HomeBusiness DigestDelta in US$53m debt headache

Delta in US$53m debt headache

ZIMBABWE’S largest beverages manufacturer Delta Beverages is struggling to settle payments amounting to US$53 million to external suppliers due to the acute foreign currency shortage crippling the economy.

By Melody Chikono

However, the company says it is banking on the outcome of talks with the Reserve Bank of Zimbabwe (RBZ) aimed at settling the arrears by H1 2019. The country is currently facing severe shortages of hard currency that has seen banks defer foreign payments by as much as six months.

Ordinarily, the repatriation of foreign exchange for securities-related transactions is given top preference on the central bank’s list for the allocation of foreign currency. Supply of Coca-Cola concentrate and other imported materials remains critical for the Delta business, but securing them had proven difficult due to delays in foreign currency allocations.

While the company has seen the company pick up small orders of concentrate from the available credit, accrued debts with suppliers has seen some of them discontinuing supplies to force payments. Delta company secretary Alex Makamaure told businessdigest on the sidelines of the company’s annual general meeting last week that they hope the half year will enable them to reduce payment arrears.

“We are currently sitting on US$53 million as at the end of Q1 in terms of our dues to our foreign suppliers. We have done a few things but half financial year will tell a better story,” Makamure said.

“There are certain dues that are we are trying to put together and also our interaction with RBZ in the next few weeks will be able to solve the problem. We might be able to have halved it or reduce it to about US$30 million or something around that figure in the half financial year.”

The company faced challenges in the supply of packaging for Chibuku Super, a traditional brew, in May and Junevas, a resin used in pre-foam, is imported however Chibuku Super is now contributing 82% to total volumes. Delta CE Pearson Gowero said challenges in accessing foreign currency remain but had received support from banks and the RBZ. However, the company still has a backlog to suppliers of raw materials

During the period, soft drinks suffered due to the lack of the imported component but volumes went up 19% and revenue up 22%.

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