Delta Corporation posts higher earnings despite ...

Delta Corporation posts higher earnings despite currency shocks

Oscar J Jeke- Zim Now Reporter

Delta Corporation Limited has reported a 14% rise in headline earnings per share and a 5% increase in group revenue for the financial year ended March 31, 2025, navigating a turbulent operating environment marked by policy shocks, exchange rate volatility, and regional headwinds.

The group’s profit after tax climbed to US$116.1 million, up from US$100.5 million in the previous year. This performance was underpinned by growth in the lager beer and wines and spirits segments.

Revenue for the year reached US$807.5 million, compared to US$767.9 million in 2024. This was driven by an 8% increase in lager beer volumes and a 15% volume growth at African Distillers. However, overall beverage volumes declined by 3% due to a 4% drop in sparkling beverages, a sharp 30% fall in Natbrew Zambia, and a 10% decline at United National Breweries in South Africa.

In Zimbabwe, sorghum beer volumes rose by 1%, but the group’s total volume in this category slipped by 7%, largely due to the cessation of regional exports.

Delta’s operating income remained flat at US$152.6 million, as profitability was weighed down by a US$12.3 million exchange loss following the 43% devaluation of the Zimbabwe Gold currency in September 2024.

Despite this, Delta raised its final dividend to 2.3 US cents per share, up from 2.0 cents. This brings the total dividend to 3.3 cents for the year.

Lager beer remained Delta’s top performer, generating US$351.9 million, an 11% increase. Sparkling beverages brought in US$165.9 million, up 13% despite lower volumes, impacted by the steep sugar tax, while the wines and spirits segment grew by 15% to US$59.7 million, helped by new ready-to-drink products and wider market penetration.

The company cited ongoing operational pressures in Zambia and South Africa.

In Zambia, Natbrew’s volumes plummeted 30% due to erratic power supply, rising maize costs, a weakening currency, and low consumer spending.

In South Africa, UNB volumes fell 10% following industrial action, although output began to recover after the commissioning of a new Chibuku Super plant in Phelindaba in May 2024.

Schweppes Holdings Africa, in which Delta recently raised its stake to 69%, saw a 15% volume drop due to sugar tax effects and competition from regional imports.

Meanwhile, Nampak Zimbabwe was hurt by power cuts, stiff local competition, and weak demand in the tobacco packaging sector.

Group CEO Maxwell Valela pointed to Zimbabwe’s fragile economic environment, shaped by a drought-hit agricultural season, deteriorating infrastructure, and fiscal changes that disrupted formal retail activity.

He noted that Delta absorbed US$21.1 million in sugar tax costs across its beverage lines to cushion consumers and preserve market share.

Delta’s shift to US-dollar reporting has brought more stability, with 83% of its Zimbabwe revenue earned in foreign currency. The company urged caution in comparing year-on-year financials due to distortions from exchange rate changes.

Delta is focused on sustainability and growth, with over US$70 million earmarked for capital expenditure, funded from internal resources.

Key initiatives include: expanding the returnable packaging model, enhancing local sourcing of cereals through smart agriculture, and accelerating digital transformation in retail operations.

The board remains optimistic, stating, “Despite persistent policy uncertainty and operational constraints, Delta is well-positioned to seize growth opportunities arising from increased consumer spending, infrastructure development, and mining-led economic activity.”