Meatco suffers N$757m revenue loss

Key Figures:

• N$757 million decline in group revenue
• N$42,5 million profit before tax, down from N$105,7 million
• N$186 million govt grants recognised as operating income
• 47% decline in cattle supply

Independent auditors have raised serious concerns about Meatco’s ability to continue operating after the parastatal suffered a N$757 million collapse in revenue during the 2025/26 financial year, while government has not budgeted any grant support for the current financial year.

The warning is contained in Meatco's audited financial statements for the year ended 31 January 2026, released last week.

Although Meatco remained profitable, thanks largely to N$186 million in government grants recognised as operating income, auditors from Grand Namibia cautioned that a combination of sharply declining revenue, accumulated losses and the absence of a government allocation in the 2026/27 budget constitutes a "material uncertainty" over the corporation's future.

The audit report, signed on 24 July 2026, draws attention to the directors' report, noting that group revenue declined by N$757 million during the year while accumulated losses stood at N$134.4 million.

"These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern," the auditors said.

Despite the warning, the auditors issued an unqualified audit opinion, saying the financial statements fairly present Meatco's financial position and that their opinion was not modified because of the going-concern uncertainty.

Revenue plummets

The financial statements paint the picture of a business battered by the aftermath of drought.

Group revenue fell by 40.6%, from N$1.865 billion in 2025 to N$1.108 billion in 2026, while profit before tax declined by almost 60%, from N$105.7 million to N$42.5 million. Net profit slipped to N$40.5 million from N$43.8 million a year earlier.

The decline was driven by a dramatic reduction in cattle availability following successive drought years.

South of the Veterinary Cordon Fence, slaughter numbers plunged by 52.7%, from 75,268 cattle to 35,594, while throughput dropped from 18,673 tonnes to 8,930 tonnes. North of the fence, cattle numbers rose modestly from 7,844 to 8,183.

Overall, cattle supplied to Meatco's operations fell by approximately 47%, from 83,112 animals to just 43,777.

"The reduction in slaughter numbers is consistent with the livestock cycle following a drought season," the board said, attributing the downturn to producers rebuilding national herds.

Govt grants keep Meatco 'profitable'

While Meatco remained in the black, the financial statements show the corporation's profitability depended heavily on state support.

During the financial year, Meatco recognised N$186 million in government grants as operating income, accounting for almost 94% of its N$198.3 million in other operating income.

Based on calculations from the financial statements, without those grants Meatco would have recorded an operating loss of roughly N$109 million instead of the reported operating profit.

Board disagrees with auditors

The auditors' assessment contrasts sharply with Meatco's board, which maintains the corporation remains financially viable.

The board said it had considered Meatco's liquidity position, projected cash flows, debt obligations, funding arrangements and continued access to banking facilities before concluding the business remains a going concern.

It also relied on confirmed and anticipated shareholder support through government grants and capital support mechanisms.

"Based on the above assessment, the board is satisfied that the corporation and the group have adequate resources to continue in operational existence for the foreseeable future.

"The board is not aware of any material uncertainties related to events or conditions that may cast significant doubt on the corporation's or the group's ability to continue as a going concern," the directors stated.

The board projects a strong recovery during the 2026/27 financial year, forecasting approximately N$2 billion in consolidated revenue and group net profit after tax of N$80.9 million, based on improved cattle availability, increased feedlot utilisation, diversified procurement and continued access to premium export markets.

Deputy chairperson explains warning

Responding to questions from Namibian Sun, Meatco deputy board chairperson Stephanie de Klerk said the auditors' warning should not be interpreted as contradicting the board's assessment.

She said the uncertainty reflects the lingering effects of prolonged drought and reduced cattle availability rather than a failure of Meatco's business model.

"The reduction in revenue primarily reflects the significant decline in cattle throughput rather than a deterioration in Meatco's business model or market position," she said.

Despite slaughter volumes falling by more than half, De Klerk said Meatco generated N$73.5 million in operating cash flow and increased its cash reserves from N$86.2 million to N$128.3 million during the year. Total assets also rose to N$1.08 billion, while equity strengthened to N$701.3 million.

N$2.56 million procurement advances under investigation

The financial statements further reveal that N$2.56 million advanced for procurement purposes remained unaccounted for at year-end.

"A provision of N$2.56 million has been recognised in respect of cash advances issued for procurement purposes that remain unaccounted for at year-end," the directors stated.

"The matter is under investigation and management has instituted appropriate measures to determine the cause of the loss, strengthen internal controls, and pursue recovery where possible."

The report does not disclose who received the advances or what goods or services were intended to be procured.

De Klerk confirmed the investigation is ongoing and said management is pursuing recovery of the funds while strengthening procurement controls.