NZ Wool Services says FY earnings to miss guidance

Thursday 16th August 2012

New Zealand Wool Services International, the wool scouring and exporting business whose majority shareholding is up for grabs, said full-year earnings will miss guidance because of a "sharp decline" in the wool market.

"The full-year result, which will be released within the next three weeks, will be profitable and ahead of the six months tax paid profit of $1.8 million, as the second-half year was marginally profitable," the company said. That signals a big drop in earnings from last year's $6.6 million. It had previously said full-year profit would be "satisfactory."

"The principal salient factors were the sharp decline in the wool market in April/May/June and the unprecedented high volumes of wool offered onto the market during the month of July when most customers were absent," the company said.

"In addition our second largest market for New Zealand wool, Australasia has shown a decline in consumption of approximately 60 percent," it said. "These and other factors such as the recession in Europe and the slow-down in China along with the high kiwi dollar have negatively impacted on our second six months."

WSI said it was "particularly disappointed" that wool growers have suffered a large decline in gross returns for coarse crossbred wool to the end of July.

The shares last traded at 40 cents, valuing the company at $24.8 million, and have dropped 40 percent this year.

A 64 percent stake in WSI is up for grabs because it was owned by the Allan Hubbard-related companies Plum Duff and Woolpak Holdings, which are in receivership.

WSI's scouring assets attracted Cavalier Wool Holdings, a joint venture between carpet-maker Cavalier Corp, Accident Compensation Corp and Direct Capital Investments, which wants to create a national monopoly on scouring and has received sign-off from the antitrust regulator.

BusinessDesk.co.nz

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