Wool Services FY profit falls 66 percent on drop in wool prices

New Zealand Wool Services International, the wool scouring and exporting business whose majority shareholding is up for grabs, posted a 66 percent drop in full-year profit as wool prices tumbled.

Profit was $2.2 million in the 12 months ended June 30, from a record $6.6 million a year earlier, when wool prices surged in the face of global demand and a supply shortage. Sales rose 0.9 percent to $202 million.

The company warned last month that profit would miss its guidance because of a "sharp" decline in wool prices in April-to-June and what it called "unprecedented high volumes" offered in July. The company also has been forced to cope with a stubbornly high New Zealand dollar, which erodes the value of export sales.

Reduced consumer demand in Europe, particularly for floor covering, a fall in China's textile industry and a drop in the consumption of carpet wool in Australia also contributed to the profit decline, WSI said today.

"The market outlook for wool depends largely on the performance of wool markets, and as such remains uncertain," WSI said. "We remain positive despite the international downturn - this confidence is evidenced by recent wool sales where prices have shown a firming tendency."

Improvements to WSI Kaputone Wool Scour over the next twelve month will also help "improve processing profits" to "achieve a satisfactory full twelve month result - better than the year under review," it said.

A 64 percent stake in WSI is up for grabs because it was owned by the Allan Hubbard-related companies Plum Duff and Woolpak Holdings, which are in receivership.

WSI's scouring assets attracted Cavalier Wool Holdings, a joint venture between carpet-maker Cavalier Corp, Accident Compensation Corp and Direct Capital Investments, which wants to create a national monopoly on scouring and has received sign-off from the antitrust regulator.

WSI shares were unchanged at 37 cents and have shed 26 percent this year. The company didn't declare a final dividend.

BusinessDesk.co.nz

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.

Related News:

NZ Wool Services says FY earnings to miss guidance
WSI first-half profit sinks 41%
WSI plans to raise capital after High Court decision