Delta delivers strong half-year performance

Delta Corporation Head Office in Borrowdale, Harare
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DELTA Corporation, Zimbabwe’s largest beverages maker, delivered a strong performance for the six months ended September 30, 2023, after recording volume growth across business units, which positively impacted revenue, profit and foreign currency sales.

Lager beer volume grew by 13 percent compared to the same period last year, with the new packaging line commissioned in August helping to stabilise overall product supply while sorghum beer volume increased by 4 percent year-over-year, Delta says.

The group, however, noted some gaps in selected lager brands and packs arising from bottlenecks in the supply of packaging materials from traditional sources but anticipates that the situation will improve during the forthcoming festive period.

The new Chibuku Super plant at the Harare Brewery was commissioned at the end of September this year and will contribute to volume in the second half of the year.

“This investment will assist in closing the supply gaps in both the domestic and regional markets,” says Delta.

United National Breweries South Africa posted a 2 percent volume growth in the second quarter and was flat on the prior year for the six months. The uptake of Chibuku Super is promising, which is supported by the entry into a number of formal retail chains.

The group intends to install a new Chibuku Super plant in South Africa during the fourth quarter, having pushed back the project due to a delay in the shipment of the equipment.

Volume recovery at Natbrew Zambia continued, recording a growth of 67 percent for the six months, driven by Chibuku Super and returnable packs and increased market penetration. However, the financial performance has been negatively impacted by the steep rise in maize prices and cost increases of imported materials.

Sparkling beverage volumes, also known as soft drinks, grew by 17 percent for the six months compared to the same period last year, with the recovery accelerating in the second quarter.

African Distillers, Delta’s wines and spirits business unit, recorded a volume growth of 10 percent above prior year, benefiting from good product availability across all key brands, increased product distribution, and brand innovation.

The spirits category grew by 8 percent, leveraging on the premiumisation of the Whitestone brand and firm demand for the affordable range.

Wine volume increased by 7 percent on the back of increased market penetration in the second quarter while the ready-to-drink segment registered a growth of 14 percent despite competition from lower-priced smuggled imports.

Delta’s associate company, Schweppes Holdings Africa, recorded a volume growth of 7 percent over the prior year for the six months while Nampak posted a modest performance during the period, as its plastic packaging units, MegaPak and CMB, were hampered by prolonged power outages and occasional raw material shortages.

At Schweppes, the business was affected by the limited supply of bottled water and Minute Maid Juice Drinks as one of the production lines was decommissioned to allow for the installation of a new plant. The product supply is expected to improve following the commissioning of a new packaging line in October 2023.

Group revenue increased by 164 percent to $1,9 trillion in inflation-adjusted terms, driven by volume growth across business units and the increased proportion of foreign currency sales to over 80 percent. Earnings before interest and tax grew by 153 percent to $408 billion in inflation-adjusted terms, compared to 784 percent in historical cost terms and an indicative growth of 10 percent in US dollar terms. – Herald