Declining volumes dent Delta's profits

Beverages producer Delta Corporation has reported a 19 percent decline in after tax profit to $35,7 million for the half-year to September 30 on the back of declining volumes across all its segments.

The group's total revenue for the period decreased 8 percent to $269 million, knocking after-tax profit to $35,7 million, down from $45 million in the prior comparable period.

In a statement accompanying the results chairman Mr Canaan Dube attributed the depressed performance to "changes in the portfolio mix, volume declines and the recent price moderations."

But strategies that were implemented during the course of this year, to address affordability and stimulate volumes through price reductions to take effect in the medium term, he added.

Operating income was down 20 percent due to a loss in financial leverage arising from the volume and revenue losses, Delta said.

Finance costs were flat at $3 million while earnings before interest, tax, depreciation and amortisation (EBIDTA) fell 16 percent
to $59,4 million.

In terms of the performances of its divisions, volumes in the lager beer segment were down 2 percent during the period under review. But the volume performance improved in the second quarter due to downward price adjustments.

The second quarter recorded a 5 percent volume increase.

The sparkling and alternative beverages segment recorded a volume decline of 15 percent for the period, a factor management attributed to increased competition from cheaper imports while the sorghum beer segment recorded a volume decline of 12 percent during the half-year.
The group's earnings per share declined 19 percent to $2,89. The board declared an interim dividend of $1,40 which is to be paid on December 9.

Delta is 38 percent owned by SABMiller, which is set to be acquired by Belgian-headquartered rival Anheuser-Busch InBev for $106 billion after the two parties yesterday announced an agreement on the terms of the transaction.