By Alois Vinga
ZIMBABWE Stock Exchange (ZSE) listed cables manufacturer, CAFCA’s pursuance of an export strategy has prompted a 70 % increase in sales as the company moves towards hedging against internal economic instability and hyperinflation.
Presenting the company’s financial report for the half year ended September 30, 2019, CAFCA company secretary, Caroline Kangara said the company is working flat out to keep its operations on course despite the challenging economic terrain.
“Export volumes have increased 70 % over the past year. As a hedge against inflation, the company has also built up stocks of 675 tonnes of finished products, almost five times its monthly sales of 140 tonnes,” she said.
The export sales increases have led to a 54 % value growth for the cables manufacturer.
During the period under review, turnover has increased from $30.4 million in the previous year to $93.4 million in the current year despite volumes dropping 24 %.
The increase is attributable to the change in exchange rates which moved from 1;1 at the beginning of the year to close and closed the year at 15 to 1 at the end of the year.
Pre – tax profit for the year at $54.1 million increased against the prior year of $5.2 million at a greater rate than the turnover increase due to large holdings of finished goods at the old exchange rate and due to costs not increasing as quickly as the exchange rate movement.
Earnings per share has grown by a multiple of 11 from 11.67 per share to 124.51 cents.
“Looking at the statement of financial position, what is significant is the growth in stocks which represents a strategic intent to increase finished goods stock as a hedge against inflation and to ensure the market has a ready access to the large range of CAFCA product lines,” said Kangara.
CAFCA is carrying 675 tonnes of finished products against a monthly sales model of 140 tonnes.
In future , the company is looking forward to take advantage of local and export market opportunities after adopting adequate mitigating strategies against the hyperinflation and challenging local economic environment.
Profit for the year stood at $18,7 million , non- current liabilities $17 million while current liabilities are at $30 million against a total equity of $88 million.