DELTA Corporation Limited owes shareholders and creditors at least $30 million due to cash problems in the Zimbabwean market, which has made it impossible for companies to make foreign payments on time.
BY VICTORIA MTOMBA
The company has a backlog on foreign dividend of $14,8m which was paid in June, about $6m for investments for Masvingo and Kwekwe plants and the balance is for suppliers.
The delays in settling foreign creditors and external dividend payments has resulted in a higher net funding of $132m, Delta said.
“We could have paid it, but that could have meant sacrificing the business. But the shareholder understands the business and has prioritised capital and raw materials. We should be able to pay before year-end the foreign dividend, but I am not sure how much,” an official said.
Delta group executive director finance, Matts Valela, during the company’s analyst briefing on Wednesday, said: “We should be taking sufficient measures to avoid disruptions of suppliers and paying shareholders on time.”
The cash crisis has also affected other companies, with the country’s biggest telecom firm, Econet Wireless Zimbabwe, saying it was struggling to meet United States dollar-denominated commitments.
In a statement accompanying the company’s half year results for the period ended August 31, 2016, Econet board chairman James Myers said the depletion of the country’s foreign currency reserves had made it difficult for all companies to make payments to foreign suppliers of capital, goods and services.
- 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
“As a result, we have been unable to make certain debt repayments on time, notwithstanding that cash was available in our local bank accounts. This situation is expected to persist. We have engaged our lenders and continue to explore mutually acceptable solutions,” he said.
Speaking at Delta’s analysts briefing, the company’s chief executive officer Pearson Gowero said water shortages were affecting the business and was more pronounced in October, adding that the company could not import water.
“There is not enough processed water and as a business, it’s a major risk. We are doing everything possible, we have water reservoirs. Beyond that, we cannot give any guarantee,” he said.
Delta warned of disruptions to production due to depleted dam and ground water sources.
The business requires about four times water to produce one litre of any of its beverages, with lager beer requiring about six times.
Valela said the company has sufficient inputs for lager beer, which is burley, sitting at two years’ cover.
“We have sufficient maize cover to take us beyond our peak close to the harvest March-June. There will be reasonable quality of maize,” he said.
Delta posted a decline in profit-after-tax to $30,9m for the half year ended September 30, 2016, compared to $35,7m same period in 2015.
Earnings per share were down by 13% to 2,52 cents while revenue was down by 8% to $246,6m.
