Unsold share parcel frustrates WSI
The receiver for a 64 per cent stake in Wool Services International is still in talks with a number of parties over a lengthy sales process for shares once controlled by the late Allan Hubbard.
The wool scourer and exporter said the share parcel was annoying and a distraction for customers.
Receivers from PricewaterhouseCoopers have been trying to offload the majority stake once controlled by Hubbard's company Plum Duff since Plum Duff was placed in receivership in December 2010.
WSI yesterday reported a net profit for the year to June 30, 2012, of $2.24 million, down from $6.64m in the prior fiscal year.
Operating revenue for the year was $201.97m, up from $200.11m in the fiscal year to June 30, 2011.
WSI managing director Michael Dwyer said the result was below directors' expectations for the year and below last year's record profit of $6.64m, reflecting unfavourable global market conditions.
A strong performance by the company for the first three quarters of the year in review was achieved and an interim dividend of 1.5 cents per share was paid to shareholders in May.
"[But] the fourth quarter saw a sharp decline in wool prices followed in July by unprecedented high volumes of wool on the market," Dwyer said.
The Christchurch-based company did not declare a final dividend.
WSI chairman Derek Kirke said unfortunately the issue of the sale of the Plum Duff stake had not been resolved. "It's a matter of great frustration for everybody involved."
Dwyer added that the company's export customers would like to see a resolution to the sales process. That would stop rumours within the market.
Dwyer said the peak in cross-bred wool prices was around 12 months ago, with about a 40 per cent fall since the fourth quarter of 2011.
Dwyer said the market events, compounded by the high New Zealand dollar, had impacted on the value of stocks. It had been necessary to make a provision at year end to reflect this fall.
Factors affecting the fall in wool prices included reduced consumer demand in Europe, particularly for floor coverings, and a fall in demand from China's textile industry.
China's economic activity had been hampered as a flow- on effect of the recession in Europe. China buys 48 per cent of New Zealand wool.
There had also been a major decline in the consumption of carpet wool in Australasia, the second largest single market for New Zealand carpet wool. This follows higher wool prices 12 months ago, precipitating a major swing to nylon carpets and carpet tiles.
PWC's Maurice Noone said the receivers were still seeking buyers for the Plum Duff stake and in talks with a number of interested parties.
He did not want to comment on potential buyers though acknowledged that Cavalier Wool Holdings had received Commerce Commission authorisation to buy the WSI assets.
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