• Revenue increased by 60% in to ZW$536.92 billion
• Profitability increased by 30% to ZW$63.14 billion
• Capital Expenditure for the year was ZW$70 million

Harare - Delta Corporation announced sparkling results, overcoming macroeconomic headwinds in Zimbabwe and supply chain constraints to post a 12% increase in beverage volume. Lager beer volume in Zimbabwe swelled to a historic 2.2 million hectolitres, up 17%, driven by competitive US dollar pricing, successful brand campaigns and improved product and packaging availability from optimized factories.

The company recorded a significant increase of 60% in revenue, reaching ZW$536.92 billion, while operating income rose by 29% to ZW$99.79 billion. Basic earnings per share also increased by 29% to ZW$4,842.23 cents, while the declared total dividend remained unchanged at US$0.03 cents per share.

Delta's revenue growth was driven by an increase in sales volume, while its regional operations moved closer to breaking even. However, the company's cost structure was distorted by the existence of multiple exchange rates, and global inflation affected packaging and fuel costs. Delta also benefited from high stockholding gains, with replacement cost-based pricing in ZW$.

The Earnings Before Interest and Taxes (EBIT) increased by 13% to US$140.6 million, indicating that the company's revenue contributed to its profitability. In light of this profitability increased by 30% to ZW$63.14 billion.

Delta's estimated consumer price index (CPI) rose by 204%, mainly due to the absence of ZIMSTATS CPI data for February and March 2023. The estimation was guided by experts, currency movement factors, and proxy data, which is permitted under IAS 29. The South African Rand to US Dollar exchange rate increased by 25%, while the Zambian Kwacha to US Dollar exchange rate increased by 12%. These exchange rate fluctuations may have impacted Delta's import expenses.

Capital Expenditure for the year was ZW$70 million. Delta invested in significantly during the year, including a new RGB packaging line in Southerton, a PET new line in Graniteside, and a Chibuku Super plant in Harare. The company also invested in distribution vehicles, forklifts, brewing tanks, coolers, and PET lines.

Despite its strong financial performance, Delta faced some challenges during the year. The company experienced a high monetary loss and effective tax rate, and it also dealt with a contractual dispute with a foreign supplier. Additionally, the company had ongoing appeal processes regarding ZIMRA foreign currency tax assessments.

Delta demonstrated strong financial performance, indicating that it is well-positioned to continue its growth trajectory in the African beverage market. Nonetheless, the company must continue to manage its costs effectively and navigate the challenges posed by exchange rate movements and inflation.

In Zimbabwe's tempestuous economy, Delta benefitted from to increased government spending, housing demand and strong mining and agricultural activity. However, volatility persisted as the Zimbabwe dollar seesawed before stabilizing in the third quarter, only to slide again in the final quarter, hamstringing formal businesses. Tight liquidity and stratospheric interest rates compounded economic distortions.

Adding to the tempest, erratic power and water supplies disrupted operations while congested cities hampered product deliveries. Pressure on consumer wallets from mounting inflation and fuel hikes threatened to dampen Delta's sparkle.

To circumvent economic floods in its main market, Delta invested heavily in equipment for informal vendors offering competitive hard currency pricing. New production coming online and penetrating value segments supported volume gains, with sparkling beverages fizzing 10% higher to claim an outsize market share despite limited PET capacity. Sorghum beer volumes in Zimbabwe ascended 9%, propelled by alternative packs, innovative flavors and exploiting regional capacity.

In neighboring Zambia, Delta's volumes spiked 28% as new sorghum beers seduced customers. An uptick in Zambia's economy promised prosperity but currency depreciation drove costs up as disposable incomes remained tight, with high maize prices adding to hardship.

In South Africa, 12% volume growth for sorghum beer signified capturing share from illicit homebrews via distribution gains and imminent local production to choke costs. An economic rebound following COVID-19 buoyed sales, though higher fuel and electricity levies pressured spending.

Despite experiencing an increase in volumes in Zambia and South Africa, the firm has yet to achieve profitability as it focuses on penetrating the market and solidifying its brands in neighboring countries.

African Distillers, Delta's spirits subsidiary, grew 18%, lifted by a 14% upswing in spirits, 16% uplift in wines and 23% upsurge in ciders. Expanded distribution and in-country supply enabled competitive pricing, cementing market dominance despite health regulations and trade constraints roiling key clients.

Schweppes Holdings Africa, an associate of Delta, faced several challenges during the year. In the first half of the year, the company was constrained by a shortage of fruit juices, which adversely affected its production and sales. Additionally, trading challenges in formal sectors further impacted the company's operations. Furthermore, a prolonged plant breakdown had a significant impact on the supply of water and Minute Maid juice drinks.

On the other hand, Nampak Zimbabwe, a packaging company, sustained volume growth and benefited from a recovery in key customer segments. Despite facing economic challenges, the company was able to maintain its growth trajectory, which is a positive sign for its future prospects.

Moving forward Delta has arranged to get in bed with Heineken to further the firm’s business foothold in the region.

Delta's sparkling performance, especially in Zimbabwe, affirmed its adaptive business models can overcome macro-economic and operational challenges, though heavy local currency debts and imports render the group exposed to exchange rate shocks and restrictive policy changes. Productivity hiccups from power outages and scarce water impact operations, but with new capacity coming online, Delta is poised to overcome present challenges and continue outpacing peers. Overall, rising above economic difficulties and supply vulnerabilities, Delta's adept management produced stellar results in a year of adversity, suggesting even more effervescent outlooks ahead.

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