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Delta innovation bears fruit

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ZIMBABWE Stock Exchange-listed beverage entity Delta Corporation Limited recorded a 38% jump in after-tax profit to $104 million for the year ended March 31, 2013 as investments and innovation by the company bear fruit.

Report by Tarisai Mandizha

Revenues for the period under review rose 14 % to $631 million.

Speaking at the company’s analyst briefing in Harare on Wednesday, chief executive officer Pearson Gowero said Delta injected $83 million towards key projects aimed at reducing operating costs and improving efficiencies.

Gowero said total beverage volumes went up to 6,9 million while total lager volumes grew 4% led by premium brands.

“We have continued to innovate in packaging with the introduction of one-way bottles on both premium and mainstream brands on the back of improved plant capacity and increased returnable bottle float,” he said.

He said the government’s decision to increase excise duty from 40% to 45% in December 2012, to a level higher than regional averages, disrupted retail pricing which in turn slowed off-take in the last trading quarter after manufacturers were forced to increase prices.

Delta’s sparkling beverages full-year volume performance grew by 9% driven by improved product availability following the commissioning of a new PET packaging line in November 2012.

Gowero said Mahewu volumes grew by 42% due to localisation of the product and sorghum beer volumes were down 8% partly affected by the poor agriculture season and a raw material cost-induced price increase.

“We plan to drive growth by further strengthening our brands portfolio and manufacturing process capabilities while focusing on cost effectiveness to deliver sustained value to our shareholders,” he said.

The group has plans to increase lager production capacity to 3 million hectolitres (hls) if the need arise from the current 2,4 million hls.

Sparkling beverages capacity stood at 1,7 million hls and could be increased to 2,4 million hls while sorghum beer production could also be increased to 5 million hls.

Gowero said the volume performance was reflecting the slowing Gross Domestic Product growth rate, adding that electricity and water continued to be a challenge.

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