Delta records $35,7m profit

HARARE - Zimbabwe's largest listed company, Delta Corporation Limited, posted a 19 percent drop in profits to $35,7 million in the six months to September 2015 due to pressure on discretionary spending and the resultant depressed consumer demand.

The company’s chairman, Canaan Dube, on Wednesday said Delta’s revenue was also down eight percent for the half year to $269 million from $291 million recorded in the corresponding period last year — reflecting changes in the portfolio mix, volume declines and the recent price moderations.

“Operating income is down 20 percent largely due to the loss of financial leverage arising from the volume and revenue losses. In lager beer, the sale mix in favour of value brands and packs has impacted on margins but kept consumers in the category,” he said.

In the period under review, Delta’s total lager beer volume was down two percent while sparkling beverages and sorghum beverages volumes went down 15 percent and 12 percent respectively.

This comes as Zimbabwe’s economy, which had grown by nearly double digit figures from 2009 to 2013, is expected to grow by 1,5 percent this year from an initial projection of 3,2 percent due to massive company closures and power shortages.

Dube said the lager volume performance was ameliorated by price adjustments effected earlier in the year.

“The second quarter recorded a five percent volume increase driven by value brand Eagle lager. Post the half year, further price adjustments were implemented to stimulate volume with particular focus on core lager, which remains in decline,” he said.

Delta, which is 38 percent owned by SABMiller, is also planning to reduce the price of soft drinks after sales were hit by competition from cheaper imports and weaker demand.

Dube noted that on the sorghum beer category there was a marked shift to Chibuku Super which benefitted from the additional capacity at the Fairbridge Brewery. 

“The segment however, recorded a one percent growth in revenue due to the change in mix in favour of Chibuku Super. The operating margins were impacted by the relatively high cost of maize stocks carried forward from last season and the high freight and logistics during the Fairbridge plant upgrade,” he said.

In the half year period, the group’s finance costs were flat at $3 million while earnings before interest, tax, depreciation and amortisation fell 16 percent to $59,4 million.

Dube said earnings per share declined 19 percent to $2,89.

The latest results came after SABMiller received a $100 billion-plus takeover offer from the world biggest brewer Anheuser-Busch InBev on Wednesday. AB InBev is hoping SABMiller will give it a foothold in growing African markets.

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