17 April 2018

Zimbabwe: Delta Revenue Jumps 18pc

ZIMBABWE Stock Exchange listed beverage manufacturer, Delta Corporation, revenue grew by 18 percent in the year to March 2018 driven by growth in larger, sparkling beverages and sorghum beer volumes, the company reported in a trading update.

According to the trading update for the fourth quarter and full year to March 2018, the 18 percent revenue growth includes results for newly acquired Zambian unit, National Breweries (Natbrew Plc) . The acquision of Natbrew Plc is effective from January 1 this year.

Zimbabwe's biggest beverage manufacturer's financial results are expected to be published on May 10, 2018. Excluding Natbrew, Delta said revenue for the 12 months period to March 2018 grew by 17 percent. For the quarter, revenue went up 52 percent (45 percent excluding Natbrew). Natbrew Plc's revenue registered a 21 percent growth for the quarter on improved product supply.

"The quarter registered strong consumer demand, a continuation of the positive trends witnessed in the previous quarter," said Delta in a statement.

In the period under review, Delta said it was not spared the negative impact of foreign currency shortages in the country, which have caused problems across the entire industry with many companies struggling to retool and buy raw materials.

"There were pronounced product supply gaps occasioned by the challenges in acquiring imported raw materials and services as the access to foreign currency has become increasingly difficult," Delta added.

The group warned its beverage category has a signicant import requirement and hence it will be adversely affected by the ongoing foreign currency challenges.

Some companies have resorted to buying foreign currency on the black market, effectively pushing prices of their products up or reducing margins given that they pay a premium for the hard currency.

Delta said lager beer volumes grew by 51 percent compared to prior year for the quarter and 27 percent for the full year while sparkling beverages volumes increased by 49 percent over prior year for the quarter and 15 percent for the 12 months.

The sorghum beer volumes for Zimbabwe grew by 8 percent above prior year for the quarter and 2 percent for the full year.

"There were some considerable disruptions to the supply of Chibuku Super due to capacity limitations impacting suppliers of key packaging materials," Delta said.

Delta is trading under a cautionary issued with respect to the notice received from The Coca-Cola Company (TCCC) advising of an intention to terminate the Bottler's Agreements with the Group entities. This followed the merger of AB InBev and SABMiller Plc in October 2016 and the subsequent agreement in principle reached between TCCC and AB InBev to explore options to restructure the bottling operations in a number of countries, discussions of which are still ongoing.

The Delta board of directors declared a final dividend worth $33,5 million being US2,70 cents per share payable in respect of all the qualifying ordinary shares of the company to be paid out of the profits for the current financial year.

This will be payable to shareholders registered at the close of business on April 27, 2018. This will bring the current financial year's dividend to US7,2 cents.

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