CABLE manufacturer, Cafca Limited (Cafca) has revealed that the operating environment continues to pose challenges, influenced by policy changes, currency instability and power supply challenges, despite a 29% increase in revenue in its first quarter.
In its trading update for its first quarter ended December 31, 2024, Cafca said the period saw industry and commerce adjusting to various changes.
These changes include the September 2024 currency devaluation, reduced expansionary spending on road infrastructure, increased power disruptions and a rise in informal retail.
“The market experienced an increase in smuggled products, disrupting value chains and forcing retailers and manufacturers to adapt rapidly. In addition, this was encouraged by a shift in trade towards the United States Dollar due to transacting preferences as well as limited circulation of Zimbabwe Gold,” Cafca said.
“The gold sector experienced a price rally, while other commodities saw their average prices softening during the 2024 calendar year.
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“The relatively stable performance in the mining sector, buoyed by gold production, was unable to offset the negative impact of the drought on agricultural output and the weak commodity prices of other minerals on the Zimbabwean economy.”
Cafca said it was now working to improve its operational capabilities as some of these challenges experienced during the period under review persist.
“The operating environment in Zimbabwe continues to pose challenges, influenced by policy changes, currency instability and power supply challenges,” the cable manufacturer said.
“While it is expected that the government will take measures to address these gaps, Cafca is working to improve its operational capabilities to constantly compete and meet our customers’ needs.
“To that end, Cafca will focus on operational effectiveness to protect margins and drive profitability.”
Despite the challenges, the firm’s volumes grew by 23%, supported by a 74% growth in aluminium volumes compared to the prior comparative period.
Cafca said the copper-based business grew by 13% compared to the prior comparative period.
“Revenue for the quarter ended December 31, 2024 grew by 29% compared to the prior comparative period due to volume growth,” the cable maker said.
“Trading margins remained under pressure due to increased industry competition.”
In terms of delivery, however, Cafca said production was affected by power disruptions and surges, causing equipment breakdowns.
“Cafca, however, managed to meet customer production requirements. The company continued to engage distributors to maintain high product availability on the shop floor,” Cafca said.
Explaining its volume growth, Cafca revealed the utilities and commercial business showed substantial growth, with volumes increasing by 187% and 83%, respectively, compared to the prior comparative period.
“Retail and distribution volumes declined by 25% in the first quarter, compared to the prior comparative period, due to the constrained trading space influenced by informalisation,” Cafca said.
“Exports dropped by 39% against prior year, due to foreign currency supply gaps in the key export markets such as Malawi, Mozambique and East Africa.”
