New Zimbabwe.com

Delta lifted by maheu as tax hike hits lagers

BEVERAGES group, Delta Corporation Limited said Wednesday that total beverage sales during the first quarter ending June 30 rose by four percent while revenue increased by eight percent over the same period.
In a trading update on Wednesday, Delta said the economy continued to experience softening consumer demand in the last quarter. Total beverages volumes were up four percent with all the categories except lager beer registering growth.
“Lager beer is down eight percent to prior year. The lager beer volume performance continues to be affected by the significantly higher than recommended retail prices in the general trade occasioned by the excise duty increase of December 2012 and lack of small coinage,” said Delta.
Delta said the company remains engaged with and give updates to government on the impact of high excise rates and the setting in of diminishing returns for both the fiscus and brewers.
“Sparkling beverages are up 13 percent, sorghum beer us up six percent with the recently commissioned Chibuku Super plant already running at full capacity. Maheu is up 80 percent to prior year,” the company said.
Revenue for the quarter was up eight percent.
“The overall financial performance for the quarter is in line with our expectations,” said Delta.
For the year ending March 31 2013, Delta said its Maheu division’s sales rose by 50 percent to US$11 million from US$5, 5 million the biggest increase by the company single section since the economy was formally dollarized in 2009.
The 50 percent increase though significantly smaller when compared to the other divisions, Delta has described it “as a good story which need to be invested in” because of its potential.
The company’s Lager sales rose eight percent to US$352 million, SBS increased by 14 percent to US$231 million and Chibuku rose 14 percent to US$118 million.
This enabled the company’s revenue to increase by 14 percent to US$631,3 million from US$554,7 million. Delta Corporation is 38 percent owned by global brewing giant SABMiller
“It is an exciting story … our divisions are reaching sales volumes that are more than some listed entities,” said Matlhogondo Valeta, Delta’s Executive Director Finance.
He said the group enjoyed a strong financial performance driven by an increased contribution of premium brands, improved productivity and margin expansion.Advertisement

Delta CEO Pearson Gowero said the group’s revenue grew as a result of improved sales mix and minimal price increases.
“This strong performance was achieved in a difficult trading environment particularly in the last quarter of the financial year arising from the slow-down in consumer spending and tight liquidity conditions in the market,” he said.
Delta reported a 36 percent rise in full-year earnings, driven by strong sales of premium lager and non-alcoholic beverages.  The company’s earnings per share rose to 8,49 cents during the period under review from 6,22c.
The company’s profit after-tax rose to US$104 million, from US$72 million last year.
Working capital is said to have increased marginally by US$5 million despite the increase in raw material stock holding to mitigate anticipated shortages.
“Capital expenditure was US$83,6 million as the company invested in production capacity and returnable containers,” said Valeta.
Cumulative capital expenditure since dollarization was US$287,5 million.
Delta became the first company on the local bourse to surpass a US$1 billion market capitalisation in October last year
Investors in Delta are also said to be buying into its ability to not only provide stable long term gains in the form of share price growth but consistent dividend pay-outs.
For the year to March 31 Delta declared a final dividend of US$2,23 cents per share bringing the total dividend for the year to 3,4 cents a 63 percent increase in one year.