Listed Delta Corporation ltd FY14 revenue declined by 4% to US$576,6 million from US$602,2 million, reflecting the effects of lower sales volumes in both lager beer and sparkling beverages.
Delta Corporation chief executive Pearson Govero told analysts and journalists on Wednesday in the capital that lager beer volumes were down 17% on the prior year, but the plunge was mitigated by a significant increase in sorghum beer volumes.
Sorghum beer volumes grew by 8% on prior year buoyed by Chibuku super investment with the supply of the product improving in the last quarter of the year.
“The supply of Chibuku super improved in the last quarter of the year with the brand attaining a 50% contribution by march 2015,” the company said.
Sorghum beer contributed 50% to total beer volumes in FY15.
Soft drink volumes comprising both sparkling and alternative beverages were down 6% on the prior year.
Gowero said price adjustments effected in the last quarter of the year in some brands was aimed at improving affordability and competitiveness.
Maheu and dairy mix beverages were up 11% for the year, with the line expected to benefit from additional flavours.
Govero said Lager beer rate of decline decelerated in the last half of the year following price reductions that improved the affordability of brands.
The company’s profit before tax was US$121,7 million down from US$136,2 million during the period under review.
After tax profit for the year was US$92,8 million.
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) was down by 10% to US$143,2 million.
Lager beer, sorghum beer and sparkling beverages operating income was US$28,1 million,US$41,2 million and US$32,5 million respectively.
Earnings before interest and tax tumbled by 14% to US$111,1 million while the company’s operating margin was down from 25,02% to 22,08%.
Company’s earnings per share decreased by 13% to US$7,44 cents per share while attributable income declined by 13% to US$91,9 million.
Operating income was down 14%, showing a shift in sales mix in favour of lower priced products and the impact of price reductions.
Delta expects to commission a new Chibuku super plant in Bulawayo by July this year to assist in closing the supply gaps.
Capital expenditure for the year amounted to US$41,5 million.
The company’s cash generated from operations was down US$7 million on the prior year due to profitability and reduced creditors.
“The slowdown in the economy resulted in a very difficult year. Consumer spent declined significantly.The company continued to focus on taking measures to capture value and retain consumers in its portfolio of beverages while expanding and maintaining its facilities for future recovery. The weakening regional currencies have made this more challenging,” Gowero said.
Delta is engaging the fiscal authorities to continually review excise duty to regional benchmarks in order to restore competitiveness.
In FY16 the beverages company intends to optimise working capital, leverage its positive cash position, resume barley malt exports as well as review prices for affordability and competitiveness across all beverages categories.
The company seeks to work on volume recovery initiatives, fixed cost productivity, refining production and distribution costs.