Nyashadzashe Ndoro
Delta Corporation Limited is lamenting the complexity of the operating environment in Zimbabwe, which is characterised by inflation and currency crisis with “no easy solutions to the numerous economic challenges”.
Delta, in its business update for the third quarter ended 31 December 2023, said the Finance Minister Mthuli Ncube’s 2024 budget, which came with a cocktail of taxes, will impact negatively on the business environment.
The beverages company believes that Zimbabwe’s current economic troubles will not be easy to resolve due to the reduced foreign currency inflows arising from lower mineral prices and the likelihood of reduction in agricultural output.
“The operating environment in Zimbabwe remains complex, with no easy solutions to the numerous economic challenges such as the currency and inflation dynamics. The measures adopted in the 2024 budget will have a far-reaching impact on the business and the market in general. The beverages sector will be affected by the sugar tax and the restrictions arising from policies impacting the route to market,” the company said.
“Aggregate demand may be impacted by the high inflation and reduced foreign currency inflows arising from lower mineral prices and the anticipated reduction in agricultural output resulting from the forecasted below normal rainfall.”
On financial performance during the third quarter, the group said revenue increased by 19% in US Dollar terms compared to prior year and grew by 12% for the nine months.
“This reflects the volume growth across business units, with the proportion of US Dollar sales averaging above 70% for the year,” Delta said.
The group’s directors also considered the current operating environment and the requirements of the International Financial Reporting Standards and decided to present the F24 financial statements in US Dollars.
“The changeover has been implemented from October 2023 in line with IFRS. Notwithstanding the due care and best endeavours to provide users with the most realistic view of financial performance and position of the Group, there are inherent subjectivities and technicalities involved in the translation of ZW$ financial information. The Consumer Price Indices and exchange rates used in the conversion process may not be aligned to the rates inherent in the financial transactions; resulting in distortions in financial information.”
Going forward, the company said it would remain focused on its sustainability agenda, with increased activities in the areas of responsible alcohol consumption, reduction in waste and pollution, community involvement, and optimising resource utilisation.
“In the current year, we have amplified our communication on underage drinking under the Pledge 18 campaign, Make A Difference-Recycle executions, and uprated the brand activations supporting sports and culture,” Delta said.
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