Meatco cuts losses to N$18 million
…as Corporation saves N$31 million through cost cutting
By Hilary Mare
MEATCO’S overall loss decreased from N$51 million to N$18 million as the corporation plans to break even in the next financial year, returning to profitability the year thereafter, Meatco’s Annual Report for the year 2018/19 reveals.
The report notes that through a wide range of cost-cutting activities, Meatco reduced administration expenses with 12 per cent year-on-year, resulting in a saving of N$31 million.
Meatco’s cash conversion cycle improved from 130 days at the end of August 2018 to 74 days at January 2019.
Board Chairperson, Dr Martha Namundjebo-Tilahun highlighted that ending the previous financial year with a loss of N$51 million and Meatco’s ability to continue as a financially viable business being questioned, drastic measures had to be taken.
“It was a tough year, but true to the tenacity and sheer guts I came to expect from Meatco team of directors and employees, we persevered, although it was another year where we made losses for the Group. However, 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.
“We are through the worst. Although there is still much work to be done, we are looking ahead with confidence, knowing that we are on the right road. We are more determined than ever to maintain this positive momentum.
“Despite the challenges we face, the future of the red meat industry is promising. Agriculture is a vital component of our country’s economy, and will remain so for many decades. In the next financial year we will start to execute our Five-year Strategic Plan for 2019/20 until 2023/24. 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,” Namundjebo-Tilahun said in the report.
Meatco was able to increase the percentage paid to producers from 53.21 per cent during the previous reporting year to 61.14 per cent in the current financial year. Our finance cost also decreased from 4.85 per cent to 3.92 per cent.
The three international markets — the Norwegian, UK and European Union markets — accounted for 74.68 per cent of the total revenue, representing nearly three-quarters of Meatco’s overall income.
Jannie Breytenbach, Acting Chief Executive Officer stated that it is common knowledge that Namibia’s red meat industry is facing challenges on a number of fronts.
“Dynamics in the market place – on the domestic, regional and international fronts – change continuously. Issues such as value chain integration, international competitiveness, changing consumer patterns, social license 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.
“Meatco has in the past, and will continue in future, to play a central role in stabilising the industry. Our vision remains to be the preferred marketing channel for every Namibian livestock producer and to promote the most sought-after meat brands in the long-term interest of our stakeholders.
“This year, more so than ever, demonstrated that all players in the red meat industry are dependent on each other. What affects the one negatively in one part of the country, impacts the other on the other side. We need to accept that we cannot work independently, hence we need to work together to build and expand the industry to everyone’s benefit,” explained Breytenbach in the report.