The New Zealand Merino Company (NZM) has significantly lifted full-year profit and the dividend it will pay to its shareholders in 2014/15.
NZM booked a $2.3 million net profit for the year, a 21% increase on the previous year. Shareholders, including 536 wool growers, will receive a total dividend of $1.15 million, up 23% on 2013/14.
NZM chief executive John Brakenridge said the strong performance showed the company’s approach of value creation, as opposed to volume play, was a winning one.
“Two decades ago fine wool was being dumped on the commodity market and sold at a discount to Australia. The growers knew they had a product that was undervalued and unrecognised.
“So NZM was set up to maximise profitability and sustainability right across value chains; from market to grower. Key to this has been confronting volatility head on and establishing multi-year forward contracts that guarantee more stable prices for brands and growers alike.”
By removing the boom-and-bust of commodity price cycles, NZM had generated more than $30 million in additional income for growers, across wool and meat programmes, in the past three years compared to returns via traditional commodity systems, said Mr Brakenridge.
“This past year we’ve continued to grow our business through establishing new contracts with luxury and active apparel brands such as Loro Piana and Reda in Italy, New Zealand brand Icebreaker and Colorado-based SmartWool.
“We’ve also extended our offering into strong wool, where we see excellent potential across the board through innovation. There’s great complementary between strong wool and our fine wool business.
“It’s no good sitting back and waiting for the market to come to you. We want to shape it and secure exclusive deals with the world’s leading brands.”
In April, NZM secured a two-year contract with Danish footwear firm Glerups to exclusively supply New Zealand wool for its indoor shoe range. In August, iconic New Zealand brand Swanndri signed up to use NZM fine Merino, mid micron and strong wool for its entire clothing and accessories range.
Mr Brakenridge said the company would continue to invest in developing new markets and supporting the growth of existing brand partners.
Innovation is also being driven at grassroots level, in areas such as genetics.
NZM’s Feetfirst project, part of a Primary Growth Partnership between NZM and the Ministry for Primary Industries, and supported by Merino Inc, has brought the fine wool industry a step closer to eradicating footrot using genetic testing. This would see millions of dollars saved by reducing lost productivity annually across the sheep industry.
The Feetfirst partnership was an example of how increased collaboration could benefit New Zealand agriculture, said Mr Brakenridge.
“That’s the sweet spot. With more collaboration, New Zealand’s primary sector could do a lot more to redefine its offering and take an active role in global markets.”