Positive profit warning from Cafca

HARARE - Cafca says its earnings for the current trading year will be significantly higher compared to last year.

In a statement issued yesterday, the company said its earnings per share (EPS) and headline earnings per share for the year ended September 30, 2018 will be approximately 10,5 cents per share which is above the 2,21 cents per share recorded last year.

EPS is an approximate measurement of the amount of a company’s profit that can be allocated to each share of its stock. An increase in a company’s EPS generally follows improvements in the income of the company.

“Profitability has been improved by strong local demand and a change in sales mix from aluminium to copper products. The high level of finished goods brought forward from the previous year have also contributed and allowed us to hold our prices throughout the year,” said Cafca.

The listed cable manufacturer said it believes it is good corporate governance to publish a trading statement if a reasonable degree of certainty exists that the financial results for the period to be reported upon next will differ by a meaningful percentage from those of the previous corresponding period.

“The prior year was adversely affected by a volume decrease that resulted in break-even months until the cost base was significantly reduced, this cost base has since been maintained

The financial information on which this statement is based has not been reviewed and reported on by Cafca’s external auditors,” Cafca said.

The company advised shareholders to exercise caution in the trading of their Cafca shares and to be aware that a dividend has been approved by the directors and this would be announced shortly.

During the previous year, the company benefited from statutory import protection, as well as the lack of competition from imports on account of foreign currency shortages.

Cafca has its primary listing on the Zimbabwe Stock Exchange and secondary listing on the Johannesburg Stock Exchange.

Last month, Cafca said it had put its recapitalisation plans on hold due to the country’s worsening foreign currency shortages.

The continued shortage of foreign currency is making it difficult for industries to import raw materials for use in their production processes, hampering the growth of manufacturing in Zimbabwe.

Rob Webster, Cafca’s managing director, told The Financial Gazette that the industry requires at least $4 million annually to recapitalise operations.

“We have budgeted on spending $4 million per annum on recapitalising though without forex this will not happen no point in using precious foreign currency on machines if there are no raw materials to put through them,” he said.

Webster said the company has for the past few months not been getting adequate foreign currency resulting in production targets being missed.

“Despite that, up to now we have kept the market adequately supplied though some lines have meant our lead times were affected,” he said.

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