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BY TATIRA ZWINOIRA
Delta Corporation Limited chief executive officer Pearson Gowero says the company is struggling to access enough foreign currency from the interbank market recently introduced by the Reserve Bank of Zimbabwe.
Despite struggling to meet their foreign currency requirement, the beverage manufacturer grew its profit after tax by nearly 62% to ZWL$143,23 million for the financial year-ended March 31,2019 from the comparative ZWL$88,5 million previous period. This performance was driven by increased revenue.
“The biggest challenge is that we do not sell to the financial consumer, we sell to other businesses, so if the other businesses are earning foreign currency then they can pay us foreign currency… we offer some of our products in US dollars, but the bulk of what remains is in RTGS dollars,” Gowero said on the sidelines of Delta’s analyst briefing on Wednesday.
“There is now an interbank market, so anybody that required forex should go to the interbank market. But, what is clearly happening is that the interbank market doesn’t have enough dollars for everybody. We have participated there. I do not have the numbers, but we are not getting as much as we would like.”
He said as of now the Reserve Bank of Zimbabwe was not assisting them. In February, government introduced an interbank forex market to help companies source their own foreign currency to ease the demand on the central bank. However, since its introduction, there have been more buyers than sellers.
“Let me put it to you this way. When you look at our overheads, we require about US$60 million to US$80 million to sustain our operations to near capacity,” Gowero said.
“There was an initial amount of money available in the interbank market, but this was just in the first few weeks, thereafter, as I speak today there is very little if any that has been made available through that market and businesses have had to devise different ways of sustaining those investments.”
The lack of foreign currency left Delta with an exposure of US$85 million as at the end of its financial year ended March 31, 2019.
The beverage manufacturer, one of government’s largest taxpayers, reopened its soft drink manufacturing plant at the beginning of the month after a three-month hiatus due to foreign currency shortages.
Delta’s revenue grew by 26,24% to ZWL$722,38 million in the period under review from a comparative ZWL$572,22 million in the previous year.
The revenue performance was due to sustained consumer demand in Delta’s larger beer segment in the first half of Delta’s financial year.
But, Delta posted a significant increase in finance charges to ZWL$21,13 million in the period under review from a comparative of ZWL$5,89 million in the prior period.
Gowero said they had started noticing a decline in the demand for their products due to low disposable incomes which may impact the company for the rest of the year.