Delta records 37 rise in half year revenue, says new tax dampens  confidence

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HARARE – The country’s biggest beverages  producer, Delta Corporation said on Thursday its half-year revenue  surged 37 percent on the back of firm consumer demand, but cautioned  the recently introduced “two cents on every dollar” tax had dampened  business confidence.

The group declared an interim dividend of 2.5 cents per share.

“The growth in revenue has positively impacted on profitability and  cash flows,” the company said in a trading update for the six months  ending 30 September.

Shortages of foreign currency continued to impact on production and  availability of packaging materials.

“Consumer demand has been firm due to increased economic activity in  mining and agriculture, expansionary fiscal and monetary policies and  the election related spending,” Delta said.

“The company has maintained stable retail prices since 2013.”

In the period, Delta recorded a 52 percent jump in lager beer volumes  compared to the same period last year.

“The business has responded well to the surge in demand, with volume  outturn surpassing historical peaks. There are some frictional  shortages of brands and packs occasioned by the limited production  capacity and raw  material supply issues,” the Zimbabwe Stock Exchange listed firm said.

Sorghum beer and soft drinks sales were up nine and three percent  respectively.

“The category (soft drinks) was adversely affected by the challenges  in securing imported raw materials, leading to extended periods of  production stoppages and out of stock situations,” Delta said.

Absence of some of its famous soft drinks brands has been noticeable  in the market.

Turning to the new tax introduced last week on electronic  transactions, Delta said government must in future engage stakeholders  first ahead of major policy pronouncements to maintain market  confidence.

“The two percent transaction tax took both business and consumers by  surprise, raising policy risks and undermining market confidence,” the  firm said.

Government has since said the tax, despite criticism by some in the  market, was staying as it was meant to widen its revenue base and aid  its attempts to cut borrowings to finance its expenditure. – New Ziana

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