- CAFCA sales volumes were expected to increase in 2022 despite the dip
- Export volumes were 34 tonnes lower with local volumes dropping by 8% against prior period
- The firm managed to repay all the ZWL $ borrowings in the quarter
Harare - The construction and mining sectors saw a rise in activity in 2022, which was expected to influence sales, but a spike in interest rates hampered economic activity among corporate entities facing 200% loan rates, affecting CAFCA sales. CAFCA’s conductors sold during Q1(Oct 2022 – Dec 2022) dropped by 12% to 559 tonnes from 634 in the comparative period of the prior period.
CAFCA remains the only cable manufacturer in Zimbabwe. CAFCA is part of CBI Electric African Cables (RSA), which in turn is owned by Reunert Limited (RSA). CAFCA manufactures and supplies cable and allied products for the transmission and distribution of electrical s and information primarily in Southern and Central Africa.
In Q1 of 2022/2023, the firm's export volumes were 34 tonnes lower than in the prior period. This was partially caused by Malawian customers who had difficulties in obtaining foreign currency, which made Q1's stock replacement sluggish. Furthermore, Mozambique had a sizable one-time order in the comparable period that was not replicated in the period under review, and this in turn heavily reduced export volumes in the quarter. Despite this, the firm is still upbeat because of a sizable order that will be delivered in March which will look to help the company make up for the shortfall in this region. Throughout October and December 2022, Rwanda maintained its baseline of exports. CAFCA anticipates increasing exports to the DRC in March to further push export volumes in Q2 whereas, in Tanzania, the company has established a consignment stock arrangement.
Local volumes for the period were 8% lower than they were for the same quarter in the previous year, with the utilities sector and factory cash sales suffering the most. As the focus shifts back to harvesting rather than faults, utilities for the company are anticipated to pick up in Q2. Two of the three utilities have placed new orders, and a barter deal should hopefully improve. Factory cash sales for the quarter were lower because of an uncompetitive US $ price, which has subsequently been fixed with the modification of the retention guidelines.
CAFCA which is listed on the Zimbabwe Stock Exchange (ZSE), London Stock Exchange (LSE), and Johannesburg Stock Exchange (JSE), has 3 months sales cover in finished goods stock giving the firm the ability to meet the +/- 1400 stock lines the market requires about the company’s weekly production target of 16 line items.
In reaction to the banks increasing interest rates to 200% last year, the firm managed to repay all the ZWL $ borrowings in the quarter. We anticipate that the next 3 months’ sales volume for the firm will be higher than the current quarter’s volume.
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