Higher sales but lower profit

for Rewa Dairy

THE Fiji-based Rewa Cooperative

Dairy Company Ltd announced an initial profit before tax of F 5115,764 for the year to December 31, 1998.

Following tax deductions and a deci sion by the company board to allocate $lOO,OOO from 1998 earnings to a bonus for shareholders of $300,000 in 1999, profit was reduced to $17,063.

Addressing shareholders at the Coop’s Extraordinary General Meeting, board chair, Ram Chand, said although profit fell short of 1997, it was still a signif icant achievement in an economy affected by a severe downturn.

He added that value of sales, at $27,206,603, was the best result in the com pany’s history and illustrated ability to hold its position in the market, even during recession.

In 1998, Rewa Coop recorded its highest-ever intake of milk at 12,456,712 litres which it attributed largely to a contin uing campaign to raise fanning standards.

Total payout for milk supplies was $4,633,739, six per cent more than in 1997.

Shareholders’ equity at year’s end was more than $6 million. Cost of sales was $21,929,714 above the 1997 result of $18,911,421.

“The main reason for this increase was the substantial extra cost imposed by the 20 per cent devaluation of the Fiji dollar in January 1998,” said Chand.

“Devaluation aimed to protect employment, maintain compet

itiveness and preserve foreign reserves. The downside was that imports became expensive and some prices rose. For Rewa Coop, it brought higher costs for purchases which added sig nificantly to our overheads.

“Our farmers, along with the rest of the population, had to cope with the increased costs of living and the effect of drought on pasture quality and water supplies,” he said. Over all sales volume rose $2.6 mil lion to $27,206,603 with the coop’s three core products -

UHT Life Milk, Rewa Butter and milk pow der - generating the biggest increases.

Life Milk sales were up 213,000 litres to 8,532,900 litres. Sales value increased from $8,594,100 in 1997 to $9,002,100.

The milk powder market, said Chand, was intensively competitive for the year. Despite this, the Coop managed to boost milk powder sales to 1321 metric tonnes worth $7,310,400 - 112 metric tonnes and nearly $lOO,OOO more than 1997.

“We progressed with plans to start local manufacture of milk powder with investment in spray dryer equipment. Milk powder is crucially important to our busi ness. Profits from this product enable us to preserve financial viability and meet our commitments to farmer-shareholders and the new blending operation will help create jobs and income opportunities in dairy

provinces.

“Rewa Coop has a special responsi bility to our rural shareholders. Concessions we have previously received from govern ment have been granted in recognition of this role.”

Rewa Butter gained in sales mainly from increasing its market share against competition from margarine. Value of sales was $8,336,200 - 20.4 per cent higher than 1997. Production was up by 71 metric tonnes to 1,321 metric tonnes.

The Coop sold 140,400 kilogrammes

of cheese - 3,800 kilogrammes more than 1997 - for a sales income of $915,500, against $825,700 the previous year. Con sumption picked up as a number of new restaurants and fast-food outlets opened in main centres. Rewa Coop’s prices are lower than prices for overseas cheese.

Through a more concentrated mar keting effort in schools, fun Flavour sales improved. The company sold 402,900 litres valued at $666,400.

Demand was up for Rewa’s cultured food, including fresh and sour cream, cot tage cheese and yoghurt. These products earned $323,200 (1997: $302,100) from 101,000 kilogranunes sold (1997 : 92,900 kilogrammes). In its first full year, Tarumba Juice generated sales revenue of $151,300 from 125,000 litres of juice.

Dairy fanners continued to benefit from a number of schemes and farm devel opment initiatives. The company incurred cost of operating chilling centres at Naluwai, Waidawara and Waidalice for farmers which went up from $250,000 in 1997 to $313,226 in 1998.

A revolving fund scheme provided alternative source of finance for farm main tenance and upgrading. Loans granted in 1998 totaled $440,676 for 118 farmers. This compared to $328,611 for 101 farmers in 1997.

Chand said: “Through prudent man agement and concentrated marketing and promotion, we were able to keep our results

positive and maintain our obliga tions to shareholders. We responded to the demands of 1998 by focussing on the future and how we should best develop our industry.”

He concluded: “Management and employees showed outstand ing effort in 1998. They fulfilled their obligations to the Coop and its owners.” “As always, we owe a debt of gratitude to the people and government of the Fiji Islands for their strong support for Rewa’s products. Without that support, there would be no dairy industry.” ■

The Rewa Daily factory Is located on the outskirts of Suva, Fiji's capital