By Varaidzo Zhakata
DELTA Corporation Limited has recorded a 5% slump in revenue collected, as earnings before interest and taxes grew by 10% in its inflation-adjusted first quarter financial results.
According to a trading update, the Zimbabwe Stock Exchange-listed firm recorded a net foreign liability reduction of US$3.5 million to stand at US$60.0 million during the period under review. This was due to policy changes adopted by the central bank to use FCA free funds to settle domestic transactions and also the introduction of the foreign currency exchange auction, which the corporation says it expects to help improve access to foreign currency, to meet operational expenditure as well as to settle legacy debts.
Lager and sorghum beer sales declined by 18% and 51%, respectively during the period under review.
Trading in alcoholic beverages was restricted to off-premise outlets for home consumption in line with the COVID-19 regulations, hence, resulting in reduced sales for the former, whilst the latter (opaque) was affected by limited access to the market mainly in trade channels, such as bottle stores and bars, and higher price adjustments driven by an increase in the cost of imported inputs such as packaging and brewing cereals.
Natbrew, Zambia, recorded an increase of 17% sales for the quarter, benefiting from price moderation and ongoing measures to revitalise volume. Sales were mostly in Chibuku Super, which is more accessible in the off-premise trade channels.
Sparkling beverage sales grew by 35% for the quarter compared to the prior year, though the recovery impetus has been affected by limited market access and limited activity in essential sales channels. The category has benefited from a stable market supply with the sales mix shifting to one-way packs and take-home offerings.
African Distillers (Afdis) recorded an overall 8% volume growth for the quarter driven by the spirits category.
Sales at Schweppes Holdings declined by 32%, reflecting the constrained trading under COVID-19 conditions. Exports have been affected by the depreciation of regional currencies, which reduces competitiveness. There has, however, been an improved intake of juicing and processing fruit.
The operating environment has not been favourable for the company during the quarter under review. This is because it coincided with the peak of restrictions to human and economic activity implemented by authorities in response to the advent of the novel Coronavirus (COVID-19) pandemic.
In Zimbabwe, the impact of COVID-19 was exacerbated by an underperforming economy, hyperinflation, an unstable exchange rate, shortages of foreign currency and food deficiencies arising from persistent droughts among other factors.
Going forward, the trading conditions in the second quarter remain largely unchanged as impacted by the COVID-19 restrictions and unstable macro-economic factors. The business will benefit from the improved access to foreign currency through the new auction system and domestic sales in foreign currency.
By Varaidzo Zhakata