Christchurch based Wool Services International Limited has announced an annual profit, six times high than last year.

In a statement issued Friday the company said its net profit climbed to $6.6 million in the 12 months to the end of June, from $1.1 million a year earlier. Sales had been boosted 33 per cent to $200.1 million on the back of surging global wool  prices.

The company is currently fighting a takeover bid by rival Cavalier Wool Holdings.

IWS shares climbed 8 per cent on Friday on the back of the announcement, and have gained 16 per cent this year.

In its Rural Economic Update for August, the ASB says current wool prices are high because of strong global demand and a tight supply.

But increase in supply could adversely affect prices and, it warns, there are two other key risks to wool prices.

Firstly a sharp reduction in cotton prices has increased competition in the fibre business, and secondly, the slowing of the global economy and the real possibility of a recession in the US and Europe, could mean total fibre demand may decline.