By Jonathan Mbiriyamveka
Listed company — Delta Corporation — reported earnings before interest and tax (EBIT) of ZW$10,7 billion which is 32% above prior year in inflation adjusted terms.
This reflects benefits from the volume recovery, inflation driven stock holding gains and tighter cost management.
In its results for the full year ended 31 March 2021, Delta Corporation Limited chairman, Canaan Dube said the Group recorded revenue of ZW$33 billion to achieve a 692% growth on the comparative year.
“The revenue growth was driven by inflation induced pricing across all product categories. Earnings before interest and tax grew by 557% over last year.
“Net finance cost of ZW$195,9 million is a result of settlement discounts on foreign liabilities and foreign exchange gains.
“The Group remained cash generative closing the year with a net funding of ZW$1,3 billion. The Group foreign currency exposure from legacy debt arrangement reduced to US$18,8 million,” he said.
Capital expenditure of ZW$2,2 billion was below planned replacement levels due to forex constraints at the front end of the year.
This includes the acquisition of the bottling assets of Mutare Bottling Company.
Lager beer volume grew by 17% compared to prior year.
“The volume recovery was mostly during the second and third quarters following the relaxation of the COVID-19 restrictions.
“The Group adopted strategies to stimulate demand through competitive pricing in an environment of weak consumer demand and currency related distortions in value chain costs.
“There are ongoing efforts to inject additional glass bottles to drive volume and enhance consumer choice of brand and pack.
“The business will benefit from the opening of In Zimbabwe, the sorghum beer volume declined by 7% compared to more trade channels as theCOVID-19 restrictions are eased,” Dube said.
He said the Zimbabwe sorghum beer volume declined by 7% compared to prior year, reflecting a notable recovery in the second half of the year.
The sector was adversely affected by the limited access to key trade channels such as bars, beerhalls and bottle stores which were closed during most phases of lockdowns.
The business relied on imported maize for most of the year. Sorghum beer volume at Natbrew Plc (Zambia) grew by 6% over last year.
“The business faces significant competitive pressure from the illegal trading in bulk beer in addition to the cost pressures arising from the escalation in the cost of imported materials due to the impact of currency depreciation,” he said.
In the outlook, Dube said the Zimbabwean economy was projected to recover as the impact of the COVID-19 pandemic declines in response to the mitigatory measures and as the population adapts to living with the virus.
“The easing of the lockdown restrictions across the region is expected to rekindle economic activity and consumer spending.
“The improved cereals harvest will restore food security, reduce pressure on foreign currency required for imports and unlock discretionary spending,” he said.
The businesses in Zimbabwe are expected to record a recovery in volume on the back of improved access to foreign currency through domestic Nostro sales, a stable exchange rate and slower inflation.
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