Delta Corporation Limited issued the following trading update:
"The Company today issues an update for the second quarter and the half year ended 30 September 2018. The business performance reflects the relative impact of the import content requiring hard currency in each business segment. Consumer demand has been firm due to increased economic activity in mining and agriculture, expansionary fiscal and monetary policies and the election related spending. The Company has maintained stable retail prices since 2013.
Post the end of the reporting period, the fiscal and monetary policy pronouncements have been dampened by the currency policy statements which seem to contradict the previous undertakings by the Reserve Bank of Zimbabwe on the multicurrency framework. In addition the 2% transaction tax took both business and consumers by surprise, raising policy risks and undermining market confidence.
Government and regulators are urged to engage stakeholders ahead of major policy pronouncements in order to maintain market confidence.
Lager beer volume grew by 52% over prior year for the quarter and is up 54% for the six months. The business has responded well to the surge in demand, with volume outturn surpassing historical peaks. There are some frictional shortages of brands and packs occasioned by the limited production capacity and raw material supply issues.
The Sorghum beer volume in Zimbabwe grew by 9% above prior year for the quarter and 2% for the six months. There was an improvement in the supply of packaging materials for Chibuku Super. The production capacity for Chibuku Super is now fully extended whilst that for standard Chibuku is limited by the shortages of Scud bottles.
National Breweries Plc - Zambia (Natbrew Plc) recorded a volume growth of 13%, in response to the volume recovery initiatives which focus on packs and competitive pricing.
The Sparkling beverages volume declined by 14% compared to prior year for the quarter and grew by 3% for the six months. The category was adversely affected by the challenges in securing imported raw materials, leading to extended periods of production stoppages and out of stock situations.
Group revenue increased by 33% (30% organic growth) for the quarter and 37% for the half year driven by the volume growth in the beer businesses. The growth in revenue has positively impacted on profitability and cashflows.
The half year results are expected to be published on 8 November 2018.
The Group’s previous financial statements are available on the website www.delta.co.zw.
All standard legal disclaimers apply.
REMINDER ON CAUTIONARY STATEMENT
Shareholders are reminded that the Company is trading under a cautionary issued with respect to the notice received from The Coca-Cola Company (TCCC) advising of an intention to terminate the Bottler’s Agreements with the Group entities (Notified Intention). This followed the merger of AB InBev and SABMiller Plc in October 2016 and the subsequent agreement in principle reached between TCCC and AB InBev to explore options to restructure the bottling operations in a number of countries. The discussions amongst the parties are ongoing…"