• Reported a profit before tax of ZMW 277.3 million  its first annual profit in years but this was primarily driven by a ZMW 576.7 foreign exchange gain
• The company recorded an operating loss of ZMW 167.1 million and continues to show negative equity of ZMW 1.25 billion
• In comparison, Delta Corporation in Zimbabwe generated USD 1.09 billion in revenue and USD 210 million in profit before tax in the same period

Harare- National Breweries, Zambia's beverages maker listed on the Lusaka Securities Exchange has reported a profit before tax of ZMW 277.3 million, equivalent to USD 14.3 million at the confirmed closing rate of ZMW 19.4 per US dollar at 31 March 2026, for the year ended 31 March 2026, against a loss before tax of ZMW 442.5 million, or USD 22.8 million, in the prior year, a swing of ZMW 719.8 million, or USD 37.1 million, in the pre-tax income line that represents one of the most dramatic single-year turnarounds in the LuSE's listed company universe.

This came despite an operating loss of ZMW 167.1 million, or USD 8.6 million, offset by the exchange gain line of ZMW 576.7 million, or USD 29.7 million,

National Breweries is primarily a producer of traditional opaque beer, the sorghum and maize-based category known commercially as Chibuku, whose domestic production and distribution across Zambia serves the mass market consumer whose price sensitivity makes premium lager commercially inaccessible as a daily consumption choice. The company contracted over 1,300 farmers for its maize and sorghum raw material requirements, sourced at competitive prices that reduced production costs for most of the year, and benefits from local agricultural supply chain integration that insulates it partially from the imported raw material price volatility that affects the lager beer category more acutely.

Revenue fell 16.2% from ZMW 435.8 million, or USD 22.5 million, to ZMW 365.4 million, or USD 18.8 million, in a year when volume recovery was hampered by power supply disruptions in the first half and slower market rebuilding thereafter. Gross profit, however, rose 33% despite the 16% revenue decline, driven by improved sales mix toward higher-margin products, lower input costs from the stronger Kwacha reducing landed costs of imported raw materials, lower fuel prices supporting distribution, and new product development reducing manufacturing costs.

The margin improvement was genuine and operationally significant. What it has not yet done is close the gap between what the business earns on its products and what it costs to run the company, operating expenses consumed the gross profit and more, producing an operating loss of ZMW 167.1 million, or USD 8.6 million, an improvement from ZWM 196.1 million, or USD 10.1 million, in the prior year, but still confirming that the cost base requires either further revenue growth or further cost reduction before brewing operations alone can sustain the business without currency translation gains filling the gap.

The ZMW 576.7 million, or USD 29.7 million, net exchange gain recorded in FY2026 against the prior year's ZMW 135.2 million, or USD 6.97 million, exchange loss was the dominant item in National Breweries' financials and the driver of the profit headline. The company carried ZMW 1.42 billion, or USD 73.2 million, in related party amounts due to its parent, an intragroup loan denominated in or linked to US dollars.

When the Kwacha strengthened by approximately 19% during the period, the ZMW equivalent of that USD-denominated liability fell, and the reduction in the liability's ZMW value was recorded as a foreign exchange gain. The ZMW 576.7 million gain did not come from brewing more beer, selling it at higher prices, or reaching more customers efficiently, but only from holding a USD-denominated liability in a year when the domestic currency appreciated against the dollar.

The same mechanism produced ZMW 135.2 million in losses in FY2025 when the Kwacha weakened, and the Kwacha's direction in FY2027 will determine whether National Breweries reports its second consecutive profit or reverts to a loss.

Meanwhile, total equity stood at negative ZMW 1,254.8 million, or negative USD 64.7 million, comprising accumulated losses of ZMW 1,255.5 million, or USD 64.7 million, against share capital and premium of ZMW 0.65 million, or USD 33,505. Liabilities of ZMW 1.71 billion, or USD 88.1 million, exceeded total assets of ZMW 453 million, or USD 23.3 million, by ZMW 1.25 billion, or USD 64.4 million, leaving the company technically insolvent.

Its continued operation depends entirely on the parent company's willingness to maintain the ZMW 1.42 billion, or USD 73.2 million, in related party amounts currently classified as current liabilities not demanding immediate repayment.

National Breweries is not a financially independent operating company as it is a brewing operation being maintained by its parent on the assumption that the Zambian market opportunity justifies continued support rather than exit or liquidation.

The most instructive comparison available for National Breweries Zambia is not an external peer. Delta Corporation holds approximately 70% of National Breweries Zambia, and its own chairperson identified NatBrew as a group drag in the same results period, making the Zimbabwe operations of the parent the correct frame for assessing what the same owner, the same product category, and the same opaque beer market logic delivers across two different national operating environments.

Delta Corporation's Zimbabwe business generated revenue of USD 1.09 billion for the year ended 31 March 2026, a 35% increase over the prior year's USD 807 million, with sorghum beer volumes growing 19% to 4.62 million hectolitres, surpassing the historical peak of 4.5 million hectolitres achieved in the 1998 financial year. Operating income reached USD 209 million, a 42% increase. EBITDA grew 42% to USD 236 million. Profit before tax increased 56% to USD 210 million. The board declared a total dividend of US 5 cents per share, a 52% increase over the prior year's US 3.30 cents.

The Zambian subsidiary, same parent, same product category, same corporate governance framework, produced ZMW 365.4 million, or USD 18.8 million, in revenue, an operating loss of ZMW 167.1 million, or USD 8.6 million, and volumes that fell 27% for the full year.

Delta's chairperson has identified National Breweries Zambia directly as a drag on the group's otherwise exceptional performance, attributing the shortfall to inconsistent power supply and market access challenges. Delta's Zimbabwe operations paid USD 306 million in taxes during the year, a figure that exceeds National Breweries Zambia's entire asset base of USD 23.3 million more than thirteen times over and exceeds NatBrew's full-year revenue of USD 18.8 million more than sixteen times over.

Zimbabwe's sorghum beer market delivered USD 209 million in operating income, Zambia's delivered an USD 8.6 million operating loss. Power supply reliability, which Delta's Zimbabwe business benefits from more consistently than NatBrew's Zambian operation, the deepening dollarisation of Zimbabwe's formal economy to approximately 94% of transactions, which reduces translation risk in Zimbabwe's revenues, and the distribution depth that Delta's decades of Zimbabwe operations have built compared to NatBrew's still-developing Zambian footprint are the operational gaps whose closure is the business case for NatBrew's recovery.

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