Chronicle Editor
Oliver Kazunga, Senior Business Reporter
GIANT beverages producer, Delta Corporation recorded a 99 percent jump in inflation adjusted revenue to $33,59 billion in the half year period ended September 30, 2021 compared to the same period last year.
The positive financial performance was driven by solid volume recovery as well as correction of value chain costs in real terms and realignment of pricing to competitive levels.
In a statement accompanying financial results for the period under review, Delta said there were increases in the cost of plastic packaging driven by global commodity cycles.
“In inflation adjusted terms the Group recorded revenue of $33,59 billion to achieve a growth of 99 percent above the prior year and $31,03 billion to grow by 192 percent in historic cost terms,” it said.
“In inflation adjusted terms, earnings before interest and tax grew by five percent to $6,44 billion and a 91 percent growth to $6,63 billion in historic cost terms.”
During the period under review, operating margins were normalising as inflation induced holding gains dissipated and the austerity measures adopted at the advent of Covid-19 ran their course.
The beverages producer said there were cost pressures arising from the disparities in exchange rates applied by local suppliers in setting prices.
The group’s foreign currency exposure from legacy debt arrangement reduced to US$13,9 million and is being retired under the Reserve Bank of Zimbabwe (RBZ) arrangements.
The listed company remained cash generative, closing the period with a net borrowing of $864 million.
Capital expenditure of $1,2 billion was below planned replacement levels due to forex constraints at the beginning of the year.
“An amount of $421 million was recorded as an unrealised foreign exchange loss relating to the legacy foreign debt amounts of US$13,9 million,” it said.
“In compliance with IFRS (International Financial Reporting Standards), the deposit at the Reserve Bank of Zimbabwe represents a commitment to pay equivalent value in US$ and has, therefore, been treated as a financial derivative uplifted at closing rate and discounted to net present value of $1,22 billion.
“The difference between the net present value and the face value of the financial asset of $421 million has been expensed.
“This unrealised net loss is expected to reverse on settlement of the instrument,” said Delta.
On the outlook, the firm said the Zimbabwe business was witnessing a significant recovery despite operating in an unstable macro-economic environment, which is further impacted by Covid-19.
“The Covid-19 pandemic has destabilised global economies. The country recorded a cereals surplus for the first time in many years of drought and ineffective agricultural policies,” it said.
“Consumer spending indicates growth driven by mining and infrastructure development projects.”
Delta management would constantly review the business continuity plans in order to maintain operations at sustainable levels; competitive product pricing, cost reduction initiatives, and adopting sourcing strategies that minimise the use of foreign currency.
The business remains profitable and has capacity to recover volumes and earnings.
“The Covid-19 pandemic has affected business activities and general human activities that change consumption occasions and patterns.
“Management will continue to realign the marketing, route to market and business operations in general for sustainability,” it said. — @KazungaOliver
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