WSI up 479pc from rising prices

Takeover target New Zealand Wool Services International (WSI) has recorded a profit increase of 479 per cent.

Managing director Michael Dwyer said key divisions Whakatu Wool Scour, Kaputone Wool Scour and the Wool Export operation contributed to the result. WSI notched up an after tax profit of $6.636 million, up 479 per cent from the $1.147 million recorded the previous year, for the year to June 30.

Mr Dwyer said it was worth noting that over the same approximate period the coarse wool indicator moved from $3.37 per kg to $6.48 per kg, an increase of 92 per cent.

"We're very pleased, because this has been a major and much-needed boost for wool growers and it has restored confidence in the production of wool."

Operating revenue for the year was up 33 per cent from $151.034 million to $200.113 million.

Operating surplus before taxation was up from $3.240 million in 2010 to $9.112 million while operating surplus after tax was up from $2.229 million to $6.636 million.

WSI chairman Derek Kirke said it was an exceptional result achieved under challenging circumstances, including operating with a rising New Zealand dollar.

"WSI has had arguably its toughest year ever, having to deal with major disruption caused by the tragic earthquakes, as well as Cavalier's attempts to create a wool-scouring monopoly, and the ensuing Commerce Commission hearings - and yet this is the best result we have ever recorded."

He said poor world economies, particularly Europe and the US, would make it difficult to replicate the result.

The country's largest carpet-maker, Australian-owned Godfrey Hirst, has appealed a commission decision giving Cavalier Wool Holdings approval to create a monopoly in the wool-scouring industry by acquiring WSI.

The acquisition would make Godfrey Hirst reliant on Cavalier, its carpet-making rival, to supply wool to the industry. If the takeover is successful, Cavalier has indicated it will relocate WSI's scouring plants from Kaputone to Timaru and from Whakatu to Cavalier's nearby plant at Awatoto, between Napier and Hastings.

Cavalier would also mothball scour lines at its Clive and Timaru plants, and take over WSI's 50 per cent stake in the Lanolin Trading Company.

More than 60 per cent of WSI is up for grabs as a result of the receivership of two companies associated with the late financier Allan Hubbard.

Farmer-owned Wool Equities are also vying for control of WSI.