Delta prays govt will make good on promise for currency reforms

Delta Corporation Head Office in Borrowdale, Harare

ZIMBABWE Stock Exchange-listed beverage manufacturer Delta Corporation is banking on monetary authorities making good on their word to have the auction exchange rate reflect macro-economic developments.

This comes after the company, in its full-year results for the year-ended March 2021, added its voice to growing concerns over policy inconsistencies and currency volatility saying they affected operations during the year.

Delta is on record saying currency volatility was compounded by multiple exchange rates, hyperinflation and reduced business during Covid-19 lockdowns.

After bearing the brunt of successive Covid-19 lockdowns and surviving currency volatility, the company expects the ongoing vaccination programme to open up the economy.

This follows concerns that the forex auction system is manipulated and more of a rationing tool.

Company secretary Alex Makamure said the company anticipates a favourable year on account of improved agriculture output, successful rollout of the country’s vaccination programme as well as improved access to foreign currency.

“The company expects a return to reduced lockdown regulations and improved business activity as the country increases the vaccination rollout programme. Further, it is hoped that the monetary authorities implement their stated intentions for the auction exchange rate to reflect macro-economic developments following pronouncements made in the recent monetary policy,” Makamure said in a trading update for the quarter-ended June 30, 2021.

Delta reported a 114% revenue growth for the quarter-ended June 30, 2021, in inflation adjusted terms following significant recoveries in volumes coming from a tight lockdown that disrupted business in the same period last year.

Makamure said the revenue growth in the quarter under review reflects the volume recovery across all beverage categories off a low prior year base.

Lager beer volume for the quarter grew by 139% compared to the same period last year. The volume is trending up, benefiting from competitive pricing, consistent product supply and the injection of new returnable glass.

He said sorghum beer volume in Zimbabwe grew by 106% for the quarter compared to prior year.

“There were some constraints in the supply of key packaging materials due to poor availability of and logistical challenges on resins on world markets. Some key trade channels such as bars and beer halls remained inaccessible under the prevailing Covid-19 regulations. The category is benefiting from the improved agricultural output and better access to rural markets. The volume at Natbrew Zambia declined by 29% for the quarter,” Makamure said.

He added that the sparkling beverages volume grew by 205% for the quarter compared to the prior year as the business continues to recover market share. This, he said, is largely due to consistent product supply and the increased social and economic activities that drive consumption.

The volume includes sales into the Manicaland territory which became part of the franchise at the beginning of the quarter.

Associate African Distillers Limited (Afdis) registered a volume growth of 47% for the quarter as the unit expands the route to market model to access more channels. Makamure said market supply was affected by the shortages of key imported ingredients.

At Schweppes Holdings Limited, another associate, beverages volume growth of 44% for the quarter was on the back of improved product supply and recovery of market share in juice drinks.

Makamure said the historical cost figures reflect lower and less frequent price increases in line with a more stable exchange rate and lower inflation in Zimbabwe. The group, he said, has benefited from improved access to foreign currency through domestic nostro sales.

“This was disrupted somewhat due to the unintended consequences of the policy change under statutory instrument 127 of 2021. There are cost disparities arising from the wide exchange rate margins.”