Source: Forex shortages leave Delta ‘frothing’ – NewsDay Zimbabwe May 11, 2018
DELTA Corporation Limited defied a tough operating environment characterised by foreign currency shortages and posted an $88,5 million profit after tax during the period ended March 31 2018 from $66,8 million in the comparable period during the previous year.
BY FIDELITY MHLANGA
“The company registered a strong performance in a difficult operating environment.
“Despite difficulties with foreign remittances, we maintained our selling prices and held down costs to deliver good returns to our shareholders.
“Together with our value chain partners, we ensured that our consumers continue to enjoy their favourite beverages at best value while striving to benefit from economies of scale,” Delta Corporation chairman, Canaan Dube said in a statement accompanying the financial results.
Dube said foreign currency shortages had affected their operations.
“Notwithstanding our best efforts, regrettably, there were supply gaps occasioned by shortages of raw materials and services, as foreign remittances became increasingly difficult during the year,” he said.
Dube said they had recorded firm demand, particularly in the second half of their financial year across all beverage categories, with sparkling beverages volume increasing by 49% over prior year for the quarter and 15% for the 12 months.
He said beverages had significant import requirements and foreign currency shortages were hampering the company.
Sorghum beer volume grew by 8% above prior year for the quarter and 2% for the full year, although Chibuku Super supply faced disruptions due to packaging issues.
Delta’s revenue surged 18% to $572,2 million from $482,9 million during the period under review.
“Revenue growth of 18% resulted in earnings before interest and tax growing 28% above last year with a strong contribution from each beverage category,” Dube said.
“Strong cash flow generation arose from improved working capital.
“Included in the net cash balance of $236 million is cumulative $59 million in unremitted dividends payable to foreign shareholders and $46 million in overdue foreign creditors.”
Total assets increased to $837,4 million from $704 million during the period under review.
The company said its new Zambian subsidiary acquired on January 1 this year, National Breweries Plc, registered a 21% volume growth for the quarter on improved product supply.
The company reminded its shareholders the company is trading under a cautionary statement issued following a notice received from the Coca-Cola Company advising of an intention to terminate the bottler’s agreements with the group entities.
This followed the merger of AB InBev and SABMiller Plc in October 2016 and the subsequent agreement in principle reached between Coca-Cola and AB InBev to explore options to restructure the bottling operations in a number of countries.