Delta Corporation Limited posted an impressive half-year financial performance on Wednesday, proving its industry heavyweight status even as ongoing firm global commodity prices had the effect of inflating the cost of plastic packaging.
The Matts Valela led beverages giant, reported revenue of ZW$33.59 billion in real terms for the six months to 30 September 2021, handily outgrowing prior year comparative turnover by 99%.
The group earned ZW$19.61 billion in revenue during the same period last year.
“The half-year interim financial statements reflect an improvement in the financial performance, benefiting from the volume recovery, the correction of value chain costs in real terms and realignment of pricing to competitive levels,” said Matts Valela, Delta CEO.
Firm aggregate demand has been driven by the successful 2021 agricultural season, increased mining output and firmer commodity prices and the spending on infrastructure projects which thereby offset the impacts of COVID-19 on the business operations.
Profit for the period at ZW$6.44 billion grew by 32% in inflation-adjusted terms compared to ZW$4.89 billion recorded in the same period last year.
Valela noted cost pressures arising from the disparities in exchange rates applied by local suppliers in setting prices and the pull-back effect COVID-19 has had on Zambia and South Africa operations.
Resultantly, both the operations posted losses as the volume grew from below breakeven levels arising from the limited trading under COVID-19.
Lager beer volume for the six months grew by 57% compared to the same period last year attributed to competitive pricing and consistent product supply with respect to both brand and pack.
“Price increases were less frequent and lower, in line with falling inflation,” Valela said adding that “the business continues to benefit from the opening of more trade channels as the COVID-19 restrictions are eased.”
Meanwhile, in Zimbabwe, the sorghum beer volume remained buoyant to register a growth of 68% for the six months in comparison to the prior year and the Group is pursuing efforts to unlock additional production capacity for Chibuku Super.
In Zambia, volumes at Natbrew Plc declined by 22% due to the limited access to the market under COVID-19 restrictions and resurgence of competition from the illegal bulk beer offerings.
Prospects for the Zambian market are, however, brighter with the appreciation of the Kwacha expected to reduce the cost pressure on imported materials.
Elsewhere, United National Breweries South Africa benefited from the lifting of the alcohol ban to record a volume increase of 118% over the prior year.
Valela said that the business is implementing volume recovery initiatives with a focus on recruiting new customers and reinvigorating the product offering.
The Sparkling beverages volume grew by 95% over the previous year.
“The business has responded positively to the ongoing initiatives to recover market share through competitive pricing, focused market execution and consistent supply of brands, flavours and packs,” Valela said.
He added that the Manicaland territory has been fully integrated, allowing the optimization of the production capacity, although there are, however, some limitations on the supply of PET packs.
African Distillers and Schweppes Holdings Africa also recorded volume growth of 66% and 37% respectively over the prior year.
Meanwhile, the volumes recovery in the beverages sector also propelled the volume and revenue performance of Nampak Zimbabwe Limited’s packaging divisions, another operation Delta has a stake in.
“The businesses in Zimbabwe are geared to exploit the opportunities to grow volume and profitability on the back of improved access to foreign currency through domestic Nostro sales and firmer aggregate demand,” he said on the outlook.