Business / Companies
Delta Beverages posts strong interim results
10 Nov 2011 at 07:49hrs | Views
Delta posted strong interim results for 2012 registering overall beverage sales volume growth of 23% to 3.4m hectalitres, driven by growth in lager (+30% to 0.9m hl), sparkling beverages (+33% to 0.6m hl), sorghum (+15% to 1.8m hl) and maheu (+113%, albeit off a low base).
Malting tonnage jumped 57% to 16,705 tonnes. Plastic tonnage thickened 24% y-o-y on improved performance by the beverages and edible oil industries. The SBs volume growth was constrained by lack of 300ml due to packaging line constraints and an unusual cold August and September. The strong volume growth was supported by investments in machinery, brands and capacity.
Sales value grew ahead of volume growth at 41%. Operating margin improved 90bps to 18.5%, slightly below expectations on increased distribution, planned repairs and maintenance costs. The margin expansion can be attributed to improved efficiencies, competitive pricing, improved product mix and supply chain management. An interim dividend of 0.83 US cents per share was declared implying an annualised dividend yield of 2.6%. The LDR is Friday 09 December 2011.
Cash generation remained strong with 103% of EBITDA converted into cash. Net operating cash flow was strong at US$ 40.2m, representing a cash interest cover of 53.1x. The balance sheet is in pristine condition with manageable net gearing of 11.9%, although this was a slight deterioration from 9.2% at year end. The current ratio is somewhat distorted by US$ 22.9m container absorption charge included in current liabilities.
Post balance sheet date, Delta has managed to restructure its balance sheet and will take on US$ 60.0m long term debt (three years) at an all in cost of 7% and expunge short term borrowings.
Delta enjoys a dominant position in Zimbabwe, commanding approximately 96% of the beer market and about 92% of the sparkling beverages. Capex to EBITDA is expected at 67% in FY 2012 from 100% in FY 2011.
The declining capex is expected to enable the company to increase its dividend payout. Given the strong demand for lagers, Delta has decided to accelerate the commissioning of a new beer packaging line for Southerton to July/August 2012 from July/August 2013 and this will add an additional 600,000hl to lager capacity. A new SB returnable glass bottle (RGB) packaging line is planned for commissioning this month, just ahead of the traditional peak period and will add 600,000hl to capacity. This is expected to resolve the 300ml shortages. Furthermore, the continued investment in coolers continues to be a big contributor to volume growth.
Management revised guidance and upped total beverage volumes to grow to 7.0m hl in FY 2012 and operating margin to be between 20% and 21%. As the group increases the total volume sold it further increases its efficiencies allowing it to keep competitive pricing on its products. EBITDA is estimated at approximately US$ 116.0m for FY 2012.
Malting tonnage jumped 57% to 16,705 tonnes. Plastic tonnage thickened 24% y-o-y on improved performance by the beverages and edible oil industries. The SBs volume growth was constrained by lack of 300ml due to packaging line constraints and an unusual cold August and September. The strong volume growth was supported by investments in machinery, brands and capacity.
Sales value grew ahead of volume growth at 41%. Operating margin improved 90bps to 18.5%, slightly below expectations on increased distribution, planned repairs and maintenance costs. The margin expansion can be attributed to improved efficiencies, competitive pricing, improved product mix and supply chain management. An interim dividend of 0.83 US cents per share was declared implying an annualised dividend yield of 2.6%. The LDR is Friday 09 December 2011.
Cash generation remained strong with 103% of EBITDA converted into cash. Net operating cash flow was strong at US$ 40.2m, representing a cash interest cover of 53.1x. The balance sheet is in pristine condition with manageable net gearing of 11.9%, although this was a slight deterioration from 9.2% at year end. The current ratio is somewhat distorted by US$ 22.9m container absorption charge included in current liabilities.
Post balance sheet date, Delta has managed to restructure its balance sheet and will take on US$ 60.0m long term debt (three years) at an all in cost of 7% and expunge short term borrowings.
Delta enjoys a dominant position in Zimbabwe, commanding approximately 96% of the beer market and about 92% of the sparkling beverages. Capex to EBITDA is expected at 67% in FY 2012 from 100% in FY 2011.
The declining capex is expected to enable the company to increase its dividend payout. Given the strong demand for lagers, Delta has decided to accelerate the commissioning of a new beer packaging line for Southerton to July/August 2012 from July/August 2013 and this will add an additional 600,000hl to lager capacity. A new SB returnable glass bottle (RGB) packaging line is planned for commissioning this month, just ahead of the traditional peak period and will add 600,000hl to capacity. This is expected to resolve the 300ml shortages. Furthermore, the continued investment in coolers continues to be a big contributor to volume growth.
Management revised guidance and upped total beverage volumes to grow to 7.0m hl in FY 2012 and operating margin to be between 20% and 21%. As the group increases the total volume sold it further increases its efficiencies allowing it to keep competitive pricing on its products. EBITDA is estimated at approximately US$ 116.0m for FY 2012.
Source - Byo24News
