Dire economy knocks SABMiller Zim unit

Harare - Delta Corporation, the Zimbabwe-based unit of SABMiller [JSE:SAB], reported a 21% decline in lager beer volumes for the first quarter to June 2014, the company said.

Delta Corporation is Zimbabwe's largest listed company with a market capitalisation of $1.55bn, and is 38% owned by global brewing giant SABMiller.

In a trading update released on Wednesday, the company said performance in the period under review had been affected by the slowdown in consumer spending and economic activity.

Sparkling beverages were down 8%, but total beverages volumes for the quarter were up 1% on the prior year.

Overall volumes were, however, sustained by growth in sorghum beer and alternative beverages as consumers downgrade from lager to cheaper traditional beers.

“The sorghum beer category continues to record growth, up 15% for the quarter spurred by the investment in increased Chibuku Super production capacity.

“Alternative Maheu are up 22% on prior year for the quarter, with some encouraging uptake in the new dairy mix and drinking yoghurt beverages,” said the company.

Revenue for the period was down 3%.

Analysts said the update was not surprising, as Zimbabwean consumers are hard pressed for cash.

Zimbabwean businesses are struggling with high operational costs and debt, competition from cheaper imports and electricity shortages.

The economic environment continues to look dire for Zimbabwe, with the country failing to meet its revenue targets for the first half of the year.

The Zimbabwe Revenue Authority missed its first-half revenue collection target, reflective of the underlying economic environment.

Net revenue collections for the first half of 2014 amounted to $1.72bn against a target of $1.74bn, resulting in a negative variance of 1%.

Most of the revenue was realised from VAT, individual tax and excise duty which contributed 26%, 25% and 14% respectively.

 - Fin24