Macroeconomic challenges drag Delta’s volumes performance

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  • Lager beer volume was down 42% during the period under review on last year performance
  • The Group noted that the circulation of returnable containers is slowed down during hyperinflation as traders hold them as a store of value
  • Revenue came in at ZW$4.2 billion in historical cost numbers, representing a growth of 480% from ZW$722.4 million recorded in the previous year

Harare – Zimbabwe Stock Exchange-listed beverages manufacturer, Delta Corporation Limited has reported depressed volumes performance across its segments for the year ended 31 March 2020 due to a combination of poor macroeconomic fundamentals existing particularly in Zimbabwe.

The Company operates in four (4) segments: non-alcoholic beverages, sparkling beverages, lager beers and traditional beers.

Lager beer volume was down 42% during the period under review on last year performance. Delta prioritized returnable bottle packs in an effort to conserve foreign currency and offer the more affordable packs to the consumer.

The Group noted that the circulation of returnable containers is slowed down during hyperinflation as traders hold them as a store of value.

Sorghum beer dropped 25% on last year while sparkling beverages volume declined by 17% compared to last year.

Meanwhile, National Breweries (Zambia) sorghum beer volume declined by 27% compared to last year.

In a statement accompanying the financial results, Delta Chairperson Mr Canaan Dube stated, “The trading environment has been turbulent particularly due to hyperinflation, an unstable exchange rate, limited availability of foreign currency in the formal banking channels and the drought induced shortages of brewing materials. The supply of fuel and key utilities such as water and electricity continued to be erratic, thereby disrupting production and distribution operations”.

“The prevalence of multiple exchange rates distorted operating costs and product pricing. The debasing of incomes as part of the Transitional Stabilisation Plan led to a collapse of demand across all beverage categories. Household incomes continue to be eroded by hyperinflation,” he added.

The Group reported revenue of ZW$4.2 billion in historical cost numbers during the period under review, representing a growth of 480% from ZW$722.4 million recorded in the previous year attributed to inflation induced pricing across all product categories.

In inflation adjusted terms, revenue increased by 10% to ZW$8.4 billion compared to ZW$7.7 billion in prior year whilst operating income increased by 19%.

On the outlook, the Group said the fortunes of the country and the Group in the current year will largely be dependent on how Zimbabwe manages and contains the COVID-19 pandemic and the ramp up plan directed at reopening the country and economy.

“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”.

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