NZ Merino boosts annual profit 19 percent
New Zealand Merino Co, a wool marketer that aims to develop higher-value markets for sheep products, posted a 19 percent lift in annual profit and said its business has doubled in value over the past three years.
Profit rose to $2.7 million in the year ended June 30, from $2.3m a year earlier, according to the Christchurch-based company's 2016 annual report.
Revenue rose 4.9 percent to $114.7m, while cost of sales gained 5.7 percent to $104m. It will pay its more than 500 growers a total dividend of $1.36m, up from $1.1m the previous year and in line with its policy of returning 50 percent of profit to shareholders.
Formed in 2001 to boost returns for the merino sheep industry, the company inked its longest-ever contract in the past year, agreeing to supply fine wool to Italian luxury fabric manufacturer Successori Reda for the next five years in a deal worth $45m.
The company is also expanding its reach into the strong wool market, managing the country's largest wool clip controlled by state-owned Landcorp Farming in the previous year, and more recently signing a seven-year $22.1m contract with the Ministry for Primary Industries to improve returns from the fibre.
"The New Zealand Merino Company is a dynamic company committed to the vision of becoming the world's premium wool company," chair Ruth Richardson said in the annual report.
The company said it met its goal set in 2013 of doubling the value of its business within three years, based on its enterprise value which estimates the market value of the business. It's now setting similar targets for the next three years.
In the past year, NZ Merino handled $11.2 million of wool from Landcorp, up from $9.3 million the previous year when the companies established ties.
NZ Merino said its joint venture with meat processor Silver Fern Farms, which markets Silere alpine origin merino meat, had sharpened its in-market focus the past year, following a challenging 18 months.
NZ Merino shares, held by wool growers, last changed hands at $1 apiece, according to data from the company's website.