Delta posts US$54m profit

financial year ended March 31, 2011.
The beverage group, the second most profitable company after Econet Wireless, turned over US$481 million on the back of increased volume momentum of 2010.
Earnings per share for the group increased 42 percent to US4,50c following significant expansion of the beverages production portfolio through the launch of new brands and packs.
Delta’s share price traded in the US40c and US50c range for most of the last two years. It broke out only twice in September/October 2009, ahead of releasing its first US dollar-denominated financials and in late October 2010 ahead of the release of its first half results.
Early this year it was trading close to the 12-month high of US65c, to close yesterday at US82c and dividend yield of more than three percent.
Operating income for the group, during the period, increased 76 percent to US$68,2 million and earnings before interests, tax, depreciation and amortisation, was 67 percent up to US$81,7 million.
The beverage giant says it will spend about US$200 million by the end of the full year 2012, which should translate to increased production levels across its core beverages business.
Commenting on the performance of the group, chief executive, Mr Joe Mutizwa said the group’s fixed costs were well-controlled and plant efficiencies improved significantly with revenue growing well ahead of overheads.
“Operating margins expanded appreciably, strong profitability and cash generation allowed a return to payment of dividends to shareholders,” he said.
Delta declared an interim dividend of US0,50c per share and a final dividend of US1c per share.
Investment activities for the group totalled US$82,1 million as net borrowings over the period stood at US19 million.
During the period under review, the company’s main products targeted a diverse range of consumers with a broad selection of alcoholic and non-alcoholic beverages.
In addition to its own beers and carbonated soft drinks, the company’s associates produce non-sparkling beverages and spirits.
Delta’s association with the SABMiller group gave it a distinct advantage of accessing new products, technical expertise and finance.
Recent innovations include the launch of Castle Lite and Burn energy drink, the re-launch of Golden Pilsner, and the introduction of 500ml and 2l PET bottles (core sparkling beverages brands).
During the period total beverages volume were up 15 percent on prior year driven by strong lager beer and sparkling beverages demand.
Clear beer production was up 40 percent to 1,6 million hectolitres, sorghum beer 2,9 million hectolitres, sparkling beverages 1,1 million hectolitres and maheu 89 000 hectolitres bringing total production to 5,7 million hectolitres.
Going forward, the beverages group is focusing on value growth, optimum capital funding for growth and mitigating high import costs.
Production of lager is expected to grow 80 percent to about 2 million hectolitres, spackling 84 percent to 1,4 million hectolitres and sorghum beer 59 percent.
Overall volume is expected to grow by between 10 and 15 percent for the full year to 2012.
Group chairman, Mr Canaan Dube said the group would be commissioning a new 42 000 bottles per hour bottling line in Graniteside by August this year to buttress the volume recovery.
A key driver of profitability for Delta during the next few years is expected to be margin expansion, on the back of the introduction of new capacity, streamlined supply chain management and improved product mix.