Leading wool exporter foresees improving trend

Leading wool exporter foresees improving trend despite reporting interim loss

Leading wool exporter NZ Wool Services International Limited (WSI) has reported a loss for the six months to the end of 2009, but is on track to turn that around in the second half of its financial year.

In the six months to 31 December 2009 WSI lost $680,173, compared to a profit of $1.036 million for the equivalent period in 2008.

Michael Dwyer, managing director of WSI, which exports around 40 per cent of New Zealand’s strong wool clip, puts the poor interim result down to the residual effects of the global economic downturn.

“While disappointing, the loss is less severe than was anticipated at the time of the company’s Annual General Meeting in December 2009, and we are already seeing considerable improvement in both trading and scouring activity, to the extent that by 31 January the company was back in profit.

“Prices for coarse crossbred wool have also lifted significantly, partly influenced by WSI’s strong participation in the market, providing further positive news for woolgrowers.

“Assuming the current high level of activity continues, we have reasonable confidence of reporting an acceptable profit by the end of our financial year,” he said.

According to Michael Dwyer, immediate signs are positive for New Zealand wool, but the sector must restructure sales and marketing activity to consolidate this.

“A solid recovery in prices for most wool types is emerging. An empty pipeline, reduced stocks, reduced production and improving demand are all working in favour of this.

“However, to sustain demand, coarse wool needs to be promoted more vigorously, emphasising its natural merits and its credentials as an environmentally sustainable product. Much, much more needs to be done to promote New Zealand coarse wool as a natural, healthy product that can breathe, is comfortable and is not derived from oil. Our Purelana brand would fit ideally within such a wider initiative, promoting New Zealand coarse wool.

“To ensure the profitability of wool production, achieve higher sustainable prices and return these to the grower, the industry must restructure sales and marketing activities. Currently numerous exporters all ply their matching wool types in the same markets, competing for the lowest price in an effort to exclude the competition. Clients involved in manufacturing take the opportunity to play one against the other. As we have seen recently, in a weak market this results in ridiculously low prices,” he said.

Michael Dwyer says WSI will work with any like-minded organisation to redress the serious shortcomings of the marketing and supply structure, and believes the company is the ideal model for the future of the New Zealand wool industry.

“We have the most efficient, cost effective means to supply wool to the consumer: direct from farm to WSI’s scours, to manufacturers; it is generally recognised that we have the best scours in the world; and we lead the New Zealand wool sector in marketing and distribution, accounting for more that 40 per cent of all coarse wool that is exported in the scoured state,” he said.

ENDS

© Scoop Media