International markets — the Norwegian, UK and European Union markets — showed their dominant contribution to Meatco’s bottom line, with the three accounting for 74.68 per cent of the meat processors total revenue, representing nearly three-quarters of Meatco’s overall income, the company’s latest annual shows.
“Norway remained the highest returning market for Meatco, and represented nearly one-third (29.98 per cent) of our revenue, even though it absorbed only 10.37 per cent of our total volume, “the company said.
“Although Norway remains our most valuable and premium market, Meatco saw much price resistance, overall lower prices and a concerted resistance on steak volumes in favour of less expensive meat cuts.”
Meatco said its UK and South African markets continued to decline in both volume and overall value in the period under review.
“Similar to the UK market, customers’ support of the Natures Reserve brand helped Meatco maintain and increase our overall returns. We continued to work with customers such as Famous Brands, Finlar/McDonald’s and Grand Foods/Burger King, as well as Rhodes Food Group and packers processing for Woolworths and other high-end retailers,” the meat processor said.
The company said its recent exports to China and planned exports to the United States will reduce its overall dependency on revenue generated by the EU market.
“These new markets offer Meatco and the Namibian farmers greater opportunity and flexibility, while reducing the dependence on some of the more traditional leading markets,” the company said.
Meatco said increased production from Brazil provided a challenge for its export in terms of pricing amid increased export volumes from the South American country.
“The big concern is the ever-increasing Brazilian herd and the growing volume of commodity priced beef in our core and emerging markets. It remains paramount that Meatco continues to develop niche markets and sustain our brand presence to differentiate ourselves from the commodity players,” the company said in its 2018/19 annual report.
In terms of the domestic market which saw the company launching its premium beef, producers’ prices increased were increased during the period under review.
“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 company said.
Meatco’s cannery during the period under review was hit by high cost of raw materials, driving up production and recorded lower production volumes.
“The current reporting year was a challenging one for the cannery due to the high cost of raw material and shortage of supply quantities. Higher production costs and the water-saving measures put in place added more pressure on cost saving. Penalties on higher water usage volumes also had an impact due to the prevailing drought in Namibia. Total canned products for the reporting year were 11,033,885 cans, which was 8,091,115 cans less than the budget. We sold 13,645,800 cans for this period, which were 5,354,640 less than the sales budgeted, “the company said.
“Due the cash flow constraints Meatco experienced during the first half of the financial year, the cannery was forced to lower production to 50,000 cans per day against the usual 85,000 cans per day. This was to ensure sufficient cash flow remains available for Meatco’s core business of slaughtering and processing.’
The company's overall losses decreased from N$51 to N$18 million during the reporting period.