Hard times hit the wool industry

Wool Services International has posted a loss of $4.38 million after tax, compared to last year's profit of $2.39 million. This was partly because tax authorities declined a 2007 deduction, which cost it $1.6m and because it took a $3.2m hit on rationalising wool scours, the company said. Managing director Michael Dwyer said that despite the world credit crisis - slowed markets, collapsed wool prices, foreign exchange fluctuations, and difficult trading conditions for customers - WSI managed a tax-paid "operating profit" of $514,000 for the year to June 30 reports The NZ Herald. "While operating performance in the first six months was good, the second half of the financial year was adversely affected by the world credit crisis," he said today. Export turnover fell 16 per cent. "Trading conditions have continued to be the most difficult we have experienced." The company planned to challenge the tax decision, but needed to make provision for the debt in the meantime. Its scouring plants, at Whakatu in the Hawke's Bay and Kaputone in Canterbury performed well, and it expanded storage at both scours, improving flows to supply each and increasing ability to process wool promptly. But though rationalisation of wool scours was a positive step much more needed to be done to rejuvenate the industry. "Reform must occur in the marketing and distribution of New Zealand wool," he said. "We are working with like-minded organisations to accelerate the process."