Delta half-year revenue down 8pc

Tinashe Makichi: Business Reporter

Delta Corporation’s revenue for the half-year to September 30, 2016 was 8 percent down at $246,6 million compared to the prior year as the group’s product segments recorded lower volumes.Operating income was down 9 percent to $39,4 million and earnings before interest, tax depreciation and amortisation was eight percent lower at $54,9 million. Lager beer volumes were down 11 percent as demand shifted to traditional beer and other cheaper alcohol offerings while volumes for sparkling beverages dropped 3 percent.

Sorghum beer volumes increased 6 percent contributing 60 percent to total revenue. Chibuku Super was the biggest performer during the period.Delta Corporation chief executive Pearson Gowero told analysts on Wednesday that Chibuku Super performance during the period was excellent although the company had failed to commission the new Chibuku Super plants on time due to challenges with making external payments.

“The delay in paying foreign suppliers has resulted in the 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 Mr Gowero.

“While the shortage of foreign currency spurred demand of local products, the issue is affecting our quest to secure critical raw materials to our business. We have also been facing challenges in remitting about $30 million in dividends to our foreign shareholders.

“We hope the situation will stabilise and we have been in constant engagement with the monetary authorities over the issue,” added Delta Corporation finance director Matts Valela.

“We still owe major shareholders some dividends from last time because banks have delayed payments and we owe foreign creditors. “We have a foreign loan of about $30 million which falls due in the next 15 months but we are taking measures that should resolve the issue. We will never allow our creditors to be exposed to that extent but this is not something we can control,” he said.

The board declared an interim dividend of two cents per share, totalling $25,8 million to be paid in December. Following the conclusion of the combination of SAB Miller and AB InBev, the company is now an associate of the new AB InBev group. Consequently, the Coca Cola Company issued notice of its intention to terminate the bottlers’ agreements with Delta Beverages and its Associate Schweppes Holdings Africa.

Mr Gowero said Coca Cola has indicated that they have no intention of exiting the Zimbabwean market and negotiations were ongoing at shareholder level.