Delta Corporation, Zimbabwe’s leading brewer and soft drinks manufacturer, has painted a grim picture of the country’s economy, highlighting its persistent fragility despite signs of resilience in consumer spending. Despite a 5% revenue increase to $807 million for the year ending March, the company cited a tough operating environment, intensifying competition, and poor economic policies as major challenges.
The local operating environment is fraught with significant operational challenges, including challenging route-to-market policies, constrained market access due to poor road infrastructure, high inflation, and an unstable domestic currency. According to Delta Corp’s chairman, Todd Moyo, these challenges have had a significant impact on the company’s operations.
Despite these challenges, consumer spending in Zimbabwe has remained resilient, driven by mining activities, government infrastructure projects, and rising diaspora remittances. However, aggregate demand for Delta Corp’s products was affected by lower mineral prices and reduced agricultural output due to prior year drought.
Delta Corp has urged the government to implement policies that would ensure the stability of the local currency and access to foreign currency through banking channels or trading channels. The company also highlighted the need for policy reforms to address the country’s economic challenges.
In terms of financial performance, Delta Corp’s revenue surged 5% to $807 million, driven by volume growth in its lager beer and the impact of the sugar tax. The company’s operating income for the period was $153 million, largely in line with the prior year’s earnings. However, the company paid $20.7 million in sugar tax to the government.
Delta Corp also highlighted the challenges posed by Zimbabwe’s Gold (ZWG) currency, which has suffered from inflationary pressures and widening disparity of market exchange rates. The company noted that official exchange rates enforced by the government no longer fully reflect prevailing market conditions, leading to significant exchange losses.
source – BusinessDaily
