Strong wool market shows signs of recovery after prolonged slump
The strong wool market has improved in the past six months, despite drops in production over recent years.
The company says its $6.9 million earnings before interest and tax was 8% up on the previous year and was achieved on sales of 135,000 bales of wool, up 30%. Chief executive NZM John Brakenridge says this is a very pleasing result and shows the business’s commitment to growth.
“Our continued improved performance is founded on a clear strategy with strong grower and customer focus and execution. The foundation of our ZQRX regenerative initiative, which was set out pre- Covid, has resonated strongly with the market, our brand partners and our growers, and has driven the very good growth in demand seen during the year.”
Brakenridge told Rural News what was particularly pleasing was the growth of the business in terms of bales handled and its ability to make an impact for growers, during a time of a lot of uncertainties.
With net profit up 3% to $4.4 million, the company is paying a dividend of 41.6 cents per share. Based on the yearend share price of $6.87, the dividend represents a yield of 6.1%.
The company adopted a new constitution and did a capital raise two years ago to list on the NZ Stock Exchange’s secondary board, the USX. Brakenridge says that entailed producing a Product Disclosure Statement forecasting the next two years profit, but the actual profit outperformed that by 82%.
Brakenridge says the company has been working on developing markets, like the “active outdoors” market for merino garments, with people being much more aware of what they wear and moving away from synthetics.
The company now claims 70% of the merino wool market in New Zealand and is also buying from growers in South Africa and Australia, where it has recently appointed a manager to handle the Australian market.
“We are building relationships with growers in Australia to meet the amount of demand that we have coming our way,” Brakenridge adds.
“We are expecting growth to continue through to 2023, with strong bale volumes and a deepening of our presence in Australia to support extension and investment in market initiatives.”
