Cafca profits down

HARARE - Zimbabwe Stock Exchange-listed cables manufacturer Cafca Holdings Limited  (Cafca) says its operating profit slumped 8,3 percent to $2,4 million in the full year to September 2015 from $2,7 million in the prior year due to declining economic conditions in the country.

In a statement accompanying the company's financials for the period under review, Cafca however said its revenue surged to $29,3 million from $23,6 million.

The cable's manufacturer noted that its strategy for the period was to push volumes and turnover to take the cables manufacturer to a 300 tonne per month capacity.

"This was achieved by cutting margins, vigorously exporting and pushing the factory on a 2x12 hour shift basis. As in the previous year, the barter deal with ZETDC gave us the bulk of our local sales," Cafca said.

Its barter deal, which commenced last year, has seen the company benefiting from replacing Zesa's copper cables with aluminium ones which are cheaper.

The listed concern's volumes during the year grew 39 percent as turnover surged 24 percent year on year.

"Turnover growth was not in line with the volume growth as we reduced selling prices and also increased exports as lower selling prices, there was also a shift from copper to aluminium products," Cafca said.

Profit before tax was 8,7 percent below prior comparable period, at $2,4 million from $2,6 million while profit for the period was $1,7 million down from $2 million.

"Provide for in the profit is an amount of $284 000 being a Zimbabwe Revenue Authority charge on a reclassification of our aluminium rod raw material at a finished good requiring us to pay for the year at 2010 at 15 percent instead of five percent," the company added.

The cables manufacturer, which reported a 41 percent rise in revenue to $14,2 million during half-year to March 31, 2015, is on record saying it could have turned over higher sales had it not placed heavy discounts on its cables to limit cheaper cables imports.

The listed cables maker had turned over $10 million during the prior comparable period in 2014.

Cafca assets were sweated at a higher scale during the half-year to March 2015, minting 72 percent more power cables.

In the outlook period, Cafca intends to reduce sales and the consequential production output of 200 tonnes per month as it clears stock and debtors build up to get cash in the bank with a view of ramping volumes to 300 tonnes per month should the economic conditions improve.

No dividend was declared for the period under review, in view of the amounts invested in debtors and stock taking into account economic uncertainity.

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