Zimbabwe business in recovery mode—Delta

The Chronicle

Business Reporter
LISTED beverages producer, Delta Corporation Limited, says the Zimbabwean business sector is witnessing significant recovery despite prevailing challenges in the macro-economic operating environment.

This comes at a time when regional economies have been adversely impacted by global inflation and the strong United States Dollar, which have driven up the cost of fuel, raw materials and cereals.

The Covid-19 pandemic and the Ukraine/Russia conflict have jointly disrupted global supply chains and commodity prices.

In Zimbabwe, the trading environment has been characterised by rising inflation and an unstable exchange rate said the company in a statement accompanying its financial results for the six months period ended 30 September 2022.

These have prompted authorities to implement policy interventions aimed at reducing the volatility of the local currency while promoting its use and circulation, resulting in both inflation and the exchange rate volatility slowing down since July 2022.

However, Delta noted that the resurgent mining sector growth and ongoing infrastructure development projects, mainly driven by the Government, have continued to energise aggregate demand.

“Consumer spending continues to be strong, driven by mining and infrastructure development projects,” said Delta.

James Mparutsa at the Delta Beverages stand at ZITF

“The business has been able to grow volume across all business units during the period.

“Management constantly reviews the business risks and the business continuity plans to maintain operations at sustainable levels, competitive product pricing, cost reduction initiatives and adapting sourcing strategies as necessary.”

In terms of the trading performance of its different units, Delta said lager beer volumes grew by 18 percent for the six months compared to the prior year.

“Product supply has stabilised, benefiting from the injection of returnable glass bottles and the intense plant maintenance undertaken during the year,” it said.

Sorghum beer volume in Zimbabwe grew by 14 percent for the half-year compared to the prior year. This was driven by the revival of the Scud pack and increased consumer engagements by Chibuku.
Sparkling beverages volumes on one hand grew by 22 percent over the previous year, anchored by the increased market penetration of the returnable glass packs and better availability of packs and flavours.
Wines and Spirits African Distillers Limited (Afdis) recorded a volume growth of 11 percent for the half-year.

At Schweppes Holdings Africa, volumes were flat last year due to the shortages of juice concentrates at the beginning of the period.

“The intake of juicing fruit at the Beitbridge Juice plant improved significantly and will provide adequate cover until the new season next year,” said the company.

“There are ongoing efforts to close the supply gaps on Minute Maid juice drinks and water.”

United National Breweries South Africa recorded a volume growth of 38 percent over the prior year, as the business focuses on winning back the consumers into the category. However, the volumes declined at Natbrew Plc (Zambia), which halted with a growth of seven percent in the second quarter.

“The focus is on revamping the route to consumer, market penetration with new pack formats and utilising the available Chibuku Super production capacity to cover the regional supply gaps,” said the company.

Meanwhile, Nampak Zimbabwe Limited continues to benefit from the volume recoveries in the beverages and other consumer sectors.

During the period, the group’s revenue increased by 63 percent to $207,8 billion reflecting the volume gains across business units and the replacement cost-based pricing.

Earnings before interest and tax (EBIT) grew by 88 percent to $46,0 billion, which indicates the benefits of higher throughput and focused cost management.

In historic cost terms, the group revenue grew by 430 percent to $164,5 billion compared to average inflation of 207 percent.

Delta said the Zimbabwe business recorded an increase in the contribution of foreign currency takings, which will support the ongoing recapitalisation programmes.

“There is a focus on aligning the cash flows in each currency. The group closed the period with net cash and cash equivalents of $17,3 billion,” it said.

On outlook, Delta said it remains focused on exploiting the firm aggregate demand, which is largely driven by mining activities, diaspora remittances and infrastructure developments and increased social activities.

Article Source: The Chronicle

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