Almot Maqolo, Staff Writer 
DELTA Corporation (Delta) will this year prioritise cutting costs across its supply chain in pursuit of more profitable growth, a senior company executive has said.
The beverage-maker has been hit by a plethora of operational challenges mainly the sugar tax, exchange rate distortions and foreign currency shortages to procure raw materials.
In a recent interview with The Financial Gazette, Delta’s finance director, Alex Makamure, said the rapid increase in costs had become a “bigger issue” for the group.
“The costs in this environment are very difficult to understand when they are quoted in either of these currencies. So, you need to be very careful as you deal with your supply chain that you are paying costs that are appropriate for your business.
“One of our focus areas is just to make sure that we re-look at our cost footprint, our fixed costs, to try and make sure that they are at the correct levels,” Makamure said.
Analysts predict that the country will remain a high-cost base for manufacturing, making it challenging for local firms to compete regionally within the African Continental Free Trade Area (AfCFTA).
Notably, industrialists have been pushing for the authorities to scrap the Intermediated Money Transfer Tax (IMTT) on electronic transactions to lower the cost of business.
They argue that IMTT has deterred some businesses from transacting through the formal banking platforms due to high costs.
As for the financials, Delta posted subdued results for the half year to September 30, 2024 affected by distortions in currency conversions.
Group revenue for the six months at US$389 million increased by 11 percent compared to the restated prior year figures.
The proportion of domestic sales undertaken in foreign currency declined from an average of 88 percent in the prior year to around 77 percent in the current period.
This shift is largely attributed to the introduction of the ZiG currency, the strict enforcement of dual pricing regulations and increased sales to the formal retail sector which largely trades in local currency.
Profit before tax stood at US$55,8 million whilst income (earnings before interest and tax) was at US$64,8 million.
The trading margins in the current period were partly affected by the under-recovery on the sugar tax and the higher cost of imported maize.
As a result, the group with its associate Schweppes Zimbabwe paid an equivalent of US$20,5 million in sugar tax for the period February to September 2024.
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