E-Malt.com News article: Zimbabwe: Delta Beverages to increase beer production capacity

Delta Beverages, which has boosted its capacity utilisation to 100 percent and enjoys a near-monopoly on the domestic beverages market, is planning to add 400 hectolitres to its current lager and beer production to meet increasing demand, The Financial Gazette reported on August, 1.

Delta's new chief executive officer, Pearson Gowero, who recently replaced Joe Mtizwa at the helm of the SABMiller associate firm, said at the company's annual general meeting last week that the company would increase production and that new production lines would be commissioned before year-end.

Gowero said a new PET line for Bulawayo was going to be commissioned by November this year while new innovations on Chibuku were in the pipeline to improve demand. Delta will also install a new plant at Chitungwiza to meet demand.

"Hand-held terminals have also been deployed for the sales force in a bid to improve service delivery," said Gowero.

"The group is also moving towards offering its full larger brand portfolio in locally produced non-returnable bottles and for this, Zimglass packaging suppliers will start supplying this month (August)," he said.

Gowero said the company recorded a 15 percent revenue growth in the first quarter of 2013 to US$165 million, from US$144 million achieved during the same period last year in line with its annual growth targets of 15 percent.

"Earnings growth remains strong, driven by high quality product mix on both our beer and beverages and value chain management," he said.

Earnings before interest and tax grew by 38 percent to close the first quarter at US$24.3 million. Gowero attributed the total volume growth largely to the company's ability to improve operating efficiencies. This enabled them to cut costs.

"We were affected by a bad agricultural season which affected our Chibuku brand. This resulted in us increasing the price of Chibuku which affected sales," said Gowero.

Gowero said a new Chibuku product with a longer shelf life would also be released in a PET pack.

He said focus would be on reducing costs while keeping raw materials supply stable.

"Barley supplies for 2013 have been secured while challenges still remain with regards to sugar and utilities. As things stand, no external funding will be required as all operations are cash positive," said Gowero.

Gowero said volumes growth were weak. However, larger beer volumes were 10 percent higher than in the prior quarter while sorghum beer volumes were six percent lower due to a decline in cereals output.

Overall, volumes performance was negatively affected by deferred cotton spending but boosted by increased tobacco revenues as they came in four percent higher during the first quarter compared to last year at 1 654 000 hectolitres, although one percent lower year to year due to weaker sorghum volumes.

Delta recorded a 36 percent revenue growth to US$544.8 million for the financial year to March 31, 2012, while operating income grew 44 percent to US$98.3 million.

Attributable income stood at US$73.7 million, 36 percent up from US$53 million at the end of 2011.

Earnings before interest, taxes, depreciation increased by 45 percent to US$118.7 million. Cash generated from operations increased by US$30 on prior year to US$121.3 million.


03 August, 2012