- Group revenue grew 63% to ZW$207.8 billion in inflation adjusted terms
- EBITDA surged 75% to ZW$51.2 billion
- Declared an interim dividend of US$0.01
ZSE-listed beverages giant, Delta Corporation, released a stellar financial performance for the six months ended 30 September 2022 despite operating in a trading environment characterized by unstable exchange rates and rising inflation.
Revenue for the Group surged 63% to ZW$207.8 billion, in inflation-adjusted terms, driven by volumes growth across all business segments with the soft drinks segment leading the volumes growth at 22% on the back of increased market penetration and better availability of packs and flavors.
Net operating costs increased by 57% for the six months ended September. On the other hand, the beer segment witnessed an 18% growth in lagers while the sorghum segment garnered a 14% increase. During the period under review, African Distillers Limited (Afdis), a subsidiary of Delta Corporation, registered an increase in volumes of 11% with the wines segment recording a 14% increase driven by improved availability of locally produced brands.
United National Breweries South Africa recorded a volume growth of 38% over prior year, as the business focuses on winning back the consumers into the category. There are ongoing efforts by the Group to expand the product range and rationalize the production and distribution footprint.
The volume decline at Natbrew Plc (Zambia) halted with a growth of 7% in the second quarter. “Consumer spending is being boosted by the increased activity in mining, infrastructure projects, domestic housing construction and marketing of commercial crops. The recent curtailment of local currency liquidity has resulted in softening of demand for goods and services in some formal channels”, said the Group.
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) for the Group increased by 75% to ZW$51.2 billion in inflation-adjusted terms while operating income jumped by 88% to ZW$46 billion during the period under review reflecting well-thought-out cost management strategies. However, profit for the period declined by 27% to ZW$18.5 billion which saw a 26% decrease in basic earnings per share to ZW$14.40.
The Group declared an interim dividend of US$0.01 for the half year ended September. The company’s closing price of ZW$192, which is circa US$0.24 at a parallel rate of ZW$800, as at November 17, therefore implies a dividend yield of 4.16% which is comfortably above the 3% average of most traded stocks on the Zimbabwe Stock Exchange (ZSE). All else equal, the dividend yield can be even higher or close to double given that the declared dividend is for the half-year period.
“There are ongoing capacity investment projects which are expected to be commissioned in the coming year”, the Group said. This comes at a time when the Innscor group announced its intentions to roll out a brewery unit in the first months of 2023 posing a threat to Delta’s beer segment operations given that the other sparkling beverages segment is under intense pressure from Pepsi makers, Varun beverages.
The company has legacy foreign debts amounting to US$5.68 million which were a result of the currency changes in February 2019. However, the Group has since registered and transferred the ZW$ equivalent to the Reserve Bank of Zimbabwe under the ZW$1:US$1 as directed by the Bank.
The Group recorded a cash and cash equivalents balance of ZW$23.5 billion during the period under review while cash generated from operations stood at ZW$24.9 billion. This gives the Group free cash flows of over ZW$12 billion. “The Group remains focused on its sustainability agenda, with increased activities in the areas of responsible alcohol consumption, reduction in waste and pollution, community involvement and optimising resource utilization”, said the company.