Delta Corporation Ltd recorded an increase in lager and sorghum beer volumes, but those of sparkling drinks plunged nearly 50% due to the currency volatility and foreign currency shortages that hit the market in the last quarter of 2018.
By Kudzai Kuwaza
Presenting the group’s audited full year financial results to March 31 2019, Delta chief executive Pearson Gowero said beer lager volumes increased by 31% with volumes of Chibuku and Sorghum beer increasing by 24% and 5% respectively. Gowero said volumes of its sparkling drinks were down by 44% and were only sold in the first seven months period of the financial year. The group also noted a surge in premium brands — Zambezi and Castle Lite.
The volumes in sparkling drinks were affected by the acute foreign currency shortage and currency volatility in the market particularly after the October Monetary Policy which brought about the separation of RTGS and United States Dollar.
“Because the availability of product is linked to our access in foreign currency, we started to experience stress from October onwards. This was caused by changes in the fiscal and monetary environment,” Gowero said.
He said after the changes, the beverage company could not access foreign currency from neither commercial banks nor the Reserve Bank of Zimbabwe.
Gowero said Delta had also been affected by the loss of purchasing power of consumers which was as much as 60%when government floated the rate and abandoned its 1:1 policy. He said demand for their products particularly in the last quarter became constrained as a result of the erosion of purchasing power of consumers.
The beverage company achieved 75% of its revenue in the first nine months of the year. He said the group has in collaboration with The Coca Cola Company put in place measures to partially address foreign currency shortages hampering the production of soft drinks.
The group’s revenues increased by 26% to $722,4 million while the operating income increased by 68% to $175,5 million.
Delta’s attributable income increased by 58% to $140,7 million while earnings per share went up by 55% to 11,19 cents.
The group declared and paid quarterly dividends amounting to 9,5 cents per share and a special dividend of 4,5 cents per share giving a total dividend of 14 cents per share at $177 million.
Gowero said the group is in the process of building a new Chibuku brewery in Rusape which should completed in the next 12 months depending on availability of foreign currency.