Rising costs erode Delta’s Zambia subsidiary margins

December 20, 2021

Rising costs erode Delta’s Zambia subsidiary margins

Harare Bureau
DELTA Corporation says second quarter margins at its Zambian subsidiary, National Breweries (Natbrew), were eroded by high costs of distribution and packaging.

The giant beverages company attributed the erosion of margins to the depreciation of the Zambian kwacha prior to the coming in of the new government.

But the kwacha has appreciated following new President Hakainde Hichilema’s August 2021 election victory.

“Despite this, the appreciation of the kwacha post elections resulted in a significant exchange gain, which positively impacted the company`s loss after tax and loss per share,” the company said in a trading update.

The Zambian company expects its loss per share for the half year ended September 30, 2021 to be 84 percent lower than the corresponding period last year.

Natbrew produces, packages and markets traditional sorghum beer products in Zambia. Popular brands of its opaque beer are Chibuku Shake-Shake and Chibuku Super.

“The company recorded a 14 percent reduction in revenue due to the reduced volumes compared to last year as the Covid-19 restrictions in 2020 resulted in higher sales of some of the company’s packs.”

Limited access to market due to Covid-19 induced lockdowns and resurgence of competition from other bulk beer offerings that are not excise/VAT compliant continues to be a concern for the business.

It reported an operating loss of K122 million in the year ended March 31, 2021 against an operating loss of K70 million for the prior year.

The total indicative share trading liquidity for National Breweries Plc (NATBRW.zm) in the past 12 months, as of 3rd December 2021, is US$237,0243 (ZMW388.47K). An average of US$20 (ZMW32.37K) per month.

Delta acquired a controlling stake in Lusaka Stock Exchange-listed sorghum beer company, NatBrew, in 2017 from its parent firm, Anheuser-Busch InBev SA/NV (AB InBev).

The entity, which was acquired from Heinrich’s Syndicate, a subsidiary of AB InBev, is a leading sorghum beer producer in Zambia whose products are marketed under the Chibuku brand.