Lamb pelt prices up 50 %— NZLL

Press, 14 May 1985, Page 28

Lamb pelt prices up 50 %— NZLL

. The finished leather market does not provide an acceptable return based on the present high lamb pelt market prices, says the general manager of New Zealand Light Leathers, Ltd, Mr N. W. Dobson, in the annual report. The price of lamb pelts has increased 50 per cent, compared with last year (based on the international market) because of the July devaluation and market demand.

However, the carry-over of 1984 stocks will cushion the effects of the price increase this year, he says.

At the end of the first quarter for 1985, indications are that the strong demand for leather will last well into the year. After two years of rapidly expanding production in finished and semi-finished leather, consolidation will be made this year.

“This will allow us to strengthen existing markets and, more importantly, perfect production techniques

and increase productivity at our factories.”

The seasonal garment leather sales season, previously based on the northern hemisphere winter and autumn fashions, was altered last year by the increase in sales in the southern hemisphere, particularly in New Zealand. This resulted in a smoother, year-round demand. During the year, NZLL exhibited leather at fairs in New York, Paris, and Hong Kong. Marketing staff visited overseas markets regularly, and a new agent was appointed to cover the West Coast of North America.

The development of slink skins to finished suede clothing and glove leather at the Washdyke tannery late in 1983 has been built up substantially.

“This development, combined with a 30 per cent increase in finished leather, totally committed our relatively small technical and management staff,” Mr Dobson says. The chairman, Mr E. J. Hazlett, says that the 1984 achievement of a profit before export incentives was a milestone for the company. It coincided with the phasing out of such incentives. The leather industry has

always been volatile and adverse years must be expected, he said. However, the directors are confident of the future of the company based on efficient production and marketing of quality finished leathers. Devaluation only added a limited amount to profit after allowing for increases in imported chemical costs and pickled pelts. “These increases, coupled with the removal of export incentives, will have an effect on future profitability, although we are confident that a good result can be achieved in 1985,” Mr Hazlett says. As reported, the total group net profit more than trebled from $921,081 to $3,055,702 in the year to December 31. Included in the result was export incentives up $178,401 to $1,878,423. It was after providing $38,063 more for depreciation at $415,980, and steady goodwill at $71,436. Sales rose 22.8 per cent to $36,915,916. The annual dividend rate has been doubled from 2.5 c to 5c a share (10 per cent), requiring $300,000. It is covered 10.2 times by the final profit. Shareholders’ funds rose $2,755,702 to $6,282,898, and included steady ordinary capital of $3 million.

Working capital increased $3,532,413 to $5,116,654 and the current ratio improved from 1.2 to 1.4 to one.