BY TAURAI MANGUDHLA
ZIMBABWE Stock Exchange (ZSE)-listed beverages manufacturer, Delta Corporation yesterday added its voice to growing concerns over policy inconsistency and currency volatility in the country, saying they affected operations during the year ended March 31, 2021.
The beverages producer said currency depreciation during the period was compounded by multiple exchange rates, hyperinflation, and reduced business during COVID-19-induced lockdowns.
Zimbabwe has had several changes to its currency in the past three years, which have created problems in the treatment of transactions for tax purposes in the absence of clear guidelines.
“The board is concerned about the unstable operating environment as indicated by hyperinflation, frequent changes to the policy environment, a weak local currency and the existence of multiple and disparate exchange rates,” Delta chairman Edwin Dube said in a commentary to financials for the period.
“The access to foreign currency has, however, improved following the introduction of a foreign currency auction system and partial re-dollarisation.
“The legacy foreign liabilities are covered by the Reserve Bank of Zimbabwe arrangements, although the policy framework is not in place,” he said.
“Consumer disposable incomes were further eroded by high inflation and low pay increases.
“Some measure of macro-economic stability was registered following the relaxation of the use of foreign currency for domestic transactions and implementation of the foreign currency auction system. There were improvements in business performance during periods when the lockdown restrictions were relaxed, particularly during the last quarter of the calendar year 2020.”
The firm weathered the storm posed by the economic crisis, seeing its inflation adjusted profit after tax rise to $7,1 billion from $3,9 billion during the comparable period in 2020.
Revenues grew to $40,4 billion during the review period, compared to $29,1 billion in 2020, mostly after inflation adjusted pricing across the company’s product categories.
Delta said the economy would bounce back as the impact of the COVID-19 pandemic declines in response to measures adopted to fight it.
“The easing of the lockdown restrictions across the region is expected to rekindle economic activity and consumer spending.
“The improved cereals harvest will restore food security, reduce pressure on foreign currency required for imports and unlock discretionary spending,” Delta noted.
“The businesses in Zimbabwe are expected to record a recovery in volumes on the back of improved access to foreign currency through domestic nostro sales, a stable exchange rate and slower inflation.
“The business in Zambia is expected to benefit from the election-related activities during the year,” added Delta.
The firm declared a final dividend of 105 cents per share.
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