Delta Beverages posts another punchy set of results

Delta Corporation Limited, ZImbabwe's brewing giant, posted another punchy set of results showing a solid 39% growth in net income to $102.5m, beating analyst estimates of $96.0m for the final results of fear 2013.

The robust performance was supported by an improved sales mix, price adjustment in sorghum, margin expansion, reduced finance costs as well as a stronger performance by associates. The company declared a final dividend of $2.23c per share, bringing the total for the year to $3.40c.

Sales value grew ahead of volume growth at 14% to $554.8m, anchored by an 8% growth in lager sales to $325m, a 14% jump in SBs sales to $231m and a 15% increase in sorghum beer sales to $118m, while alternative beverages saw a 50% surge to $11m. EBIT margins improved to 24.7% from 20%, driving operating profit growth of 37%. This was on the back of an improved product mix, reduced maintenance and improved supply chain management.

In a note to its clients, Imara Africa said, in our view, Delta has a compelling story with its pristine balance sheet, strong cashflows and solid brands. Imara analysts expect the group to sustain the margin expansion supported by improved efficiencies, enhanced product mix and improved supply chain management. They believe there is still upside to the share price for long-term investors and recommended investors to buy the stock.