Wednesday, 06 December 2017 13:55

‘Challenging’ year for wool

Written by  Pam Tipa
Wools of NZ chief executive Rosstan Mazey. Wools of NZ chief executive Rosstan Mazey.

The last year has been “one of the most challenging for the New Zealand strong wool industry”, according to Wools of NZ’s latest annual report.

Nevertheless it had net revenue of $15.4 million – similar to last year – and operating profit of $142,769 ($150,583 last year) in the year to June 30, 2017.

The report says global demand for strong wool has continued to trend downwards. China, traditionally a big importer of NZ wool, has increased its domestic wool production.

NZ’s wool exports to China have decreased by 48% over the last two years, with volume down from 65m kg in 2014-15 to 34m kg in the 2016-17 season as local producers come on stream.

“The impact of this on NZ’s overall wool export effort is significant given China has traditionally represented a disproportionately large market for NZ wool The next-largest importer is the UK which took well under 10m kg this year.

Linked to this dramatic reduction, the NZ Wool Indicator has decreased in NZD by $2.35 in 2016-17 vs 2015-16, down from $5 to $2.65, the report says. The decrease has been exacerbated by the strong NZ dollar (NZD).

“Despite these challenging market conditions, Wools of NZ has worked hard to maintain contracted wool volumes with international partners and in securing forward contract prices in order to provide growers with an element of certainty in a vulnerable market,” the report says.

Chairman Mark Shadbolt and chief executive Rosstan Mazey last month told the annual meeting they were proud to deliver a positive financial result for grower shareholders despite the current state of the industry.

“These results are testimony to the merits of the strategic focus of the company over the last five years and the trust and confidence of our shareholders in that focus,” says Shadbolt.

“We have relentlessly pursued targeted investments in R&D, the development of new technologies that add value to our strong wool, the right partnerships, different routes to market, securing forward contracts for wool, ethical and sustainable production practices and building a compelling brand story.”

He says the company is in a strong position to further develop global commercial markets for initiatives and ground-breaking technologies such as Clacial XT and NuYarn and pursuing new initiatives through commercial success with NZ and international partners for the long term profitability of grower shareholders.

“Ongoing success will be greatly enhanced by choosing the right partners who share our drive to add value to shareholders’ wool and to work in collaboration.”

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