Delta Corporation reports 11% rise in interim revenue on back of high pricing

ZIMBABWE – Delta Corporation Limited, leading manufacturer and marketer of beverages in Zimbabwe has reported an 11% rise in revenue to ZWL 12.9 billion (US$35.6m) in inflation adjusted terms, for the half year period ended September.

The revenue growth which signified the company defying the impact of Covid-19 related restrictions that characterised the reporting period, was driven by inflation induced pricing across all product categories.

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Its operating income grew 15% to ZWL 4 billion (US$11m) while EBITDA went up by 12% to ZWL 4.5 billion (US$12.4m).

The company’s Headline Earnings per share increased by 3.5% to ZWL 244,62 cents.

During the period under review, the company registered growth in sales volume across most of its categories i.e. larger beer, sparking beverages and Africa Distillers with exception of sorghum beer and Schweeps Holding Africa.

EBITDA went up by 12% to ZWL 4.5 billion (US$12.4m).

Larger beer revenues surpass sorghum beer contribution

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Lager beer volume grew 3% compared to the same period last year. This reflects a growth of 18% in the second quarter, reversing the sharp decline recorded in the first quarter when the COVID-19 restrictions were at their peak.

“The volume recovery is underpinned by competitive pricing and consistent supply and is currently skewed in favour of the mainstream brands and larger packs due to changes in consumption occasions and settings,” indicated the company.

The category contributed ZWL 5.2 billion (US$14.36m) to Delta’s revenue a rise from 2019’s ZWL 4.1 billion (US$11.3m). With this it overtook sorghum’s contribution of ZWL 5.1 billion (US$14m) a decline from previous year’s ZWL 5.3 billion (US$14.6m).

The traditional beer sales volume declined by 31% due to the limited access to key trade channels such as bars, bottle stores and the rural markets during lockdown particularly in the first quarter.

However, sorghum beer volume at Natbrew Plc in Zambia grew by 8%. The nascent volume recovery is attributed to the improved appeal of Chibuku Super.

The South African entity, United National Breweries which was fully acquired by Delta in April for a consideration of ZWL 923 million (US$2.55m), was largely closed for the first four months as the authorities implemented very strict prohibitions on the sale and consumption of alcohol under the COVID-19 lockdown measures.

Despite of that the company expects the acquisition to increase the group’s regional footprint in the sorghum beer sector.

Sparkling beverages volumes up 22%

For the sparkling beverages, volume grew by 22% over last year, albeit from a low base.

The business continues to recover market share on the back of consistent product supply and competitive pricing.

There was a swing in volume towards non-returnable take home packs, reflecting the reduced out of home activity due to COVID-19 restrictions.

In the trading update, the company revealed that it is finalising discussions with The Coca-Cola Company for the extension of the sparkling beverages franchise territory to include Manicaland.

In addition, it has entered an agreement to purchase the bottling assets of Mutare Bottling Company (MBC).  The transaction is subject to regulatory approvals.

African Distillers volumes rise as Schweppes decline

Delta also enjoyed positive contribution from associate African Distillers, where volumes grew by 15%, driven by spirits and ready to drink categories. This is despite some supply gaps arising from challenges in the logistics of imported raw materials.

The contribution from Schweppes Holdings was, however, negative with volumes coming off by 18%. Challenges in accessing raw materials and the impact of Covid-19 contributed to the decline.

The business is expected to benefit from improved supply of juice concentrates and the introduction of new flavours under the Minute Maid brand.

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