HomeMy WebLinkAboutThe Seaforth News, 1945-09-27, Page 6CANADA PACKERS LIbi1TEll
REPORT TO SHAREHOLDERS
The eighteenth year of Canada Packers Limited closed March
29th, 1945
It was the sixth war year. Both volume and result of operations
were determined largely by war conditions.
in each year since the beginning of the war, dramatic increases
have been achieved in Live Stock 'and general Agricultural pro -
'duction, These were reflected in corresponding increases in
volume of Packinghouse operations.
In the year under review the increase in volume continued, but
at a reduced pace. •
The following table sets up, for the last pre-war year (ended
March 1939), - and for thewar period, the record of Canada
Packers' operations in terms of: -
A. Dollar Sales
B. Weight of product sold
C. Net Profit
D. Profit as percentage of Sales
E. Profit per pound
TABLE NO. 1
A B C D E
Profit
wear Dollar - weight or -Net aof s aper
Ended Sales Product Sold Profit ales Pound
March .1030 $ 77,225,732 800,E763,592 lbs, $1,238,736 1,6%
March - 1940 89,205,639 913,251,116 1,667,800 1.9
March 1041- X110,291,839 1,091,263,352 1,555,028 1.4
March 1942 144,509,292 1,228,029,942 1,611,465 1.1
March 1943 160,141,671 1,328,616,940 1,911,418 .95
Mardi 1044 206,159,939 1,182,932,508 1,687,587 .88
March 1945 2.28,398.111 1,698,326,055 1,824,811 .80
INCREASE
1943 over 1939 196% 112% 47%
1045 over 1944 11% 7% '8%
• • •
WARTIME INVENTORY RESERVE
1/6c
1/5
1/7
1/8
1/8
1/9
1/9
Following World War 1, losses of the deflation period (1920-
21) wiped out the wartime profits of most Canadian Packing
companies. So severe were those losses that ultimately they
made necessary a widespread reorganization of the Industry. ,
By reason of inflation -control measures erected during World
War II, it is hoped that post-war losses will this time be much
less severe. Nevertheless, at some stage following the war, de-
flation losses seem inevitable. Prices of Live Stock products
have advanced to levels which, -it would seem, -can not be
permanently maintained.
This view is supported by the following table, which compares
present prices With those of 1939.
TABLE NO. 2
COMPARISON PRICES LIVE STOCK PRODUCTS
1945 AND 1939
Good Steers, live, Toronto -
Flogs, 13-1 dressed, Toronto -
Lambs, live, Toronto - -
Chickens, Milk Fed A, 'Toronto
Eggs, "A" Large, Toronto -
Creamery Flutter Toronto
Cheese, f.o.b. factory, Ontario
Average Average
Marsh March
1043 1039
- $t1.54 $ 6,78
- 19.42* 12.25
- 14.95 9.10
- .35 .211/2
.3S .211/2
.431/2* * .21 94
.23* .11
*Subsidies, Federal plus Provincial, included in 1^45 prices -
Hogs - 91.62 per 100 lbs. Butter -14!,;c per
Cheese -3c per lb.
• • •
To meet the anticipated Inventory losses, in each war year a
sum has been set aside as Wartime Inventory Reserve. That
suns for the year under review was $581,000;00. .
The total reserve set up during the war period has been:-
Year
een:Year Ended
March 1940
March 1941
March 1942
March 1943
March 1944
March 1945
'total -
S 579,000.00
380,000.00
1,310,000.00
650,000.00
500,000.00
581,000.00
- $4,000,000.00
This total of four million dollars may be too much or too little.
No one atpresent can tell. It is hoped it may prove too much,
in which case a portion of it will ultimately be transferred to
the Profit and Loss Account. That all of it might he needed
may be seen from the following facts:
1. To convert this year's Inventory (March
29, 1945) to the price basis of the last
pre-war year (March 30, 1939), a reserve
would he required of - - - 5,600,000
2. In the deflation years following World
War 1,-(1920-21), the four companies
now comprising Canada Packers, made
a .combined loss of - - - - - „ 5,500,000
Upon all the slues set aside as Wartime Inventory Reserve, full
Income Taxes have been paid, and except that they may be
needed to offset post-war inventory losses, these sums might`
properly he treated as profits.
Had this course been followed, and had no inventory Reserve
been set up, Columns C, D, E in Table No. 1 would have ap-
peared as follows: -
Year Eudcrl.
March 1939
March 7940
March 1941
March 1942
March 943
March 1944 •
March 1945
TABLE NO. 3
Profit
51,238,736
2,246,809
1,935,028
2,921,465
2,261,418
2,187,587
2,405,811
Profit as
Percentage Profit per
of Sales Pound
1.6',; 1/6¢
2.5 1/4
1.8 1/6
2.0 1/1
1.3 1/6
1.1 1/7
1.1 1/7
DISTRIBUTION OF SALES DOLLAR
TABLE NO.4
Out of each $1.00 of Sales in the respective years, the follow-
ing sums were paid: --
1945
To Producers, chiefly for live stock 82%3¢
To Employees (salaries, wages and
bonus) - - - 7%3
To Service Organizations - - .3
To Suppliers-
- - 31/3
To Bondholders - Taxes - 184
Total paid to persons other than
Shareholders - - -
Set aside for Depreciation -
Remainder -retained for the benefit of
Shareholders -
Set aside for Wartime inventory Reserve
Remainder -Net Profit - - -
Paid to shareholders as dividends - -
98
99¢
¢
go
Balance retained as Working, Capital for
extension and improvement
of the business - - - yy ¢
• •
CAPITAL STRUCTURE
1939
8,0Y8¢
8;y
413
22/3
14
IN¢
NO
During the year, effect was given to the plan of subdividing the
Shares, announced in the last Annual Report. The Capital struc-
ture of the Company is now as follows:.
Bonds None
'A' Shares, carrying a cumulative
preferential dividend of
$1.50 per share - 400,000 shares
Amount of dividend - - - - $600,000
B' Shares, upon which is paid
• a present dividend of
50c per share - - 800,000 shares
Amount of dividend - - - $400,000
Total Dividend
0 0 •
$1,000,000
WAR AND POST-WAR PLANT EXTENSION
During the war years, due to greatly increased volume, the
strain upon the physical equipment of the plants has been
severe. Plant extension has necessarily been held to a minimum,
but expenditure for upkeep has been much increased.
Sums charged to Fixed Capital during the war period are re-
vealed by the following': -
Fixed Assets (Balance Sheet 1945) - - $23,720,750
Fixed Assets (Balance Sheet 1939) - $21,636,385
Additions to. Fixed Assets during war period $ 2,084,365
Plans. have already been completed for a•subsiantial programme
of plant replacement and extension in the post-war period. So
far as possible, construction will be delayed until a slackening
occurs in general industrial activity.
0
Following the close of the war in Europe, it is appropriate that
this Report should deal with two main subjects: -
1. A review of the performance of the backing Industry
during the war period.
2. An estimate of the outlook for Live Stock in the post-
war years.
3 THE WARTIME RECORD OF THE PACKING INDUSTRY
The first, and paramount duty of the Industry was that it man-
age to process the greatly increased deliveries of Live Stock.
That this was not a simple -matter, is evident from the follow-
ing comparison of inspected slaughterings for the years 1944
and 1939: -
TABLE NO. 5
NUMBER OF ANIMALS PROCESSED, INSPECTED HOUSES
1944 1939
Hogs - 8,766,441 3,628,369.
Cattle 1,354,104 872,574
Sheep and Lambs 949,096 786,274
Calves - - 660,556 679,922
Increase in Total weight of meal produced 1
*Average rearm dressed weight of animals killed:
1944
Increase
i42 %
55'/
21'31.
3'/
10:10
N ogs • 166.4 lbs. 10(1.4 Ib.2.
Cattle - - 502.1 405.2
Sheep and Lambs - 41,5 42,3 .
Calves 11.0,2' 1.06.0
Authority: Meat Board, Ottawa.
Considering that plant capacity in 1939 was in scale approxi-
mately with then marketing's, the task of coping with this en-
ormous increase in volume was a difficult one.
Substantial extensions' in plant were, of course, necessary; but in
the main the handling of the increased deliveries was achieved
by 'adjustments', especially by increase in numbers of personnel,
and of shifts. Proof that the jot) was effectively done lies in the
fact that only in two short periods throughout the 51/2 years,
was the flow of Live Stock slowed up, due to congestion at llie
plants.
Next to the obligation of processing this great increase of
volume, was that of doing the job et a reasonable margin of
profit.
In respect of -profit, the facts are not available for the total
Industry. Canada Packers is the largest single unit, and its results.
probably fairly indicate those of the Industry as a whole.
A comparison has already been given ('fable No. 4) of the years
1939 and 1945. But a comparison of the six-year war period.
with the six=year pre-war period gives a more complete picture.
Thisis presented in the following table, No, 6.
TABLE NO. 6
COMPARISON OF OPERATING RESULTS
6 pear pre-war period, 1934-1939 inclusive,
and 6'year war period, 1940-1945 inclusive
Pre-war Period'. 4V ar 1'e riod Pe rce n tago
191.1.- 1139 1510.- 1115 increase
Average Sales
Average Profit before Taxes b,
Average Taxes c,
Average Net Profit (after
Taxes) 1, 1,310,384
Average Net Profit as per-
centage of Sales 1.0%
(d as to a)
869;057,785
:1,690,309
379,095
9137,793,748 132%
3,857,704 127%
2,198,108 478%
1,659,086 26%
1.05% decrease 45%
10 swnmary, •therefore, the record is as follows: -
The 'essential job of processing increased deliveries of Live
Stock was accomplished without block, and without invoking
financial assistance from the Government.
Many war contracts involved large advances by the Government
for plant. And in most cases the contracts provided for a profit
(before taxes) of 5 percent.
The profit of the Packing industry (before taxes) was approxi-
mately 2.45 per cent.
Of this, 1.4 per cent was returned to the Government, as In-
come and Excess Profits 'fax, leaving a net profit to the In-
dustry of 1.05 per cent.
•
2. OUTLOOK FOR LIVE' STOCK IN THE POST-WAR YEARS
The increase in Canadian Live Stock production was a vital
factor in the Allied war effort. Credit for this achievement be-
longs entirely to the Canadian Farmer. The Packing Industry
can claim no part of it. The Packer is simply the processing -
element in the Live Stock Industry. His volume is determined
entirely by the numbers of Live Stock brought to market.
Cattle and Hog populations are now at levels much higher than
those of any pre-war date. When war demand is over, the sur-.
plus will be such that, unless outlets canbe maintained much
larger than those of the pre-war period, the increased produc-
tion in itself might become a threat to the level of Live Stock
prices.
What, then, is the prospect for Live Stock prices in the post-
war years?
Concerning the period immediately ahead, there is no doubt.
The outlet is assured. Great Britain has already contracted to
buy (at present prices) all the Beef and all the Pork product
which Canada can ship, up to the end of 1946.
As to the period 1947 forward, the problems of Cattle and
1 -logs must be considered separately.
CATTLE
Cattle production in Canada has always been limited by the fact
that production costs are higher than in Southern hemisphere
countries, especially Argentina, Brazil and Australasia. For this
reason, Canada has not, in the past, been able to compele in
the open Beef markets of the world. The chief open market has
been Great Britain,
However, though excluded from the open markets, Canada has
had a measure of preference in the chief protected market, viz,
United States. To that country, until wartime controls diverted
the flow, Canada shipped about 200,000 Cattle yearly. And
her production of Cattle was regulated roughly to meet Can-
adian domestic requirements, plus the 200,000 head shipped to
United States.
On July 1st, 1942, for reasons of war expediency, an embargo
was placed against this movement of Canadian Beef Cattle to
United States, Thereafter, the flow of Canada's surplus Beef
was to Great Britain. During 1944, shipments of Beef totalled
106,000,000 lbs. And during 1945, it is expected shipments
will be substantially heavier.
However, Great Britain cannot be counted upon as a perman-
ent market for Canadian Beef. When world supplies catch up
with world demand, it seems certain Canada Will Again find
herself unable to compete with Beef from Southern hemisphere.
counties. It is hoped chat Canada's outlet to United States by
that time will have 'been reopened, and possibly enlarged. That
outlet has Always been, and will again be, of vital importance to
the Canadian Cattle Producer.
In the long run it niay be necessary that Canada adjust her Cattle
population to the same principle as in the pre-war period
that of meeting domestic requirements for Beef, plus agreed
shipments to United States.
But this does not mean returning to the numbers of 1939,, Can,
adian requirements will be much heavier than in the pre-war.
years. Per capita consumption of Beef has advanced from 53.2
lbs. in 1939 to 61.7 lbs. in 1944. And if purchasing power per
niitted, Canada's Beef consumption could easily advance to 70'
lbs. per capita. (In 1943 it actually reached 69.3 lbs,) Out of
the war has come a new understanding of the nutritional value
of meats 0.6 a protective food, also a new concept of the import-
ance to the nation of maintaining its chief asset, viz. the health
of its citizens, at the highest possible level.
An enlightened National policy should see to it that the ex-
perience of the '30's shalt not -be repeated, when great stores of •
unsaleable food depressed its Agriculture, while at the same
time a large section of its population went undernourished The
establishment of a high internal standard of nutrition would in
itself he ;in important safeguard of the Welfare of Canadian
Agriculture.
(Continued on Next Page)