Delta Corporation reports 480% rise in revenue despite significant economic constrains

ZAMBIA – Delta Corporation Limited, leading manufacturer and marketer of both international and locally produced beverages in Zimbabwe has reported a 480% growth in revenue to ZWL 4.2 billion (US$11.6m) on historical cost basis, in the year ended March 31, 2020 from ZWL 722m (US$1.99m) recorded the previous year.

According to the company’s financial report, the revenue growth was driven by inflation induced pricing across all product categories.

During the year under review Earnings before interest and tax (EBITDA) grew by 560% to ZWL 1.42billion (US$3.9m) while Operating Income rose by 650% to ZWL 1.32 billion (US$3.6m).

The company’s Headlines Earning Per Share (HEPS) increased by 629% to 81.55 cents.

The Beverage giant earned a profit of ZWL 1.03 billion (US$2.8m) from ZWL 143m (US$395,000) earned in the year ended March 2019.

In inflation adjusted terms, revenue increased by 10% over prior year whilst operating income increased by 19%, EBITDA rose by 26% and HEPS increased by 9%.

Group chairman Canaan Dube, bemoaned the challenging operating environment that was characterised by foreign currency shortages, fuel and utilities supply challenges as well as inflationary pressures that had a knock on effect on consumer disposable incomes.

Lager beer volume was down 42% compared to last year however, premium category led by Zambezi Lager remained resilient as it held its proportionate share of the reduced volume.

“There was a prioritisation of returnable bottle packs in an effort to conserve foreign currency and offer the more affordable packs to the consumer. It is noted that the circulation of returnable containers is slowed down during hyperinflation as traders hold them as a store of value,” noted Mr Dube.

Sorghum beer in Zimbabwe dropped 25 percent on last year. The pricing of the category was driven by the escalation in the cost of imported inputs such as packaging and brewing cereals. Under this category, Chibuku Super remains the largest contributor to volume in line with the group’s strategy.

Sorghum beer in Zambia produced by National Breweries saw a decline in volume by 27%.

The sparkling beverages category volume fell 17 percent compared to last year on the back of foreign currency shortages, utility challenges especially water supply and reduced consumer spend.

The business continues to work collaboratively with The Coca-Cola Company in order to maintain consistent product supply. The introduction of the “without sugar” variants was a major highlight of the year.

Earlier this year Delta renewed the bottler’s agreement with The Coca-Cola Company (TCCC) to run for the next three years.

Operations at African Distillers continued to be dominant in its various product categories thus delivering pleasing results. Foreign currency shortages constrained the entity’s growth potential. The entity continued to innovate and successfully launch products that require less foreign currency.

In its associated entities, Schweppes, recorded volume loss for the year although its products continued to dominate the dilutable soft drinks category. At Nampak, overall demand remained subdued reflecting the reduced spending on most packaged consumer goods.

“The first quarter of the trading year will be significantly subdued owing to the effects of lockdown on business and the lag that will follow as the economy is gradually reopened and new or modified consumption patterns are established,” said Mr Dude.

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