Delta to complete Natbrew Zambia acquisition next year

DELTA Corporation Limited says the transaction for the acquisition of National Brewery Zambia (Natbrew) is expected to be completed by March next year as the beverages maker consolidates its position as a multi- beverages firm in the region.

Delta said it would acquire a majority stake in Natbrew in order to boost its multi beverage strategy. Natbrew is the leading sorghum beer producer in Zambia whose products are marketed under the Chibuku brand.

Delta chief executive Mr Pearson Gowero said that although the firm was not at liberty to disclose the finer details of the transaction, this would be concluded in the first quarter of 2018.

"That fits together in our long term strategy, of being a multi-beverage company," said Mr Gowero on the sidelines of the group's presentation of financial results for the half year to September 2017.

Meanwhile, progress on concluding the bottler agreement with The Coca Cola Company (TCCC) is taking longer than anticipated although management is confident of retaining the franchise and maintain the business. Other countries such as Botswana, Zambia and Lesotho are also affected although no conclusion has been made yet.

"Progress has been slow, the transaction is partially completed. The issue is complex but in the mean time we continue to run our business," said Mr Gowero.

In the half year to September 30, 2017, Delta's profit after tax rose 4 percent to $32 million compared to $30 million achieved in the same period last year on improved business from associate companies. Profit from associates increased by 355 percent to $1,6 million from $351,000 in the same period last year, driven by positive performance from both Afdis and Schweppes which recorded revenue and volume growth in the period.

Group's total revenue for the period marginally increased by one percent to $250 million from $246 million in the same period last year driven by higher volume of lager beer. Figures from the beverages giant show that lager beer volumes increased by 11 percent to 676 hectolitres while gross sales increased by 9 percent to $119 million with volume mix in favour of value packs and brands.

Sparkling beverages volumes remained flat while maheu increased by 19 percent on the prior comparable period. Sorghum beer volumes declined by 4 percent on the back of transactional challenges in the rural markets and the trading up to lager beers as well as disruptions experienced in the roll-out of the new 1,5 litre pack. Earnings before tax, interest, depreciation and amortisation (EBITDA) fell four percent to $53 million, reflecting the contribution of value packs and brand in the mix. Delta declared a dividend of 2,25 cents per share.