FINANCIAL services firm IH Securities forecasts that Delta Corporation Limited's increased stake in Schweppes Holding Africa Limited will drive revenue growth for the beverages giant.
This prediction follows Delta's recent announcement of acquiring a controlling 69% stake in Schweppes, up from its previous 49% holding.
The transaction, effective April 1, 2025, was disclosed in Delta's year-end results released last week.
With this majority stake, Schweppes will now be consolidated as a subsidiary in Delta's financial reporting.
The move marks a significant shift from the previous ownership structure where local consortium Waterton Investments held 51% of Schweppes shares.
This strategic expansion comes at a critical time for Delta as it navigates mounting cost pressures stemming from exchange rate fluctuations and increased taxation.
Analysts suggest the acquisition could propel Delta's revenue beyond the US$807,47 million reported for the fiscal year ending March 31, 2025.
“Consolidation of Schweppes numbers will add to topline uplift for the group,” IH Securities said in an analysis of Delta’s financial year report under review.
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“We expect the macroeconomic environment to carry some tailwinds for the group. An improved agricultural season and record gold prices will likely respectively assist with the input supply chain and improved bottom-of-the-pyramid liquidity, resultantly aiding volume growth for the company.”
However, tax remains a key cost driver for Delta.
In the period under review, Delta disclosed US$254,15 million in confirmed taxes, comprising US$230,35 million in indirect taxes — including VAT, excise duties, and the sugar tax — and US$23,8 million in income tax.
This, together with the US$74,8 million additional tax assessments made by the Zimbabwe Revenue Authority, should Delta lose its appeals, would mean the firm paying a tax bill of US$329 million for its financial year ended March 31, 2025.
“As of May, the government has introduced an increase of 19,1% to the diesel levy, which may counteract the group’s effort to decrease its cost profile,” IH Securities said.
“Forward-looking, the group has said that key focus will be on sustaining topline growth and, in regional markets, driving volume performance.”
An increase in pricing plus a 70,33% narrowing in exchange losses to US$12,32 million for the period under review, led to a profit after tax of US$116,14 million.
The profit after tax was an increase of 16% over the prior year.
“The operating environment in Zimbabwe remains complex, influenced by policy changes and currency instability,” Delta chairman Todd Moyo said.
“The beverages sector faces further challenges relating to uncompetitive retail prices arising from high input costs and taxes which attract lower priced imports from the region and policy driven changes to the route to market.”
Delta urged the authorities to implement policies that ensured the stability of the local currency and access to foreign currency through the banking channels or through trading.
“The business remains well-positioned to seize any opportunities from increased consumer spending,” Moyo said.
“Our focus remains on capitalising on activities that generate aggregate demand and positioning the business for future growth.”
