Zimbabwe: Delta Corporation reports significant decline in revenue for the quarter and nine months to December 2016

Zimbabwe’s Delta Corporation has reported a significant decline in revenue for the quarter and nine months to December 2016, weighed down by depressed aggregate demand and product shortages, The Herald reported on January 17.

Revenue declined 10 percent for the third quarter to December and was lower 9 percent for the nine months period on weak demand and product shortage due to water supply interruptions to two of the group’s sorghum beer plants.

Delta, manufacturer of popular beer brands such as Castle, Black Label, Zambezi, Castle Lite and Pilsner, said lager beer volumes fell by 1 percent for the quarter and 8 percent for the nine months.

“This category was adversely impacted by the increased imports from neighbouring countries, which are covered by preferential trade protocols and are fuelled by currency arbitrage opportunities,” Delta said in a trading update on January 16.

The group continues to be negatively impacted by a difficult economic environment were disposable incomes continue to shrink on account of company closures and weak economic growth. Finance and Economic Development Minister Patrick Chinamasa expects the economy to expand by 1.7 percent.

Delta said sorghum beer volumes decreased by 4 percent for the quarter, but increased by 2 percent for the nine months period.

“The decline in the quarter reflects the disruptions to production due to water cuts affecting the Chibuku Super plants at Chitungwiza and Fairbridge (Bulawayo).”

Its new Chibuku Super plant in Kwekwe was commissioned in December while Masvingo will come on line next month, the Zimbabwe Stock Exchange listed firm said.

Delta said last year that challenges in making foreign payments had resulted in it failing to commission the Chibuku Super plants in Masvingo and Kwekwe in line with its plans.

“The delay in paying foreign suppliers has resulted in late commissioning of the new plants at Masvingo and Kwekwe which are now expected to contribute to production before the end of the calendar year,” said chief executive Pearson Gowero at that time.

He said while the shortage of foreign currency spurred demand of local products, which affected procurement of raw materials for the business, Delta faced challenges remitting about $30 million in dividends to its foreign shareholders.

Delta reported that revenue for the period to September 30, 2016 fell 8 percent to $246.6 million compared to the prior year as all segments recorded lower volumes during the period.

Delta is trading under cautionary after receiving a notice from The Coca Cola Company, which advised of its intention to terminate the bottler’s agreement with group entities following combination of AB InBev and SABMiller Plc.

Belgian global brewer Anheuser–Busch Inbev and TCCC reached an agreement in principle that TCCC will purchase AB InBev’s interests in bottling operations in various markets.

“The parties indicate that the joint statement pronounces their strategic intent with no specific position having been reached with respect to Zimbabwe. The board and parties remain engaged on the matter,” Delta Corporation said in a statement accompanying the trading update for the period under review.

16 January, 2017