Blog

MEAT Corporation of Namibia (Meatco) chief executive officer (CEO) Mwilima Mushokobanji says the pre-tax loss of N$206 million the company reported in its latest annual financial results last week were expected, as a result of Namibia’s recent drought period.

Meatco has in the meantime received a government bailout of N$200 million.

Mushokobanji yesterday said Meatco expected the reported loss of N$206 million as the company’s revenue dropped from N$1,7 billion to N$752 million over two financial years.

Mushokobanji confirmed that Meatco’s loss was stated in an independent auditor’s report on the company’s latest financial results.

“We knew because we came from the drought,” he said.

Mushokobanji said the loss was a result of the drought, which drastically reduced the throughput of slaughter cattle.

“In our projections, what was very clear come 2020/21, we were going to have a serious throughput problem, because we have lost a lot of cattle due to drought, and then for 2021/22, we only slaughtered 36 000 head of cattle,” he said.

Meatco’s revenue declined from N$1,7 billion in 2019/20 to N$873 million the following year, and to N$752 million in 2021/22.

To break even, Meatco needs to slaughter at least 60 000 head of cattle annually, which need to be exported to international markets.

“If we could have slaughtered 60 000 cattle, we could have wiped the loss you see here,” he said.

Mushokobanji said the only reason Meatco had N$1,7 billion in revenue in 2019/20 was because the company’s slaughtering figures were at 116 000 head of cattle, after farmers were advised to get rid of most of their livestock.

He said the government has given Meatco N$200 million, which would not constitute additional debt.

“The N$200 million shareholder injection during the 2023 financial year has significantly improved the debt-to-equity ratio,” he said. The auditors were concerned about Meatco’s debt, which includes a debt of N$431 million with the Development Bank of Namibia (DBN).

The company has over the past financial year reduced its bank overdraft by 32% – from N$102 million to N$69 million.

Mushokobanji said a loan Meatco has with Bank Windhoek was reduced from N$21 million to N$8 million.

“This loan is now fully settled,” he said, as the government bailout will assist with that.

He said Meatco has reduced a loan of N$200 million with the DBN from N$171 million to N$147 million over the past year.

GOVERNMENT ‘CURSED’

Economist Omu Kakujaha-Matundu says it is a well-known fact that where the government puts its fingerprints things do not go well.

“Air Namibia, the RCC, TransNamib, and the list continues. The culture of no consequences and pumping public money into bottomless pits is well entrenched,” he says.

Kakujaha-Matundu says with Meatco’s status as a state-owned enterprise, one would not expect much from its turnaround.

“And one would not expect much in the future as competition is breathing down Meatco’s neck. Hopefully the northern communal area-West African deal could turn its fortunes. Let’s keep our fingers crossed,” he says.

DISCUSSION NEEDED

Mushokobanji yesterday said Meatco needs to discuss its auditors’ questions about the company’s status, as a going concern with the auditors because they are mainly concerned about the volumes of slaughter stock that come to the abattoir.

“We need to clarify that with the auditors in terms of what they meant . . . they are concerned about the volumes which affect the bottom line,” he said.

He said because drought has affected Meatco’s business over the last three years, it will continue to do so.

“What they mean is that as much as it looks like they are building the national stock, the auditor is worried about throughput moving forward into the future. We gave the auditors confidence,” he said.

GOING FORWARD

Meatco continues to downsize its staff complement to survive the company’s financial position.

The company has retrenched about 80 employees, which the CEO said has saved it salary expenditure amounting to N$15 million.

“No salary increases were given to senior and middle management staff for the last two years,” Mushokobanji said.

The company’s monthly salaries were reduced from N$14 million in 2018 to N$11 million in 2022. That is N$40 million per year less than what was recorded in 2018.

“Total staff reduced from 975 in 2018 to 738 in 2022. Permanent staff will be reduced from 826 in 2018 to 577 in 2022,” he said.

This comes as more than 50 employees at Meatco’s abattoir at Katima Mulilo are demanding that the company employ them on a fixed-term basis with benefits.

Meatco is expected to have its upcoming annual general meeting on 30 September at Otjiwarongo.