Delta Corporation recorded declines across its beverage lines, with soft drinks being the hardest hit, in a turbulent final quarter of its 2019 financial year.
The company has struggled to source foreign currency for its import requirements – mainly concentrates and packaging – even after the introduction of an interbank forex market in February. Some of its soft drink lines have only started to reappear on the market after months of shortages.
Last November, Delta said its annual foreign currency needs range from US$60 million to US$100 million, at the levels of product demand prevailing at the time. The company said it also owed dividends worth US$30 million to Anheuser-Busch InBev, the world’s largest brewer that’s Delta’s largest single shareholder with 40% equity.
Foreign suppliers were also owed US$41 million, the company said.
In a trading update published on Thursday, the beverage maker said soft drink volumes were 89% down in the three months to March 2019, compared to the same period of last year.
“The sparkling beverages business was virtually closed during the quarter due to non-availability of imported raw materials,” Delta said.
“Operations have since resumed, albeit at a slow pace. There are ongoing collaborative interventions together with The Coca-Cola Company to restore the business to a sustainable footing.”
Lager and sorghum beer volumes were down 3% and 2%, respectively in 2019Q4, compared to the corresponding quarter.
Delta’s woes also extended to Zambia, where its recent acquisition, National Breweries, recorded a 24% volume decline on the back of weak demand.
On an annual basis, lager and sorghum beers are up 31% and 5%, respectively. Soft drink volumes are, however, 44% weaker on a year on year basis.
The group will, however, report an overall 33% for the quarter and 26% for the full year, but this is thanks to February’s currency changes.
“It is noted that the financials are distorted by the changes in the reporting currency from USD to RTGS$, noting that the group maintained stable pricing for the nine months and only partially rebased prices in the fourth quarter,” Delta said.
“The full impact of the introduction of the introduction of the interbank exchange rates on the group’s financial position is still being assessed.”
Delta will report its FY2019 results on May 16.