Zim economy conducive for our growth – Delta

by | Jan 18, 2022 | Uncategorized | 0 comments

 

• company applauds Government`s vaccine programme

Nevanji Munyaradzi Chiondegwa

Zimbabwean businesses will continue to benefit from the growth in consumer spending driven by agriculture, mining, infrastructural development and general commerce and to register growth in spite of the challenges related to an unstable exchange rate, high inflation and adverse impacts of COVID-19

This is according to the business outlook given by Delta Corporation Limited in its business update for the third quarter and nine months ended 31 December 2021.

The report by Delta Corporation, a blue-chip company with operations in Zimbabwe, Zambia and South Africa brings confirmation that indeed economic conditions in the country are improving.

It also comes at a time the World Bank country report has confirmed that the Zimbabwean economy grew by 5,1% despite the economic activities being hampered by the severe impacts of COVOD-19 pandemic.

According to Delta Corporation, the economy continues to benefit from slower inflation and increased use of foreign currency for domestic transactions which provides industry with better access to imported raw materials and inputs.

The company says that the improved access to foreign currency will enable it to undertake critical capital investments.

Consumer spending was spurred by increased mining activity, improved agricultural output, infrastructure projects and payments of bonuses and salaries in foreign currency.

The Company recorded increased sales volumes across all its brands in the third quarter under review with Financial performance growing by 34%.

The revenue grew 51% for the nine months in inflation adjusted terms compared to growth of 120% for the quarter and 149% for the nine months in historical cost terms. This reflects the volume recovery and replacement cost-based pricing.

The Group says it continues to leverage on the increased access to foreign currency through domestic foreign currency sales to contain input costs, which allows for competitive pricing.

Sorghum beer volume grew by 25% for the quarter and 50% for the nine months compared to prior year in Zimbabwe.

Chibuku Super contributed 77% in the quarter. There are ongoing interventions to unlock the capacity constraints on Chibuku Super in addition to the efforts to invigorate the standard and highly popular Chibuku (Scud) product.

The lager beer volume grew by 6% for the quarter and 33% for the nine months compared to the same period last year.

Product supply improved, benefiting from the injection of returnable glass and improved plant reliability. There were, however, supply gaps on some brands like the premium brand Zambezi Lager and other green bottle brands due to global supply chain disruptions induced by COVID-19.

The Sparkling Beverages business registered a robust volume recovery to grow by 34% for the quarter and 62% for the nine months compared to prior year.

This reflects market share gains driven by affordability, consistent product supply and an expanded pack and flavour offering.

The volume at wines and spirits maker African Distillers Limited (Afdis) grew by 32% for the quarter and 48% for the nine months, driven by improved supply of ciders and other locally produced brands, on the back of better access to imported inputs.

The increased economic activity also saw Delta Corporation associate entities such as Schweppes Holdings record a beverages volume growth of 15% for the quarter.

The 2021 intake of juicing fruit was below target due to higher exports of fresh fruit, itself a plus on the economy.

Meanwhile, Nampak, which benefits from increased volume sales, was yet to report its results. It is however anticipated that the report will be positive too.

Delta Corporation says, the rollout of vaccines has lessened the severity of Covid-19 and reduced mortality rates, with some countries concluding that the virus was now endemic.

This has allowed for a gradual return to normal levels of social and economic activity as people adjust to living with COVID-19.

“There are many uncertainties that make it difficult to estimate the full impact of the COVID-19 pandemic on the financial health of the Company and Group entities. We continue to encourage our employees and stakeholders to embrace vaccinations including the booster doses,” the report said.

The Company says it will continue to prioritise the safety and health of its employees and to adhere to best practice and COVID-19 protocols as advised by the authorities whilst seeking to exploit any opportunities to grow the business.

The Group will continue to up-scale its sustainable development initiatives with a particular emphasis on responsible alcohol consumption, environmental protection and corporate citizenship

 

Investor`s outlook

 

For those who have some money money put down as investments, Delta Corporation provides an option for investors to tap in the broader economic recovery story in Zimbabwe

With a GDP growth rate of 7.8% for 2021 and 5.5% expected for 2022 for Zimbabwe, investing in Delta Corporation shares is a no brainer.

The regional diversification strategy also adds some icing to the cake.

The expected continued benefits Zimbabwe will derive from the growth in consumer spending driven by agriculture, mining and infrastructural development is an advantage.

It also appears that there will always be room for beer volumes growth in Zimbabwe as per capita beer consumption levels remain lower than those seen in the developed world.

Population expansion and youthful demographics also provide significant tailwinds for growth. Any serious investor should be adding this liquid brewer to their portfolio.