Cafca after-tax profit declines

Cafca after-tax profit declines
Published: 20 November 2013
Cafca reported a flat set of results showing a 3% growth in revenue on the back of reduced realizations per tonne due to increased sales of aluminium as opposed to copper as well as increase in export volumes.
Operating profit declined by 13% to $2.1m as a result of depressed margins on exports and the strategy of combating imports on price locally.

Cashflows were strained on high working capital requirements and high finance charges. Net cash generated from operations was a negative $0.7m. Borrowings grew from $1.1m to $1.7m mainly to fund the copper barter deal with ZEDTC resulting in a 76% increase in finance charges to $157,455.

Although net gearing deteriorated from 7.8% to 16.4%, it remained manageable. The company recorded an improved balance sheet as current assets grew 6% y-o-y to $11.0m which is approximately 3.5 times the current liabilities.

Although CAFCA remains the only cable manufacturer in Zimbabwe they face stiff competition from cheap imports. The company is focusing on copper barter project and sees growth in 2014 should they get assistance from the government

Imara Edwards Stockbrokers analyst, Lilian Kugarakuripi says "The company is well positioned to take advantage of any increase in infrastructural development, nonetheless, the current liquidity constraints negatively impact on trading."
- businessdaily
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