SABMiller’s Zimbabwe associate says Q1 revenue falls 10pct, mulls job cuts

SABMiller’s Zimbabwe associate says Q1 revenue falls 10pct, mulls job cuts

(updates with Q1 performance) By Bernard Mpofu, HARARE, July 16 (The Source) – The local associate of SABMiller has recorded a 10 percent decline in revenue for the first quarter-ended 30 June due to weak demand and price reductions.

Delta Corporation said volume performance for all beverage categories was subdued.

“This reflects the depressed consumer spend, driven largely by the underlying weak macro-economic performance,” it said in a trading update on Thursday.

Lager beer volume was eight percent below prior year while sparking beverages were down 15 percent. Maheu and dairy mix beverages recorded a decline of 11 percent attributed partly to production related supply outages.

The sorghum beer recorded a decline of 12 percent while Chibuku Super recorded a strong growth which was restricted by the available capacity.

Earlier, the company said it could be forced to retrench among several cost cutting measures because business performance has been on a downward spiral on the back of weakening aggregate demand and high operating costs.

“Business performance continues on a downward spiral. Naturally, we need to respond with speed to streamline our operations in line with the business performance,” an official said.

“In relation to human resources costs, the following measures must be undertaken. Volumes remain soft and we need to immediately respond by rationalizing our operations and reducing headcount.”

The company announced a cocktail of measures which include a drive to reduce leave days to 30 for all employees and a freeze on recruitment and internal promotions.

Sources said Delta had also cut on its training costs and has frozen the recruitment of students on industrial attachment until further notice.

When reached for comment, company secretary Alex Makamure said: “All companies have to look at survival strategies. We discussed business issues at the analyst briefing in May.”

SABMiller owns 38 percent of Delta’s issued share capital, whose $1,2 billion market capitalisation makes it the biggest stock on Zimbabwe the Stock Exchange.

An underperforming economy characterized by company closures and weak aggregate demand has seen most companies effecting cost reduction measures such as salary cuts and scaling down of operations to remain afloat.

Official data shows that 4,500 companies closed between 2011 and October last year, putting 65,000 people out of work.

Last week, Zimbabwe’s largest mobile phone operator Econet Wireless demanded that its supplies cut prices by 15 percent or risk being blacklisted, as the telco feels the effects of government enforced tariff cuts on voice services and a flat-lining economy.

Econet and its rival, Telecel — the local unit of Dutch telco VimpelCom — have also announced salary cuts after earnings declined.