SURGING consumer spending and stronger economic activity pushed Delta Corporation to its strongest financial performance on record, with the beverages group revealing that demand for some products outstripped production capacity during the year ended March 31.
The company crossed the US$1 billion revenue threshold for the first time after turnover rose 35 percent to US$1 billion, while profit before tax climbed US$209 million.
Growth was underpinned by rising volumes across lager beer, sorghum beer and soft drinks, as improved agricultural incomes, mining activity and construction spending stimulated consumer demand.
Operating income advanced 42 percent to US$209 million, with EBITDA also increasing 42 percent to US$236 million.
During the Delta analysts briefing at Manrk Training Centre in Harare, the company’s Chief executive officer Matihogonolo Valela said the broader economy was showing encouraging signs of recovery and spending confidence.
“We are seeing a very strong consumer demand. FMCG goods, domestic construction and even some corporate activities in the construction sector suggest that money is being spent,” said Valela.
“And this is coming from agriculture, cash crops, some food production, mineral prices and improved activity in the economy.”
Valela said Zimbabwe’s relative macro-economic calm had also improved trading conditions.
“When it comes to Zimbabwe itself, we are seeing relative stability. We are seeing stable growth rates as well as the economy is on a good start,” he said.
The beverages giant said foreign currency transactions now account for 94 percent of domestic sales, up from 80 percent in the previous financial year.
Delta’s lager beer business recorded a 10 percent increase in volumes, although the company admitted some brands experienced supply gaps due to stronger-than-expected demand.
“In some of our categories, we missed demand forecasts and we were pleasantly surprised by market support,” said Valela.
“CAPEX plans are now being implemented to correct that mismatch between supply and demand.”
To address the shortages, Delta is investing in additional production infrastructure, including a new packaging line, replacement of the brewhouse at Belmont Brewery and upgrades to equipment at Southerton Brewery.
The sorghum beer segment emerged as the group’s top-performing unit after volumes surged surpassing the previous all-time peak achieved in 1998.
Delta attributed the growth to improved rural liquidity from tobacco proceeds, mining incomes and aggressive market campaigns.
In the soft drinks business, sparkling beverages volumes increased during the year, while total soft drink volumes grew to 3.1 million hectolitres following the consolidation of Schweppes Holdings Africa Limited (SHAL).
Despite the strong earnings performance, Delta said the sugar surtax remained a major burden on the non-alcoholic beverages business, with the group absorbing around US$30 million in tax costs to cushion consumers from price increases.
The company also highlighted infrastructure and regulatory challenges affecting operations across the region.
“Power remains a challenge,” said Valela.
“There is no generation growth, so we are challenged.”
Delta is also locked in a dispute with the Zimbabwe Revenue Authority (ZIMRA), which is claiming approximately US$97 million in taxes, penalties and interest linked to foreign currency tax obligations dating back to 2019.
The company said it had already paid US$18.7 million under existing payment arrangements while continuing engagements with tax authorities and legal appeals.
Valela maintained that the dispute was largely rooted in exchange rate distortions experienced during Zimbabwe’s currency transition period.
“It’s not only the quality of the taxpayer situation. It is the currency chain distortion that has resulted in the crisis,” he said.
