Delta to commission Chibuku Super production facility in Bulawayo

Oliver Kazunga Senior Business Reporter
DELTA Beverages is set to commission a new Chibuku Super production facility in Bulawayo in July this year as part of measures to close supply gaps and increase revenue earnings. The move comes in the wake of a 17 percent drop in lager volumes for the year ended March 31, 2015, driven by subdued consumer spending.

During the period under review, the beverages maker posted a four percent drop in revenue due to lower sales value and volumes in lager and sparkling beverages.

“Lager beer volume is down 17 percent on prior year. The rate of decline decelerated in the last half of the year following price reductions that improved affordability of our brands.

“The excise duty rate reduction from 45 percent to 40 percent . . . effected on January 1, 2015, has supported our initiatives on affordability,” said Delta in a statement accompanying its financials for the year.

“The soft drinks volume comprising both sparkling and alternative beverages is down six percent on prior year. Price adjustments were effected in the last quarter of the year in some brands and packs aimed at improving affordability and competitiveness.”

The company, however, said the maheu and dairy mix beverages were up 11 percent for the year.

It said the category was expected to benefit from the additional production capacity commissioned last October, the refreshed Shumba Maheu packaging and the continued rollout of additional flavours.

The drop in revenue was mitigated by a significant increase in sorghum beer due to the increased contribution of higher value Chibuku Super.

“Sorghum beer is up eight percent on prior year driven by Chibuku Super innovation and investment. The supply of Chibuku Super improved in the last quarter of the year with the brand attaining a 50 percent contribution by March 15.

“The new Chibuku Super production facility in Bulawayo is scheduled for commissioning in July 2015, which will assist in closing the supply gaps,” it said.

It said operating income was down 14 percent reflecting the changed sales mix in favour of lower priced products and the impact of price reductions.

“Earnings Before Interest Depreciation Tax and Amortisatisation was down 10 percent on prior year versus a 14 percent decline in operating income reflecting a focus on fixed cost management.

“Cash generated from operations is down $7 million on prior year due to lower profitability and reduced creditors. Capital expenditure amounted to $41,5 million,” said Delta.

On the outlook, the beverages manufacturer said the difficult economic conditions were forecast to continue.

Despite the prevailing economic climate, the firm remains focused on delivering value to its stakeholders by optimising its operations and product innovations.

The firm has a declared a final dividend of $2,30 per share to be paid on June 10.