Fuel price increases, inflationary pressures and implementation of the living wage were "challenging our ability to achieve acceptable margins", directors of the council-owned company said in their six-monthly report to December.
"It has also become evident over this period that price increase mechanisms within our major contracts are not fully reflective of these current pressures."
The directors drew attention to unprecedented levels of Covid-19 and other sick leave, and a high level of staff turnover.
Strict border measures and low unemployment had made it harder to attract and retain skilled staff, they said.
Delta is part of the Dunedin City Holdings Ltd (DCHL) group of companies owned by the Dunedin City Council.
DCHL chairman Keith Cooper told the council’s finance and council-controlled organisations committee he was satisfied with how the group’s companies were tracking, except for Delta.
Action to turn around the situation was expected come to a head within six weeks and further reviews might be needed, he said.
"You can rest assured it’s got our full attention," he said.
Delta’s performance was reported to be ahead of the prior year, but behind budget.
It recorded a net profit after tax of $1.2 million for the period but, as Dunedin Mayor Jules Radich highlighted, it would have had a loss if it were not for $1.9 million in sale proceeds related to collection of historical debt from a Christchurch subdivision.
The original debt of more than $13 million from the Yaldhurst development had been recovered and some further funds were coming in, but would soon be at an end, councillors were told.
Deputy mayor Sophie Barker noted a high staff satisfaction rating at Aurora Energy and wondered if its keys to success might be shared with Delta.
Work was being done to share initiatives about matters such as wellbeing across the group, DCHL general manager Jemma Adams said.
Committee chairman Cr Lee Vandervis said some questions about the performance of companies were "fairly longstanding" and councillors were receiving more information to help them understand issues.
Council oversight in the past had "not been quite what it could be".
