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NZ Wool Services up 48%

Wednesday 20th February 2008

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New Zealand's largest wool exporter, New Zealand Wool Services International Limited, today reported a tax paid profit of $1.324 million for the six months to 31 December 2007, (same period last year a loss of $1.814 million).

Turnover was up 48% to $86.706 million following the company's purchase of Raymond Dale Wool Marketing Limited last year.

Managing director Michael Dwyer said that the solid half year result, the best for four years, was gratifying, particularly in light of continuing difficult trading conditions.

Scouring operations performed well, including the Whakatu scour in the North Island, which is now performing more in line with the standards required of it.

The ongoing strength and volatility of the New Zealand dollar, coupled with exceptionally high interest rates impeded further profitability, and is also doing enormous damage to the infrastructure of a significant portion of the pastoral productive sector of the economy.

"Our Purelana branded wool strategy is proving successful, and has been well-received by woolgrowers. Increasing numbers of growers are committing to supply their wool to the Purelana brand on forward contracts, and we are confident the strategy will result in more sustainable economic returns for crossbred wool," he said.

"Our two scouring plants, Kaputone and Whakatu, are operating at maximum capacity and this would normally bode well for the second half. However, the hostile export environment is becoming even more difficult because of the higher NZ dollar and interest rates. Therefore, while these conditions continue, we view our second half performance with considerable caution and temper expectations.

"Looking forward, reducing supply coupled with steady demand should drive the price of wool higher over the next 18 months. In these conditions, the challenge for the industry will be to develop demand creation programmes to ensure these higher prices can be sustained over the long term.

"We are following with interest the Wool Industry Network (WIN) initiative, and await developments. We remain ready to co-operate with industry participants if required and play our part for the betterment of the wool industry as a whole.

"The focus for New Zealand Wool Services is on achieving a satisfactory return for shareholders. The company also aims to assist in helping achieve an improved price for wool growers, who are its life blood. Without them we do not have a wool industry," said Dwyer.

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