Delta sweats over raw materials importation

  • As revenue for Q3 2019 increases 27%

By Tito Maposa

ZIMBABWE Stock Exchange listed beverages manufacturer Delta Corporation is sweating over continued challenges in the importation of its raw materials and servicing of overdue payables.

The company is currently working closely with the Reserve Bank of Zimbabwe (RBZ) to expunge liabilities within the agreed framework.

This comes after the beverages maker reported 27% growth (in inflation adjusted terms) in revenue for the third quarter of 2019, reflecting the changes in product mix and price increases that are based on replacement cost.

Delta Corporation company secretary Alex Makamure said the group’s financial performance may be adversely impacted by any policy changes going forward with respect to settlement of the legacy foreign liabilities.

“The sourcing of imported raw materials and services remains challenging due to the delays in servicing overdue payables,” said Makamure.

On volume performance, the company’s lager beer volume declined 43% for the quarter and 46% for the nine months compared to the same period last year.

Makamure noted that there is a focus on supplying key brands and packs and conserving foreign currency.

The Sorghum beer volume in Zimbabwe declined 41% for the quarter and 25% for the nine months. The category was adversely impacted by the constrained supply of maize and escalation in the cost of imported inputs such as packaging materials. There is renewed focus on the returnable Scud pack.

At Natbrew Zambia, the volume was 32% down for the quarter compared to last year. Makamure said there are some pricing disparities with other alcohol categories particularly driven by the steep increase in maize prices.

The Sparkling beverages for the period volume grew 38% for the quarter and was down 40% for the nine months. There was a notable volume recovery in response to improved product supply and moderated retail pricing.

Makamure said the recently launched “No Sugar” variants have been welcomed by the consumers while African Distillers recorded a volume drop of 10% for the quarter.

He said the demand for ciders and white spirits remains strong while there is concern about the illicit trade in some of the product categories.

The beverages volume at Schweppes Holdings declined 23% for the quarter due to an outage of key imported raw materials for both the Mazoe and Minute Maid brands but there was an improved performance on the recently launched Fruitade.

Going forward Makamure said the company will manage the emerging risks with particular focus on reducing the foreign liabilities and maintaining consistent product supply.