HARARE: Delta Corporation Limited experienced decline in revenue of 10% in the quarter ended June 30 from the same period last year attributed to a drop in volumes, the company has said.
Volumes were down 12% during the period from the comparable period last year.
Speaking at the company’s annual general meeting last week, chief executive officer Pearson Gowero said the strong United States dollar was encouraging imports exposing the uncompetitive nature of the economy. He said under performance in the agriculture sector, particularly cereals and poor commodity prices had continued to affect sales.
“We have had no meaningful or tangible foreign direct investment, which means that there has been a lot less cash coming in, our exports are not growing, so the amount of available cash to our economy has continued to be somewhat limited,” Gowero said.
“We are seeing a lot of evidence of stress to our consumers and we note that fewer and fewer of our consumers have regular incomes now.”
Delta said lager beer saw an 8% drop in volumes and a 15% decline in revenue, while sorghum beer experienced a decline of 12% and a 2% drop in revenue.
The compmany said soft drinks were the hardest hit with a 15% decline in volumes and 16% in revenue due to competition from imported value products and cordials.
“We are just seeing sales that are generally flat for most of the days be it a Saturday or Friday or Monday we do not see a distinction,” Gowero said.
Gowero said as a result of the decline across the board, Delta had tightened credit in the face of increased risk.
He said the past five or six weeks they had adjusted prices that were slowly being felt.
“Where we have lost our market share is on account of similar products, particularly in the area of Castle Lite that has been coming from South Africa, it is a friendly fire but it is also denting the business here,” Gowero said.
He said the reason why sparkling beverages were being hit hard was cheaper imports such as Twizza, which were moving faster on the shelves. He said there was a lower cost on importing compared to their production costs. Gowero said the decline in volume had seen the company regressing.
As a result, Gowero said, it was having an impact on Delta’s associates such as Schweppes Zimbabwe Limited whose revenue was down 5% while Nampak Zimbabwe’s packaging volumes were depressed in line with key customer performance.
In response to the decline, Delta will embark on several strategies to improve company revenues. These include moving towards driving the top line of the company, improving product mix, reducing costs across value chain, nurturing the brand portfolio, optimising capital expenditure to drive productivity and sustaining a dividend pay-out.
