Snug prospects for grower-owned wool firm
Wools of New Zealand, a grower sales and marketing company, is on track to post a better-than-expected full-year result.
Chief executive Ross Townshend said the result, to be announced later this year, would be an improvement on what was predicted in the prospectus, issued in October 2012.
He would not say what figure he was hoping the company would achieve, because there were still some months before the end of the financial year.
"I'm happy with where we are tracking. We are making good progress," Townshend said.
It will be the company's first full year of operation since it amassed $6 million in a capital-raising programme, which closed in February last year. The prospectus predicted the company would post a $435,000 profit this financial year.
If it is successful in producing a better result, it will be the second year in a row the company has exceeded expectations.
In the year to June 30, 2013, the company reported a better-than- forecast financial result with a loss of $351,022 compared with a prospective loss of $1.1m.
"It's good. It's great. We've got a long way to go, but so far so good," Townshend said.
The grower-owned sales and marketing company has 720 shareholders, who collectively produce about 14.5 million kilograms of strong wool annually. It also has another 300 farmers who provide it with 5 million kg.
Wools of New Zealand has two main contracts, including one to supply lamb wool to United Kingdom fabric-weaver Camira Fabrics. This contract is worth $6.25/kg compared with a spot price of $5.10.
"There are people who are prepared to pay extra money for the traceability and the prominence of our wool."
It also has its Laneve carpet-wool contract in which it supplies strong wool to international carpet manufacturers. The Laneve contract is worth $4.85/kg clean, about 20 cents more than the market.
Wools of New Zealand also offers a direct-to-scour option for farmers.
Townshend and the company's chairman Mark Shadbolt have this week been attending a flooring trade show in Shanghai, where they hope to attract more business.
"We've just got to keep building on the platform we've built so far," Townshend said.
One of the biggest opportunities for Wools of New Zealand was the North American market, he said.
"The most pleasing trend so far is the big guys in carpet in North America are looking to widen their wool offering."
He said only 2 to 3 per cent of the carpet sold in North America had wool in it, and producers were looking to increase that.
"People in the US have big houses and generally they are carpeted."
The company will next week embark on a nationwide roadshow to provide an update on its progress and discuss opportunities to improve wool returns.
Townshend said he was keen to get farmers more aware of what the company had to offer.