The loss for the year ended June 30 was $422,000, compared with a $368,870 profit a year earlier.
Farmer/shareholders got $467,000 in rebates on wool they sold through the co-operative, up from $379,000 the year before.
Higher rebate levels were partly a result of a bigger shareholder base, with 38 new names on the register, adding more wool to be sold through auction, chairman Bay de Lautour said.
The co-op also sold woolsacks to shareholders at a discount and that trade also increased.
A large part of the PWC business was done through the Carrfields Primary Wool (CP Wool) joint venture, in which PWC shared equal ownership with the Carr Group.
CP Wool had increased market share at auction but had a 3% fall in volume as sheep numbers continued to fall and drought in some areas led to lower wool weights.
The group believed the outlook was strong for two of its business ventures, the Christchurch-based NZ Yarns spinning company and the Just Shorn wool carpet brand, both supplied with wool by PWC shareholders.
New Zealand carpet sales were ahead of expectations though there was a limited range in the market. A relaunch of Just Shorn was planned in the United States, using the upmarket hard-flooring retailer Carlisle.
The Just Shorn revamp covered production and in-market activity.
The bulk of the yarn being used for the carpets would now be made by NZ Yarns, increasing the scale of that business, CP Wool chairman and PWC director Howie Gardner said.
“We believe we’ve got a serious, vertically integrated business from wool to showroom now. It’s a very robust model.”
NZ Yarns made a loss in the June 2016 year, affecting the PWC group result, but had diversified its markets and had initiatives under way so the future looked good.
Sheep farmers were being hit by the fall in the wool price after Chinese buying dropped away but that also helped the profitability of businesses such as NZ Yarns and Just Shorn, because their core raw material got cheaper.
There was no sign of the price fall reversing any time soon, Gardner said.
The market change had pushed some private buyers out of the market but the uncertainty was constraining remaining players from aggressively buying.
“We’re carefully considering how we will operate in the market,” he said.
“People who know a lot more than I do say this is unprecedented and it would be foolhardy to rush in.”
Some farmers would be able store their wool till prices recovered but others might not be able to afford to.
At the end of the trading year, CP Wool paid a $1 million dividend to the two shareholders, which they then lent back to the company.
“Neither parent shareholder needed the money so it was put back in to support the NZ Yarns turnaround.”
At balance date, PWC had assets of $4.48m and liabilities of $2.03m. The 50% share in CP Wool had a book value of $1.34m, down from $2.25m a year earlier and reflecting a move from profit to a loss by the subsidiary and the impact of the dividend payment.
The co-operative still had a significant shareholder loan from de Lautour but the annual report said repayment was not required till sufficient funds were released from the CP Wool investment.
