DELTA Corporation says it remains focused on expanding production capacity and strengthening its supply chain despite ongoing tax disputes worth about US$97 million and rising pressure from global input costs.
In its trading update for the quarter ended June 30, the beverages group said it continued investing heavily in brewing, packaging and logistics infrastructure to meet growing consumer demand while simultaneously engaging tax authorities over long running assessments.
The Zimbabwe Revenue Authority has assessed additional foreign currency denominated income tax, VAT, interest and penalties relating to the period between 2019 and 2024 amounting to approximately US$97 million.
Delta said it had already paid US$20.8 million under Zimbabwe’s “pay now, argue later” principle while continuing to challenge key aspects of the assessments through the courts.
The company said it remained committed to finding an amicable resolution with the tax authorities.
At the same time, Delta is pressing ahead with significant investment in production capacity.
The company said upgrades at Southerton Brewery were expected to begin increasing output during the third quarter, while work on a replacement brewhouse and an additional packaging line at Belmont Brewery was progressing.
Further investment is also being channelled into returnable glass, packaging materials, crates and logistics to reduce supply shortages before the end of the year.
Delta said the capital programme was designed to capture rising consumer demand after lager beer volumes increased 17 percent during the first quarter.
Traditional sorghum beer volumes in Zimbabwe rose 20 percent, while African Distillers posted 43 percent growth.
Overall group beverage volumes increased 14 percent to approximately 3.4 million hectolitres, lifting quarterly revenue by 23 percent to US$294.6 million.
The company said favourable economic conditions, including a stable ZiG currency, low inflation, firm mineral prices, stronger agricultural output and increased diaspora remittances, continued to support consumer spending.
However, management warned that geopolitical tensions in the Middle East and Ukraine were increasing shipping costs, fuel prices, freight charges and imported raw material costs.
The group also highlighted pressure from Zimbabwe’s sugar tax, higher PET packaging costs and fuel prices, particularly within its non alcoholic beverages business.
Regionally, Delta said operations in South Africa were gradually improving despite affordability pressures, while Zambia’s economy was benefiting from declining inflation, lower interest rates and stronger copper prices.
The company said it remained alert to risks associated with raw material shortages, currency movements, fuel costs and global supply chain disruptions, while maintaining focus on disciplined pricing, preserving cash generation and completing strategic capital projects on schedule.
