Zimbabwe’s Delta Corp reports increase in revenue amid challenging beverage sector

ZIMBABWE – Delta Corporation Limited has reported a 26% increase in revenue in the full year ended March 31st, 2019 despite a challenging operating environment mainly due to pressure exerted by forex quandary in the country.

However, the beverage manufacture noted that the representation do not reflect the actual position of its financial performance after a change in reporting currency during the last quarter of the period under review.

The Reserve Bank of Zimbabwe (RBZ) changed the reporting standards allowing Zimbabwe Stock Exchange-listed firms to report in United States dollars (US$).

The monetary authorities scrapped and discredited the long held 1:1 parity between local bond notes and electronic money, merging them into a lower-value transitional currency called the RTGS dollar.

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According to a NewsDay report, Delta said in a recent trading update that the value of the RTGS$ deposits continued to be eroded by the fast depreciating exchange rates and cost-push inflation, resulting in severe decline in aggregate demand.

“The group revenue will reflect an increase of 33% for the quarter and 26% for the full year.

“It is noted that the financials are distorted by the changes in the reporting currency from US$ to RTGS$, noting that the group maintained stable pricing for the nine months and only partially rebased prices in the fourth quarter.

“The full impact of the introduction of the inter-bank exchange rates on the group’s financial position is still being assessed,” the company said.

Delta noted that beverage volumes declined by 89% in the last quarter the period under review while and decreased by 44% on average for the full year which was attributed to non-availability of imported raw materials.

This had compelled the beverage manufacturer to contemplate closing down total operation of the sparkling beverage unit during the quarter.

Delta requires between US$60 and US$100 million in foreign currency annually to import critical raw materials of which the sparkling beverages unit takes up at least 50% of these foreign currency requirements

Majority of the capital is used in outsourcing concentrate as well as packaging materials from external suppliers.

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“Sorghum beer volumes in Zimbabwe contracted by 2% versus prior year for the quarter and grew by 5% for the full year.

Demand for the category remains encouraging despite the cost pressures on imported packaging materials, spares and the repricing of agricultural produce,” Delta said.

“National Breweries Plc Zambia recorded a volume decline of 24% for the quarter and is flat on prior year for the 12 months. Product demand has reduced following some price increases and down trading to subsistence offerings,” Delta said.

Anheuser-Busch InBev holds a significant stake in the company following the acquisition of SABMiller.

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