HARARE – Delta Corporation reported an 11% rise in revenue for the half-year ending September 2024, reaching US$389.1 million, driven primarily by a strong performance in its sparkling beverages and lager beer segments, which grew 10% and 9%, respectively.
Despite these gains, profit before tax rose by 63% to US$55.8 million, with lower exchange losses helping offset a 12% drop in operating income due to regulatory and cost pressures.
The company faced several challenges within its Zimbabwean operations, including increased raw material costs due to drought, disruptions in formal trading channels stemming from strict market policies, price competition from grey imports, high utility expenses, and currency devaluation impacts from the ZiG. Nevertheless, Delta’s performance highlights its adaptability and resilience in navigating a complex and restrictive economic environment.
Delta’s approach to managing its beverage portfolio—alongside absorbing regulatory costs such as the sugar tax—demonstrates a commitment to sustaining market share. “Lager beer volume grew by 9% year-over-year in the half-year period as demand remained strong, supported by consistent brand availability,” said Delta Chairman Sternford Moyo. However, he also noted operational challenges like increased power and water outages, as well as an essential maintenance shutdown at Belmont Brewery, which momentarily affected supply.
Regulatory pressures and rising utility costs continue to weigh on Delta’s profitability, posing risks to its long-term sustainability. However, as one of Zimbabwe’s leading employers and a major contributor to the economy, Delta plays a stabilising role in the consumer goods sector.
In the period under review, the proportion of domestic sales conducted in foreign currency fell to 77% from 88% the previous year, a shift Delta attributes to the introduction of the ZiG currency, dual pricing regulations, and increased local currency sales in the formal retail sector. Margins were further affected by the sugar tax and the higher cost of imported maize. Delta and its subsidiary Schweppes Zimbabwe paid US$20.5 million in sugar tax between February and September 2024.
Delta’s performance highlights its strategic positioning and commitment to growth amid regulatory and operational challenges, though sustained pressure on margins may affect future profitability.