eBusiness Weekly
HARARE – Beverage manufacturer, Delta corporation, on Thursday said volumes in both its lager and sorghum businesses in the fourth quarter ended March this year declined on weak consumer spending.
In a trading update for the quarter and full year ended March, Delta said lager volumes declined by three percent while sorghum volumes went down by two percent.
The company said demand for the sorghum category however remained encouraging despite the cost pressures on imported packaging materials, spares and the re-pricing of agricultural cereals.
“The Lager beer volume declined by 3 percent in comparison to prior year for the quarter and is up 31 percent for the full year. Demand has reduced due to the increase in RTGS$ wholesale and retail prices,” said Delta.
“The Sorghum beer volume in Zimbabwe contracted by 2 percent versus prior year for the quarter and grew by 5 percent for the full year.”
Retail prices for a pint of beer now ranges between 3 and 4 RTGS dollars, up from RTGS$1 at the beginning of the year.
“The value of the RTGS$ deposits continues to be eroded by the fast depreciating exchange rates and cost push inflation. Resultantly, there has been a severe decline in aggregate demand,” the company said.
Delta said the sparkling beverages business was virtually closed during the quarter due to non-availability of imported raw materials.
As a result, volumes declined by 89 percent compared to prior year for the quarter and decreased by 44 percent for the full year.
“Operations have since resumed albeit at a slow pace. There are ongoing collaborative interventions together with The Cola-Cola Company to restore the business to a sustainable footing,” it said.
Despite the troubling operating environment which led to depleted sales volumes, the price hikes of beer provided a sufficient cushion for the company.
“The Group revenue will reflect an increase of 33 percent for the quarter and 26 percent for the full year. It is noted that the financials are distorted by the changes in the reporting currency from US$ to RTGS$, noting that the Group maintained stable pricing for the nine months and only partially re-based prices in the fourth quarter.”
Delta said it was concerned about its ability to access foreign currency in order to meet its external obligations.
Full impact of the introduction of the inter-bank exchange rates on the Group’s financial position was still being assessed and full year results are expected to be published next month. – New Ziana
