Meatco aims for profitability by 2021
Meatco managed to reduce its overall losses by N$33 million during the previous financial year and plans to break even in 2019/20, before returning to profitability the following year.
The company's 2018/19 annual report, which was released at Meatco's 33rd annual general meeting (AGM) last week, shows that it decreased its overall losses from N$51 to N$18 million during the reporting period.
According to Meatco, it right-sized its workforce through organisational restructuring and block slaughtering, which resulted in a saving of N$40 million per annum on the salary account.
The company further managed to reduce administration expenses by 12% year-on-year through a wide range of cost-cutting activities, resulting in a saving of N$31 million.
The report further shows that Meatco slaughtered approximately 7 000 more cattle than was expected, which contributed to keeping the processing plant open.
“Although nearly 20 000 less cattle were slaughtered in the reporting year compared with the previous year, it is still 7 086 more than we anticipated at the beginning of the year.
“We sourced 7 390 more cattle from farmers south of the veterinary cordon fence (VCF) than the previous year,” said Meatco.
The company said that given the situation of the ongoing downward trend of procuring cattle from livestock producers, it predicted that only 55 000 cattle will be slaughtered, resulting in a projected revenue of N$827 million and a net loss for the year amounting to N$185 million.
“As we projected a throughput of 55 000 slaughtered cattle at the beginning of the 2018/19 period, it was essential that throughput had to increase with at least 10 000 to between 60 000 to 70 000 cattle.”
At the end of the reporting period, Meatco slaughtered 62 086 cattle, which was 7 086 cattle more than the 55 000 projected.
Of the 62 086 cattle slaughtered, 40 366 were sourced from livestock farmers south of the VCF, which was 7 390 more than the previous year.
A total of 2 518 cattle (2017/18: 15 502) were sourced from Meatco's backwards integration sources, 19 202 cattle (2017/18: 33 506) from Meatco feedlots and 1 521 (2017/18: 896) cattle were slaughtered north of the VCF.
Furthermore, the reporting year was a particularly good for producers in terms of prices.
Overall, the average producer price increased by 9.88% from N$37.64 per kg in 2017/2018 to N$41.36 per kg.
The average producer price paid by Meatco to Namibian producers was 4.34% higher than the average South African parity price. In total, Meatco paid out N$632 million to producers in the reporting year, representing 65.22% of its total turnover.
This was 12.01% more than the previous year, when 53.21% of turnover was paid out.
Meatco board chairperson Martha Namundjebo-Tilahun said the board approved a one-year turnaround strategy in February 2018, focusing on minimising losses and increasing the sustainability of the corporation.
“The financial position of the group improved substantially - a dramatic turnaround from where we were 12 months ago. As we continue on this road to recovery, the strategy is to break even in the next financial year, and thereafter start building our reserves, going forward.”
According to her the company's five-year strategic plan for 2019/20 until 2023/24 will be executed this financial year.
“With a clear strategy and a laser focus on the needs of our stakeholders, Meatco is better equipped than ever to help our producers meet their commercial objectives.”
Meanwhile, Meatco acting CEO Jannie Breytenbach said it is common knowledge that Namibia's red meat industry is facing challenges on a number of fronts.
“Dynamics in the marketplace - on the domestic, regional and international fronts - change continuously. Issues such as value chain integration, international competitiveness, changing consumer patterns, social licence to operate and climate change, coupled with local issues such as drought, a shrinking national herd, degradation of rangelands, among others, will test Namibian livestock producers relentlessly,” he said.
ELLANIE SMIT
The company's 2018/19 annual report, which was released at Meatco's 33rd annual general meeting (AGM) last week, shows that it decreased its overall losses from N$51 to N$18 million during the reporting period.
According to Meatco, it right-sized its workforce through organisational restructuring and block slaughtering, which resulted in a saving of N$40 million per annum on the salary account.
The company further managed to reduce administration expenses by 12% year-on-year through a wide range of cost-cutting activities, resulting in a saving of N$31 million.
The report further shows that Meatco slaughtered approximately 7 000 more cattle than was expected, which contributed to keeping the processing plant open.
“Although nearly 20 000 less cattle were slaughtered in the reporting year compared with the previous year, it is still 7 086 more than we anticipated at the beginning of the year.
“We sourced 7 390 more cattle from farmers south of the veterinary cordon fence (VCF) than the previous year,” said Meatco.
The company said that given the situation of the ongoing downward trend of procuring cattle from livestock producers, it predicted that only 55 000 cattle will be slaughtered, resulting in a projected revenue of N$827 million and a net loss for the year amounting to N$185 million.
“As we projected a throughput of 55 000 slaughtered cattle at the beginning of the 2018/19 period, it was essential that throughput had to increase with at least 10 000 to between 60 000 to 70 000 cattle.”
At the end of the reporting period, Meatco slaughtered 62 086 cattle, which was 7 086 cattle more than the 55 000 projected.
Of the 62 086 cattle slaughtered, 40 366 were sourced from livestock farmers south of the VCF, which was 7 390 more than the previous year.
A total of 2 518 cattle (2017/18: 15 502) were sourced from Meatco's backwards integration sources, 19 202 cattle (2017/18: 33 506) from Meatco feedlots and 1 521 (2017/18: 896) cattle were slaughtered north of the VCF.
Furthermore, the reporting year was a particularly good for producers in terms of prices.
Overall, the average producer price increased by 9.88% from N$37.64 per kg in 2017/2018 to N$41.36 per kg.
The average producer price paid by Meatco to Namibian producers was 4.34% higher than the average South African parity price. In total, Meatco paid out N$632 million to producers in the reporting year, representing 65.22% of its total turnover.
This was 12.01% more than the previous year, when 53.21% of turnover was paid out.
Meatco board chairperson Martha Namundjebo-Tilahun said the board approved a one-year turnaround strategy in February 2018, focusing on minimising losses and increasing the sustainability of the corporation.
“The financial position of the group improved substantially - a dramatic turnaround from where we were 12 months ago. As we continue on this road to recovery, the strategy is to break even in the next financial year, and thereafter start building our reserves, going forward.”
According to her the company's five-year strategic plan for 2019/20 until 2023/24 will be executed this financial year.
“With a clear strategy and a laser focus on the needs of our stakeholders, Meatco is better equipped than ever to help our producers meet their commercial objectives.”
Meanwhile, Meatco acting CEO Jannie Breytenbach said it is common knowledge that Namibia's red meat industry is facing challenges on a number of fronts.
“Dynamics in the marketplace - on the domestic, regional and international fronts - change continuously. Issues such as value chain integration, international competitiveness, changing consumer patterns, social licence to operate and climate change, coupled with local issues such as drought, a shrinking national herd, degradation of rangelands, among others, will test Namibian livestock producers relentlessly,” he said.
ELLANIE SMIT
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