Zimbabwe’s Delta Corporation revenue up 18% on beer volume growth

ZIMBABWE – Delta Corporation’s, the beer and soft drinks company of Zimbabwe revenue has increased 18% in the year to March 2018, attributed to higher beer volumes and growth in larger sparkling beverages.

The Herald report cited a trading update for the fourth quarter and full year to March 2018, which included the results of the newly acquired Zambian unit, National Breweries (Natbrew Plc).

The Zimbabwe Stock Exchange listed beverage manufacturer, Delta acquired a controlling stake in the sorghum beer company, National Breweries (Natbrew Plc) from Heinrich’s Syndicate, AB InBev’s subsidiary.

Delta, which is also an associate of the Belgian brewer, AB InBev announced the bid after it announced that its sorghum beer volumes for the quarter to September had gone down 3% as a result of Zimbabwe’s cash shortages.

Apart from Natbrew, whose results were included starting January 2018, Delta said that revenue for the 12 months were up 17%, having the highest increase of 52% (45% excluding Natbrew) in the fourth quarter.

Natbrew Plc’s revenue grew 21% in the fourth quarter on improved product supply.

Beer volumes grew 51% compared to prior year for the quarter and 27 percent for the full year while sparkling beverages volumes increased by 49% over prior year for the quarter and 15 percent for the 12 months.

For Zimbabwe, sorghum beer volumes grew 8% above prior year for the quarter and 2% for the full year.

Delta said there were some considerable disruptions to the supply of Chibuku Super due to capacity limitations impacting suppliers of key packaging materials and that it was trading under a cautionary issued with respect to the notice received from The Coca-Cola Company (TCCC) advising of an intention to terminate the Bottler’s Agreements with the Group entities.

This preceded the merger between AB InBev and SABMiller Plc in October 2016 who agreed to explore options to restructure the bottling operations in a number of countries.

“The quarter registered strong consumer demand, a continuation of the positive trends witnessed in the previous quarter,” said Delta in a statement.

“There were pronounced product supply gaps occasioned by the challenges in acquiring imported raw materials and services as the access to foreign currency has become increasingly difficult.”

Revenue was impacted by foreign currency shortages in the country making it difficult for companies to retool and buy raw materials, given the fact that the beverage category has a significant import requirement.

Currency shortages has led to many companies resorting to buying foreign currency on the black market, effectively pushing prices of their products up or reducing margins given that they pay a premium for the hard currency.

A final dividend worth $33.5 million being US2.70 cents per share payable in respect of all the qualifying ordinary shares of the company was declared by the company’s board of directors.

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