ZIMBABWE Stock Exchange-listed manufacturing concern Delta Corporation has engaged Treasury over the current excise duty on lager beer amid concerns that the upward revision in tax has resulted in softened spending.
Acting Business Editor
Despite posting a 9,5% growth in half year earnings driven by rising sorghum beer and non-alcoholic beverages sales, the company announced a slump in lager beer volumes. After tax profit for the period under review rose to $47 million from $42,6 million driven by a 5% growth in revenue, earnings before interest and tax also rose to $62,6 million.
Delta, an associate of SABMiller said earnings per share rose to 3,83 cents during the period under review, up from 3,50 cents in prior comparative period. Lager beer gross sales were down 4% to $164 million while sorghum beer sales were up 24% to $76 million. Sparkling beverages sales increased by 8% to $110. Alternative beverages (maheu), which was recently launched were 59% to $7 million during the period under review.
Delta chief executive officer Pearson Gowero told an analyst briefing that the underperformance of the economy over the last six months has resulted to low demand for lager beers.
“We are currently engaging government to consider revising excise duty on lager beer,” Gowero said. Government increased excise duty by 5 cents last year.
The company said the operating environment for the second half of the year was likely going to be demanding as key economic sectors remained subdued. Analysts say demand for lager was further expected to decline due to the recent increase in prices as well as low disposable incomes as companies continued to fold.
Last Monday, the price of beer, according to Delta, increased by up to 20 cents. Before the increase in excise duty, Delta Corporation, 38% owned by global brewing giant SAB Miller, reported a $104 million after-tax profit for the full year to March compared with $72 million during the same period last year driven by strong sales of premium lager and non-alcoholic beverages.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
The company has also announced plans to commission an $8 million line for Chibuku in a bid to grow market share for sorghum beer.
Matts Valela, the company’s executive director in charge of finance said the new plant was to be financed using internally generated resources.
Meanwhile, the country’s industrial lobby group, the Confederation of Zimbabwe Industry, has also lobbied government over the country’s tax regime in the forthcoming national budget amid concerns of massive company closures.
CZI submitted a raft of measures required to turn around the manufacturing sector on the back of subdued capacity utilisation.
Capacity utilisation for the manufacturing sector this year declined to 39% from 44% mainly due to funding constraints.
