By Jonathan Mbiriyamveka
Delta Corporation Limited reported a significant impact from exchange rate volatility in its financial results for the six months ending September 2024.
The company, which operates in Zimbabwe’s challenging economic environment, faced substantial currency-related losses due to the gap between the official and market exchange rates.
During the reporting period, Delta recorded net exchange losses amounting to US$10.5 million, driven by the devaluation of Zimbabwean currency against the U.S dollar.
The shift towards the end of the period saw the official exchange rate misalign with market realities, exacerbating monetary asset devaluation, including cash holdings and receivables.
In a statement, Delta Corporation Limited company secretary Ms Faith Musinga highlighted that adjusting exchange rates in line with the International Accounting Standard (IAS) 21 was necessary to better reflect the economic conditions.
However, this strategy did not entirely mitigate the currency translation losses.
With the Reserve Bank of Zimbabwe adjusting the official rate to be more market-aligned, Delta Corporation continues to monitor these monetary conditions closely, aiming to align its strategies with IAS 21’s requirements for hyperinflationary economies.
The financial report underscores how economic instability in Zimbabwe remains a challenge for Delta Corporation Limited, with the foreign exchange losses presenting a stark obstacle to the company’s bottom line despite a reported 11% increase in revenue, reaching US$389 million for the half-year.
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