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Record Gains for Primary Wool

January 16, 2014

Primary Wool Co-operative reports record profit in Farmers Weekly

Farmers Weekly shared the following article on January 15, 2014

Alan Williams

Primary Wool Co-operative has reported a record profit, helped by improving trends for the Just Shorn™ brand floor coverings in the United States.

The co-op had increased market share and brought in new farmer shareholders, with a net gain of 75 to more than 1200, chairman Bay de Lautour said.

Numbers were up about 300 in the past three to four years.

Primary Wool’s profit for the year ended September 30 was $1.9 million, after allowing for a 3c a kilogram rebate to suppliers who sold wool through auction.

A 10% dividend was also paid to shareholders. That was the second dividend in two years, after about eight years without a payout. The rebate system meant about half the profit made through auction was returned to growers.

Primary Wool’s profits come through its half share in Elders Primary Wool (EPW), which continues to grow the Just Shorn brand through the United States and Canada.

Just Shorn™ would be launched into the Australian market next month, through about 50 stores linked to the Carpet One franchise, de Lautour said.

The $1.9m net profit came through a combination of Primary Wool’s share of EPW earnings, plus a dividend. Based on comprehensive income for the co-op, earnings a share rose to 71c from 36.6c in the September 2012 year.

“We’ve not seen anything like it before and the co-operative’s equity is building up nicely,” de Lautour said.

The full Primary Wool result, incorporating revenue, balance sheet details, and operating cash flow, will be released to the Companies Office early next month.

Primary Wool had started the 2013 financial year with total equity of $1.52m and total assets of $3.28m. Assets included $424,000 in cash, he said.

The EPW profit for the year was $2.985m. Primary Wool received monthly reports on sales volume and dollar revenue in the US and those were encouraging, he said.

Primary Wool is a big supporter of industry-good programmes and is the main funder of the Campaign for Wool in New Zealand.

Product branding and wool promotion were the co-op’s broad strategy, de Lautour said.

“Every 10c/kg we can get on the wool price is another 10c profit for sheep farmers.

“We’ve not seen anything like it before and the co-operative’s equity is building up nicely.”

Bay de Lautour Primary Wool Co-operative

The co-op had also sourced about 60,000 new wool packs and was selling them to farmers at $4 each, less than the market rate for second-hand packs, he said.

“This is a reward to shareholders but also a way of improving the presentation of the wool clip.”

A lot of the second-hand wool packs still in regular use were shoddy and also a safety risk, he said.

The co-op had been busy trying to get more unity within farmer entities and would continue to work towards that goal, de Lautour said.

Primary Wool would increase its spending on promotion and industry good as its equity position continued to strengthen, de Lautour said.

Some of the preference shares he had subscribed for in previous years had been redeemed and as more were redeemed over the next couple of years that would leave more group profit to be spent in the industry.

De Lautour’s total shareholding in the co-op has reduced to about 30%, down from about 60% two years ago, as the preference shares have been redeemed.

Read the original Farmers Weekly article here