By Oliver Kazunga
Giant beverages producer, Delta Corporation, says it owes external creditors US$63,8 million and the debt was in existence when the country adopted a mono currency last year.
In a financial statement for the full year ended March 31, 2020, the listed beverages firm said it had entered into arrangements with the Reserve Bank of Zimbabwe (RBZ) for the redemption of the liability.
“The company owes US$63,8 million in foreign creditors and bank loans, which were in existence when the country adopted a mono currency in early 2019.
“The company entered into arrangements with the Reserve Bank of Zimbabwe as supported by the monetary authority regulations and guidelines for a systematic redemption of this liability,” said Delta.
It said a total of an estimated US$10 million was paid during the year in line with the arrangements with Apex Bank.
The Delta board, it said, remains anxious to see the end of the above foreign currency exposure and notes the difficulties of accounting for the same to achieve fair reporting while complying with IFRS (International Financial Reporting Standards).
In historical cost numbers, the group during the period under review, reported revenue of ZWL$4,2 billion to achieve a 480 percent growth on the comparative year. The revenue growth was driven by inflation induced pricing across all product categories.
“The net finance cost of ZWL$100 million is a result of foreign exchange losses and low deposit interest rates,” it said.
Commenting on the trading environment, the manufacturing concern said the operating climate has been turbulent, particularly due to hyperinflation, an unstable exchange rate, limited availability of foreign currency in the formal banking channels and the drought-induced shortages of brewing materials.
It said the supply of fuel and key utilities such as water and electricity continued to be erratic alongside negative macro-economic factors, thereby disrupting production and distribution operations.
“The prevalence of multiple exchange rates distorted operating costs and product pricing.
“The debasing of incomes as part of the Transitional Stabilisation Plan led to a collapse of demand across all beverage categories,” said the company.
During the financial year under review, Delta’s Lager beer volume was down 42 percent.
“There was a prioritisation of returnable bottle packs in an effort to conserve foreign currency and offer the more affordable packs to the consumer.
“It is noted that the circulation of returnable containers is slowed down during hyperinflation as traders hold them as a store of value.
“The premium category led by Zambezi Lager remains resilient as it held its proportionate share of the reduced volume,” said Delta.
The sorghum beer unit dropped 25 percent on last year and the pricing of the category was driven by the escalation in the cost of imported inputs such as packaging and brewing cereals.
“In line with our strategy, Chibuku Super remains the largest contributor to volume,” said Delta. Meanwhile, it said the sparkling beverages side saw volumes declining by 17 percent during the period under review compared to the previous year.
“The performance of the category was affected by foreign currency shortages, utility challenges especially water supply and reduced consumer spending.
“The business continues to work collaboratively with The Coca-Cola Company in order to maintain consistent product supply.
“The introduction of the ‘without sugar’ variants was a major highlight of the year,” it said.
African Distillers, during the financial period under review, continued to be dominant in its various product categories, thus, delivering pleasing results.
However, foreign currency shortages constrained the entity’s growth potential.
“The entity continued to innovate and successfully launched products that require less foreign currency,” it said.
On Schweppes Holdings Africa, its associate entity, Delta said the company recorded a volume loss for the year although its products continued to dominate the dilutable soft drinks category.
The entity continued to expand its value-added products from the agricultural processing division.
“Foreign currency shortages adversely impacted the supply of key brands while the deteriorating foreign exchange rates put pressure on pricing and costs,” said Delta. The Chronicle