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Enacy Mapakame
DELTA Corporation’s poor third quarter earnings sparked a stock market sell-off of its stock as the beverage maker’s share price tumbled 11 percent in three days of trading last week, wiping off $83 million of its market value during the period.
Delta reported on January 18 that revenues for the three months to December 31, 2015 fell 5 percent from a year earlier on continued weak demand. Volumes dropped across all product lines. Shares of Delta Corporation tripped from US64c on Monday to US57c by Wednesday as investors also dumped stocks in several blue-chip counters.
The stock dropped as much as 5 percent on Monday when the quarterly figures were released, with over 663 000 shares sold over two days.
By falling 17 percent year-to-date, Delta Corporation dropped faster than the mainstream industrial index, which has tanked 8,4 percent in the review period. During the same time last year, the industrial index rose 2,3 percent.
Over the past 52 weeks, Delta Corporation’s shares touched a high of US122c and a low of US57c.
Delta’s third quarter earnings saw lager beer volumes declining 14 percent from a year ago.
On the overall, lager volumes have slumped 6 percent in the nine months to December 31, 2015. Sparkling beverages volume was flat on prior year for the quarter but down 9 percent for the nine months, the company said in a trading update.
Sorghum beer was also flat on prior year for the quarter, but declined 8 percent for the nine months. Maheu and dairy mix beverages slipped 7 percent for the quarter “mainly due to a supply challenge in November”.
Analysts say the continued decline in revenues at Delta Corporation — Zimbabwe’s biggest company by market capitalisation — points to general market-wide weaknesses.
“The weakness in the market is on the back of continued weakness in economic fundamentals. The World Economic Forum has since warned that the country risks plunging into a fiscal crisis this year due to governance failure.
“Disposable incomes have also continued on a downward path as evidenced by Delta Corporation’s falling volumes for the third quarter ended 31 December 2015,” said brokerage firm Lynton Edwards Securities in a research note on Wednesday.
Heavyweight counters ended sharply lower during the three days to Wednesday.
Industrial conglomerate, Innscor Africa Ltd skid 12,5 percent to a record low US21c after announcing that it had offloaded the six Spar Corporate Stores that it operated in Zimbabwe as of January 1 this year.
The Spar franchise accounted for $52,8 million of Innscor Africa Ltd’s total revenue and $14,6 million of total assets during the year to June 30, 2015.
On a year-to-date basis, Innscor Africa Ltd has plunged 29 percent, almost four times quicker than the mainstream industrial index.
Telecomms group Econet Wireless Zimbabwe fell 1,5 percent to US19,8c at mid-week, extending the ZSE bloodbath as desperate sellers sought liquidity in a dry market.
Old Mutual lost nearly 2 percent to US188c.
On Wednesday, the main index was at 105,09 points from 115 points at the beginning of January.
The mining index which is currently at 21,74 points is down 8,3 percent year-to-date.
Online Reporter