1 Oct 2014

Merino company increases profit

3:25 pm on 1 October 2014

Fine wool marketing company New Zealand Merino has had a successful year, lifting its net profit from $870,000 to almost $1.9 million and could return prices to growers significantly above market levels.

merino

The company is focusing on the fine and superfine merino markets. Photo: PHOTO NZ

Chief executive John Brackenridge said it was able to return prices to growers that were significantly above market levels. However, he warned there would be more pressure on prices this season, especially for the finer wools.

"The very fine edge for this season is a very tight market. We've had a substantial increase in production in Australia. The more medium types, most of which we have in contracts through to the active outdoors markets, the market for those is very tight too.

"But where there's the most downwards pressure is in the fine, superfine area, so we're putting a substantial amount of time into those markets, trying to get branded programmes and so forth going there."

Mr Brackenridge said the area of greatest growth for the New Zealand Merino Company has been the active outdoors market, supplying companies such as Icebreaker with fine and mid-micron wools.

He said the company is also broadening its horizons, moving into strong wools used in interior textiles.

"What we're looking at is the flow-on effect of the benefit that's happened through the fine edge by us getting greater critical mass by working with mid-micron growers. So where there are those synergies, we are applying our model alongside select partners and growers who have approached us."

Mr Brackenridge said the company is working with strong wool growers and grower groups in direct contracts, rather than competing for wool at auctions. The company is now getting about 70 percent of its wool supply in direct contracts with growers.