Delta thriving on increased spending

Despite the high inflation, negative interest rates, severe foreign currency shortages, an unrealistic exchange rate and falling formal employment, consumer spending has been firm largely because of the low interest rates which discourage savings and the impact of remittances from Zimbabweans working outside the country, Delta Corporation, one of the heavyweights on the Zimbabwe Stock Exchange, says in its report for the first half ending September.

Its sales went up by 71 percent from $19.8 billion to $34 billion but more than trebled from $11 billion after accounting for the demerger which saw it shedding off its hotel operation Zimsun, the furniture business under Pelhams and the retail business of OK.

The company managed a net profit of $6.4 billion, more than the $5.8 billion it realised for the year ending March and more than five times its net profit of $1.1 billion for the first half of 2001.

Even in inflation adjusted terms, the net profit was not that bad, increasing from $2.3 billion to $6.4 billion, over half that for the year ending March which stood at $10.1 billion.

The company says exports grew by 462 percent to $1.4 billion. It set aside $3.3 billion to maintain and expand operations.

The company says it expects the second half to be more profitable since it is traditionally so containing as it does the holiday season peak activity and hotter weather.

It says expenditure on consumer goods is likely to remain strong over the second half because of high inflation, remittances into the country and low interest rates.

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