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Delta shrugs off economic woes


Zimbabwe Stock Exchange-listed beverage maker Delta Corporation will shrug off economic problems besetting the economy and continue to register growth, an international advisory firm has said.

Renaisance Capital (RenCap), in its sector report for the bellwether stock, said Delta would this year remain resilient despite a recent cut in economic growth projections.

Last month, Finance minister Tendai Biti revised downwards the country’s economic growth projections from 9,4% to 6,5% on the back of underperformance of diamond revenue and subdued performance of the manufacturing sector.

“We believe Zimbabwe’s macroeconomic environment is becoming more challenging in the absence of political reform.

“Although Delta has proved a resilient performer during difficult times, it is not immune to deteriorating growth in our view,” said RenCap in a research note.

“While a weaker macro-picture in 2012 and 2013 could impair volume growth, we still expect to see growth in revenue and earnings, driven by product-mix gains and improved efficiencies.

“For FY13 (full year 2013), we forecast revenue and earnings growth of 15% and 18% respectively. Over FY12 (full year 2012) — FY18 we expect top — and bottom-line growth to average 11% and 14%, respectively.”

Industry last week expressed fears over looming general elections, saying the forthcoming polls could trigger collapse of the under-financed manufacturing sector.

“We know that some of our companies will not be in existence this time next year unless something improves,” said Confederation of Zimbabwe Industries president Kumbirai Katsande recently.
“Difficult times are before us . . . Our plea to politicians is that they spare some thought for the economy, otherwise it will be difficult to pick up the pieces after the elections.

“As elections pick up steam, we are going to be tested on our maturity and non-partisan stance.”

Although capacity utilisation had improved in some sectors, including beverages and tobacco processing, some key sectors such as pharmaceuticals and paper and pulp industries were teetering on the brink of collapse.

The manufacturing sector, which is facing stiff competition from regional peers because of its antiquated technology, requires $2 billion to recapitalise.

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