The New Zealand Merino Company - Strong Result

The New Zealand Merino Company Limited Announces Strong Result

The New Zealand Merino Company (NZM) has announced a strong operating performance for the year ended 30 June 2009, consolidating its position as the leading marketer of Merino and Mid Micron wool in New Zealand.

Profit before tax for the year was $2.3 million, a lift of $0.4 million on the previous years result, largely resulting from the purchase of the finer-edge of the PGG Wrightson mid micron business, as well as increased contract activity. The result represents a return on average shareholders funds of 33%.

Branded contracts continue to underpin NZM’s business providing price protection and certainty for both the company and its grower suppliers. Contract volumes, and in particular branded forward contract volumes, increased significantly during the year.

“This year’s result is very pleasing and highlights the success of NZM’s unique model”. Chairman John Nichol said in announcing the result.

“The New Zealand Merino Company continues to be proactive in recognising the need for innovation and change in the industry and the need for investment in marketing and differentiating our unique product. Our Merino and mid-micron grower clients and our shareholders are now benefiting from the considerable value generated from the company’s approach.”

“The financial position of the company is robust and places us in a strong position to work through the current financial environment, while continuing to invest heavily in marketing, research and development, and innovation.”

Chief Executive John Brakenridge acknowledged the support the company has received from growers, manufacturers and other industry participants.

“NZM has for the first time recorded wool sales in excess of $100 million, including $53 million of sales by contract. Through these contracts the company is providing stability in the industry that provides confidence for both growers and manufacturers particularly in these difficult economic times”. Mr Brakenridge said.

“Our purchase of the finer-edge of the PGG Wrightson mid-micron business has enabled us to extend the benefits that merino growers have enjoyed to include mid-micron growers.”

The good financial result underpins a strong financial position for the company with total assets of $10.0 million and shareholders’ funds of $7.3 million. The company has no term debt.

NZM, owned 50% by Merino growers through Merino Grower Investments Limited (MGIL) and 50% by PGG Wrightson Limited, began operations in July 2001 and is the only company offering a truly integrated approach to sales, marketing and research and development for Merino and mid-micron wool.

NZM will pay a dividend to shareholders of 50% of after tax profits.