ZIMBABWE beer brewer and soft drinks manufacturer Delta Corporation has declared a $0.6 cents (R9.30) final dividend after raising lager beer and sparkling beverages volumes by 38-65 percent respectively over the year period to the end of March.
Delta Corp is among only a few Zimbabwean companies to declare a US Dollar dividend in the past few years that have seen listed companies grapple with uncertainty in the financial and operating currency framework.
An associate company, African Distillers (Afdis) – which is controlled by Delta and South African wines and spirits manufacturer Distell – and hotel group African Sun are some of the companies that have declared dividends in hard currency.
The US Dollar dividend to be paid by Delta Corp is in addition to another Zimdollar denominated pay cheque to shareholders for the same period under review. Other companies such as Dairibord Holdings have had to cancel payment of declared dividends citing absence of credit facilities on the local market.
“The Board declared a final dividend of US$ 0,6 cents and ZW$ 120 cents per share to be paid on 17 June 2022, in line with the multi-currency framework,” said Sternford Moyo, the chairman for Delta Corp.
More than half of Delta Corp’s revenue for the period was “in foreign currency enabling better availability of imported inputs” supply. Earnings before interest and tax soared by some 150 percent to the equivalent of about $65 million at the interbank exchange rate of around $1:ZWL320.
As Zimbabwe battles headwinds from a bottoming out economy and global disturbances, most companies are anticipating a difficult operating framework. For Delta, among the blue chip stocks on the Zimbabwe bourse, there are a few windows of opportunity to boost consumption that include remittances and mining.
These were likely to ensure that “aggregate demand will remain firm” in the next few months. The company is however also bracing for likely volatility from next year’s general elections.
“The country gears for a general election in 2023. There are however indications that aggregate demand will remain firm largely driven by mining activities, diaspora remittances and infrastructure developments,” added Moyo.
Government-funded infrastructure development projects such as roads construction that have been blamed for inflaming the parallel market exchange rate by some economists will now be paid for in US Dollars and local currency on a 50-50 basis, Finance Minister Mthuli Ncube said on Wednesday.
During the year to end March, Delta raised lager beer volumes by 38 percent, attributable to “consistent product supply” as well as a “significant injection of new returnable glass bottles which enabled the better utilisation of existing production” capacity.
“There are opportunities for traders to moderate pricing in foreign currency which remains above recommended levels. A new packaging plant is scheduled for installation in early 2023 to further address market supply demands,” the company said.
The popular sorghum beer aimed for the lower end of the market delivered 43 percent volume growth for the Zimbabwe market on the back of “improved product supply and market pull” although the category was “affected by limited access to rural markets and key trade channels such as bars and beer-halls”.
Most of these channels remained inaccessible under Covid-19 lockdowns and curfews during the early parts of the period under review.
The soft drinks division recorded big growth in volumes of 65 percent after responding positively to market recovery strategies such as competitive pricing. The segment had faced stronger competition from the licensed manufacturer of Pepsi products that entered the market with relatively cheaper pricing.
BUSINESS REPORT ONLINE