru businessman Allan Hubbard and failed in 2010.


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