Delta released a strong set of results for the full year to March 2021 despite operating in an environment that was characterised by restrictions to social and economic activity implemented by authorities in response to the advent of the novel coronavirus (Covid-19) pandemic.
Delta largely makes more sales when people are free to go about their social and economic activities.
During the period under review, at least five months (March to May 2020 and January to February 2021) were under high lockdown levels.
In addition to reduced business activity arising from the Covid-19 lock downs, the operating environment was characterised by depreciation of the local currency and prevalence of multiple exchange rates, and hyperinflation which eroded consumer disposable incomes.
Despite the glaring challenges, the Group still managed to sell more than it did prior year comparative.
Lager beer volume grew by 17 percent with management saying the volume recovery was mostly during the second and third quarters following the relaxation of the Covid-19 restrictions.
In a statement accompanying the results, chairperson Canaan Dube said the Group adopted strategies to stimulate demand through competitive pricing in an environment of weak consumer demand and currency-related distortions in value chain costs.
The sparkling beverages business also registered sales volume growth of 33 percent over last year, with Dube saying the growth was on the back of “on the back of consistent product supply and competitive pricing.”’
However, supply could have been better as the category faced some constraints in the supply of key raw materials such as sugar and carbon dioxide which affected market supply during the period under review.
The sorghum beer business with Zimbabwe registering a 7 percent decrease in sales volume, while in Zambia sales volume grew by 6 percent.
Commenting on the Zimbabwe based business, Dube said the sector was adversely affected by the limited access to key trade channels such as bars, beer-halls and bottle stores which were closed during most phases of lockdowns.
While the Zambia businesses recorded sales volume growth, it continued to face “significant competitive pressure from the illegal trading in bulk beer in addition to the cost pressures arising from the escalation in the cost of imported materials due to the impact of currency depreciation”.
The South African entity, United National Breweries, was closed for extended periods as the authorities implemented very strict prohibitions on the sale and consumption of alcohol under the Covid-19 national lockdown measures. The entity is implementing volume recovery measures.
Associate companies, African Distillers (Afdis) and Schweppes Holdings Africa had a mixed sales volume performance with the former growing sales volume by 31 percent while the latter had a 1 percent drop.
Afdis could have faired much better but the wine category was adversely affected by the limited trading through on premise consumption outlets during hard lockdowns.
At Schweppes volume was further impacted by the limited supply of sugar in addition to the extended Covid-19 lock downs.
The growth in volumes, coupled with inflation induced pricing across all product categories resulted in the group recording inflation-beating revenue growth of 692 percent. Year-on-year inflation for March 2021 stood at 240,6 percent.
According to Dube, the Group recorded revenue of $33 billion to achieve a 692 percent growth in the comparative year.
“The revenue growth was driven by inflation-induced pricing across all product categories,” Dube noted.
Earnings before interest and tax grew by 557 percent over last year.
Earnings per share were 575,11 cents (local currency) and the group declared a final dividend of 105 cents, having earlier paid an interim dividend of 45 cents.
The Group remained cash generative closing the year with net funding of $1,3 billion.
Capital expenditure of $2,2 billion was below planned replacement levels due to forex constraints at the front end of the year.
This includes the acquisition of the bottling assets of Mutare Bottling Company.