22 Sep 2016

NZ Merino hits record profit result

11:45 am on 22 September 2016

New Zealand Merino has lifted its full-year profit by 18 percent to $2.7 million

Direct from the sheep's back, the super fine Merino wool grown at Earnscleugh Station in New Zealand is destined for the catwalks of the world.

New Zealand Merino has achieved a record result, but warns there are still plenty of challenges for the industry. Photo: RNZ / Steve Wilde

Shareholders, including over 500 fine woolgrowers, will get a total dividend which represents a return of 38.3 percent on the current share price.

NZ Merino chief executive John Brackenridge said this year's financial success was all thanks to their business model.

"It's really based upon the continuation of our model which is very much market focused, market shaping and driven to make a difference to our brand partners and to our growers.

"We've had a record volume in terms of transactions and bales through the door, we've extended to non-traditional areas such as strong wool and we've really had the model get great attraction in terms of a lot of the branding and differentiation work we're doing."

Mr Brackenridge said New Zealand Merino's $5 million deal with Italian company Reda earlier this year had really helped the company.

"The deal with Reda is fantastic, it's a good indication we think within the primary sector of the opportunities.

"Here is a company that is innovating, they've got their fabrics going through to some amazing products like Allbirds Shoes and they're prepared to make a commitment through to the grower for five years so the growers can concentrate on the breeding and productivity gains with the certainty of very good pricing for the next five years."

There were several challenges for the merino industry, said Mr Brackenridge.

"Things such as climatic - we've had a very dry season. Also continuing to ensure across the farming enterprises that we've got more and more contracts, not just with wool but other parts of their income like meat and so forth."