Delta unit sees 16 percent decline in volumes

Delta Corporation Head Office in Borrowdale, Harare

HARARE – National Breweries (Natbrew), a unit of Delta Corporation, volumes declined 16 percent in the year to March 2022, leading to an 18 percent revenue contraction.

Natbrew produces, packages and markets traditional sorghum beer products in Zambia. Popular variants of its opaque beer are Chibuku Shake-Shake and Chibuku Super.

“Volume performance in the current year was affected by the decline of informal exports of Chibuku Super, the increase in excise and general product prices and Covid-19 restrictions which affected product availability in the market,” the company said in a statement accompanying the results.

The firm said it offered a full range of affordable and aspirational packaging products during the year under review.

The firm sought to increase the availability of the packaging products by pursuing a penetration strategy targeted at enhancing product presence and visibility across all markets.

The company also began exporting Chibuku Super to Zimbabwe in the fourth quarter of the fiscal year.

Natbrew said it will continue to intensify efforts to drive volume growth by offering quality and competitively priced products to its consumers.

“The current efforts to improve product availability by focusing on outlet penetration are expected to yield volume growth in the immediate term,” said the company in its outlook.

“Increased exports into Zimbabwe will also contribute to volume growth while earning the company valuable foreign currency to fund working capital requirements.”

“The full benefits of these strategies are expected to accrue in the next financial year and beyond when financial performance and cash flows are expected to improve,” it said.

“The return to draught operations and the re-introduction of the 1,5l returnable bottle offered consumers a much wider choice among our affordable products.”

In the period under review, the company’s revenue declined from US$16,76 million in 2020 to US$13,55 million in 2021. Limited access to the market as a result of Covid-19 induced lockdowns and resurgence of competition from other bulk beer offerings that are not excise/VAT compliant continues to be a concern for the business.

Margins were under pressure from the increased raw material prices in the second half of the year, according to the company.

“In addition, the margins were further depressed by distribution costs which peaked in the last quarter because of the increase in fuel costs.”

The appreciation of the Kwacha post-elections resulted in a significant exchange gain for the group.

“The strengthening Kwacha resulted in an exchange gain of US$2,6 million on revaluation of foreign currency liabilities,” said the company.

Accordingly, the company ended the year with an operational loss of US$5 million, compared to US$9,8 million the previous year. Intercompany borrowings resulted in a 70 percent increase in net financing expenses. Similarly, the company reported a loss after tax of US$7 million and a loss per share of US$0,11, compared to US$11,29 million and US$0,11 the previous year. – Herald