Online Reporter
Michael Tome, Business Reporter
Delta Corporation Limited says it projects enhanced business prospects on the back of expected strong consumer spending, driven by a stable ZiG currency, good tobacco harvest, firm mineral prices and growing diaspora remittances.
The group indicated that it saw significant benefits from a relatively stable operating environment during the group’s first quarter to June 2025.
A stable ZiG exchange rate played a crucial role in boosting consumer confidence and spending power, which allowed consumers to plan and spend with more certainty.
The record-breaking tobacco marketing season has also been a major contributor to the positive operating environment, as substantial revenue injected into the economy has increased disposable income for farmers and related stakeholders, further boosting consumer spending.
Additionally, increased mining activity, driven by favourable mineral prices, particularly gold, has enhanced the profitability of mining operations, leading to increased production and employment.
Diaspora remittances have also benefited from the strengthening of cross-exchange rates, particularly against the Rand and Pound, which are key source markets.
According to Delta, these factors have combined to create a strong foundation for consumer spending, driving growth and stability in the operating environment.
Consequently, this led to the group’s revenue increasing by 25 percent in the quarter compared to the previous year, driven by volume growth.
The Group’s operating margins benefited from economies of scale due to volume growth and reduced grain costs.
However, the sugar tax burden was significant, as the Group incurred US$6,7 million in the quarter, disproportionate to its business revenue.
Over 85 percent of domestic sales were conducted in foreign currency during the quarter.
“The Group is benefiting from a relatively stable operating environment witnessed in the quarter under review. There are signs of strong consumer spending driven by a stable ZiG exchange rate, the record-breaking tobacco marketing season, increased mining activity and firm mineral prices.
“The economy is benefiting from the improved cereals and tobacco outputs and the higher gold prices in 2025. Diaspora remittances are benefiting from the firming cross exchange rates such as the Rand and Pound, our key source markets,” said Delta Group company secretary Faith Musinga in the first quarter trading update to June 2025.
In the period under review, Lager beer volume increased by 19 percent compared to the previous year, driven by strong demand which stemmed from rising consumer incomes and stable pricing.
The business exceeded historical volume and daily sales rates for the winter months.
Sorghum beer volume in Zimbabwe grew 11 percent in the quarter, driven by marketing efforts, market activations, and price moderation.
Despite challenges like liquor licensing issues and informal sector growth, the business thrived.
Sparkling Beverages volume grew two percent year on year, driven by price discounting as the business absorbed the sugar tax.
However, notable price differentials compared to the region, due to high sugar costs, import duties and sugar tax, led to volume losses due to cheaper imports and unregulated sweetener offerings.
African Distillers (Afdis) attained a 40 percent volume growth in the quarter compared to the prior year.
This growth was driven by strong performances across its product categories, with the Ready-to-Drink (RTD) category leading the way with a 45 percent increase, which stemmed mainly from the introduction of the 660ml Hunters pack.
The Spirit category also showed significant growth, rising by 36 percent, while the wine segment grew by 25 percent, driven by firm demand within the affordable segment.
Crucially, the business benefited from disruptions to the illicit and informal trade, further contributing to its growth.
Meanwhile, the Group continues to pursue a favourable legal outcome to its protracted tax dispute with the Zimbabwe Revenue Authority (Zimra), including claims from additional assessments amounting to US$73 million.
According to the group’s trading update for the first quarter ended June 30, 2025, Delta is actively pursuing ongoing appeals and new cases in various courts as it battles Zimra over Value Added Tax and Income Tax liabilities from 2019 to 2022.
According to the beverage maker’s financial year 2026 (FY26) first quarter to June 2025 trading update released this week, Delta’s enduring grievance centres on Zimra’s assessments, which the company disputes and argues fail to adequately account for payments earlier made in local currency.
Among Delta’s contentions are alleged “inconsistencies” in Zimra’s Tax Revenue Management System (TaRMS), with Delta asserting a misallocation of current tax payments that seemingly disregards specific returns lodged by the taxpayer.
Despite adverse judgments from the High Court and the Supreme Court in earlier phases of the dispute, Delta’s legal counsel continues to seek a favourable outcome to the wrangle.
In the trading update, Delta further noted that a recent attempt to gain access to the Constitutional Court was declined, with the highest court directing that all the unresolved legal issues should continue to be pursued through the fiscal courts.
In line with the “pay now, argue later” principle and pre-existing payment plans, Delta said it had remitted a total of US$11,6 million as of June 30, 2025.
The company has articulated its expectation that any future adjustments to the payment plan will be “rational, with due consideration of the financial health of the business and the fact that the principal amounts were fully paid in legal tender at the relevant periods, based on the best available interpretation of the legislation”.
The trading update also highlighted Delta’s significant exposure to the Government through Treasury Bills, suggesting these could be utilised to offset any portion of the tax liability that is ultimately deemed payable.
The company’s tax contribution to the Zimbabwean fiscus remains substantial, with over US$72 million paid in taxes for the quarter ended June 30, 2025, a 10 percent increase year-on-year.
Management, according to the trading update, confirmed it remains in continuous engagement with Zimra, while simultaneously appealing what it describes as “legal and factual issues of the assessments and the judgments”, under the guidance of tax experts and legal counsel.
Delta has consistently maintained that these assessments, should they materialise as per the current figures, would have a “material impact” on the group’s operations.
