Cables manufacturer CAFCA Limited’s profit for the year to September 30, 2018 surged 442 percent to $3,8 million from $0,7 million in the prior year, driven by growth in volumes spurred by local demand.
Revenue for the period rose 57 percent to $30 million compared to $19 million achieved in the same period last year.
According to CAFCA, revenue from customers domiciled in Zimbabwe amounted to $29 million, representing a growth of 61 percent from prior year’s figure of $18 million.
Revenue from external customers, mainly in Zambia, Malawi and Mozambique remained flat at $1,05 million.
This comes after Government implemented a trade protectionist measure through promulgation of the Statutory Instrument 64 of 2016 (later adjusted to SI-122 of 2017), which was meant to limit the importation of products that can be made locally to boost local consumption and industry activity.
SI-122 was, however, temporarily suspended to allow those with foreign currency to import products and avert shortages especially of basic commodities.
Operating profit improved four-fold to $5,2 million from $1,2 million achieved in the prior year.
Basic earnings per share rose 428 percent to 11,67 cents.
Management also attributed the growth to a change in sales mix from aluminium to copper.
“Most of the growth was in the local market resulting mainly from protection by Government of local manufacturers.
“Profitability has been improved by strong local demand and a change in sales mix. The high level of finished goods brought forward from the previous year has also contributed and allowed us to hold prices throughout the year,” said CAFCA.
In the prior year, volumes were adversely affected which resulted in break-even months until the cost base was significantly reduced.
Total assets grew 24 percent to $22,5 million.
By year end, cash balances stood at $8,9 million of which $3,5 million was set aside for dividend and $4 million for capital expenditure.
Stocks at the beginning of the financial year were at $8,2 million and closed at $8,6 million as a hedge against hyperinflation and short-term availability of foreign exchange.
CAFCA says the obtaining foreign currency shortages affecting local industry will continue to have adverse impact on business if not addressed.
“Until such time as the authorities can put in place a more equitable and stable system of foreign currency allocation it will be difficult to predict the fortunes of either the economy or the company.”
CAFCA declared a dividend of 10,5 cents a share.
Meanwhile the Competition and Tariff Commission (CTC) says it is investigating the company with regards alleged restrictive practices.
According to the CTC allegations of restrictive practices by Cafca and the Zimbabwe Electricity Transmission and Distribution Company (ZETDC).
“It was alleged that ZEDTC and Cafca have a barter trade agreement whereby Cafca is supplying aluminium conductor cables to ZEDTC in exchange for copper scrap from ZEDTC in a manner that excluded other players in the relevant market,” says CTC in a statement.
As a result of the “exclusive dealing”, the CTC requested that the Procurement Regulatory Authority of Zimbabwe (PRAZ) withdraws the authority it granted to Cafca and ZEDTC be advised to flight open tenders for aluminium conductor cables.