Delta pays final dividend of US$45,1 million

Delta pays final dividend of US$45,1 million

The company paid a total of over US$166 million in direct and indirect taxes during the year, under review which mainly comprises excise duty on clear beer and value added tax.

LEADING Beverage concern, Delta Corporation will on Wednesday reward its shareholders with a final dividend of US$28,4 million.
This will bring the total dividend for the financial year to March 2015 to US$45,1 million, which is three percent above the US$43,7 million disbursed in 2014.
The Zimbabwe Stock Exchange listed entity has been paying dividends since 2010 despite committing significant amounts to the capital investment program.
The company has increased the dividend pay-out despite the profit for the year declining by 13 percent from US$107,2 million in 2014 to US$92,8 million this year. The decline in profit was on the back of reduced volume and revenues from lager beer and soft drinks, which reflects the difficult trading environment.
The company paid a total of over US$166 million in direct and indirect taxes during the year, under review which mainly comprises excise duty on clear beer and value added tax.
The finance director, Matts Valela told analysts at the 2015 results briefing in May that the company intends to reduce the dividend cover to around two times, benefiting from reduced capital expenditure.
He emphasised the importance of rewarding shareholders with cash as some of them, particularly pensioners, rely on these remittances for sustenance.
The dividend will be paid to shareholders registered in the books of the company as at June 5 2015.
To improve on profit going forward, Delta said it will implement business survival initiatives which include reducing fixed costs and optimization of production and distribution costs. Volume recovery initiatives will also be implemented. This is expected to be achieved through a review of pricing for affordability and competitiveness across all beverage categories. Delta is also expected to optimize working capital and leverage on its positive cash position.
Sparkling beverage volumes declined by seven percent to 1,47 million hectolitres due to lower priced imports and cordials while alternate beverage volumes grew 11 percent to 194 hectolitres on prior year. All in all, total volumes declined two percent to 6,79 million hectolitres.
Sorghum beer was the largest contributor to revenue at 55 percent from 50 percent last year while lagers shrunk five percent to 20 percent from last year. In the beer category, sorghum beer contributed 72 percent while lagers contributed 28 percent. Delta says it benefited from excise duty reduction and price reductions for affordability and competitiveness.
Lager beer sales declined 12 percent to US$278 million, while sorghum beer sales shot up 21 percent to US$176 million.
In the soft drinks segment, sparkling beverage sales were down 10 percent to US$204 million while alternative beverage sales grew 10 percent to US$16 million.
Delta’s operation to a large extend is a mirror of the country’s economic environment.
The company’s business model however allows it to generate significant cash and grow volumes.
Essentially, Delta is able to transfer any increase in the cost of production to its consumer without suffering a significant drop in demand.
Delta has also seen a rapid growth in capacity utilisation post dollarisation which can be attributed to a robust business model and constant investment in plant and machinery.
The business is ahead in grabbing opportunities arising from the prevailing macro-economic stability. It has been one of the few manufacturers which managed to attain optimum capacity utilisation after the introduction of the multiple currency system.
Delta’s operating income declined to US$111,1 million from US$129,8 million as the firm lost value at the gross margin level which went down to 22 percentfrom 25 percent in the prior year. Taxation declined to US$29,81 million from US$32,22 million in the prior year. Profit for the year declined to US$91,95 million from US$104 073 in the comparable period. Total assets grew to US$663,66 million from US$619,88 million in the comparable period.

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