DEVCO HAD ‘YEAR OF RECOVERY’

Press, Volume CXII, Issue 32874, 24 March 1972, Page 15

DEVCO HAD ‘YEAR OF RECOVERY’

(From Our Own Reporter) WELLINGTON, March 22. In spite of a $430,467 loss for the year ended last October 31, lamb sales for die Meat Export Development Company in North America improved 23 per cent, said the retiring chairman of the company (Mr J. C. Scandrett, of Invercargill) today.

The year should be regarded as one of recovery, change and progress, Mr Scandrett said. Over the last two years the company had virtually reconstructed its marketing base and the distribution network had been strengthened in the United States and Canada. “These moves have resulted in consistently improved sales. The year’s sales to North America amounted to 463,126 cartons or 926,252 lamb carcase equivalents.” From October to the end of February, 1972 (compared with the corresponding period last year), sales were up 60 per cent. This year’s sales target is 640,000 cartons or 1.3 m lambs, an over-all improvement of about 40 per cent. STOCKS DOWN Mr Scandrett said that at the last balance date the company held exceptionally heavy stocks (476,240 cartons) and these were discounted in the accounts. During the year under review, lower buying and increased sales corrected this position and stocks at October 31 were at a more reasonable 250,600 cartons.

Lamb must be diverted from Britain, and in this Devco was making a major contribution, Mr Scandrett said. However, North America was different from many other lamb markets in that packaged cuts were required. “We are recovering all costs to c.i.f. and also a contribution towards North American overheads from our present price levels,” Mr Scandrett said. “The lifting of our quality control methods and the raising of cutting yields will progressively defray market developments costs.”

Mr Scandrett said, however, that the economics of lamb cutting were marginal, yet Devco’s market demanded fabricated lamb.

“Regular profitability will depend on increased efficiencies in cutting, further increases in volume, and higher prices. The company feels it is advancing steadily towards all these objectives.”

Currency uncertainties, devaluation and surcharges had brought difficulties during the year, but prices had been

raised to help offset these factors.

Mr Scandrett said the change from consignment selling to direct sales to dis- " iburors entailed an increase in North American promotional staff. However, the higher overheads had been offset by the saving of commission payments.

Sales increases had justified the change to direct selling to distributors who fulfilled genuine wholesale and retail distribution.