Home » Business » Delta Revenue Declines 4 Percent

A continued change in the mix from mainstream beer towards low cost and premium brands saw Delta’s revenue for the full year to March decline 4 percent to $575 million. Finance director Matts Valela told a briefing last week Wednesday that there was a general volume decline in favour of lower priced products.

He said as a result, there was a continued change in the beer categories mix. CEO Pearson Gowero said the volume and value loss that the business had incurred came from the mainstream category whose contribution to the mix was down 66 percent from 72 percent last year. There was, however, a gain in the premium brands to 26 percent from 21 percent and on the economy to 8 percent from 7 percent last year.

Mr Valela, however, noted that while overall gross income for lager beer was coming down, the unit price per hectolitre was up to $196,30 from $186,33 indicating the increased contribution from premium brands. The trend was the same for sorghum beer where the unit price per hectolitre is up to $47,47 from $42,47 again indicating the increased contribution of Chibuku Super. The trend was, however, not the same for sparkling beverages where the higher margin packs were affected by cheap imports resulting in the unit price per hectolitre coming down to $138,29 from $141,72.

Mr Valela said the PL was deleveraged with an EBIT decline much steeper than revenue decline as the group had to give up value at gross margin level as a result of the shift in the mix.

“We are understand what is happening now. We are reacting to it appropriately, we continue to look at it as we face the turbulence. We have no doubt we will ride the storm. We have managed to stem the fixed cost monster and we are at par with last year. We think there is still more to gain out of it.”

Lager beer volumes were down 17 percent to 1,41 million hls although Gowero noted that the rate of decline had improved than what it was two quarters ago “when we were really sliding”. Volumes for Sorghum beer which continue to capture mainstream drinkers soared 8 percent to 3,71 million hls reflecting an ardent appetite for favourably priced products in the market.

Sparkling beverage volumes declined 7 percent to 1,47 million hls due to lower priced imports and cordials while alternate beverage volumes grew 11 percent on prior year. All in all, total volumes declined 2 percent to 6,79 million hls. Sorghum beer was the largest contributor to revenue at 55 percent from 50 percent last year while lagers shrunk 5 percent to 20 percent from last year. In the beer category, sorghum beer contributed 72 percent while lagers contributed 28 percent. Mr Valela said Delta benefited from excise duty reduction and price reductions for affordability and competitiveness.

Lager beer sales declined 12 percent to $278 million, while sorghum beer sales shot up 21 percent to $176 million. In the soft drinks segment, sparkling beverage sales were down 10 percent to $204mln while alternative beverage sales grew 10 percent to $16 million. Operating income declined to $111.,13 million from $129,8 million as the firm lost value at the gross margin level which went down to 22 percent from 25 percent in the prior year. Taxation declined to $29.81 million from $32,22 million in the prior year. Profit for the year declined to $91.95 million from $104,07 million in the comparable period. Total comprehensive income for the year also declined to $92,8 million from $107,19 million in the prior year.

EBITDA was down 10 percent to $143,2 million, which was however better than the EBIT out turn of which was down 14 percent to $111,1 million. Attributable income declined by 13 percent to $91,9 million.

Source : The Herald

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