Cafca hopes to ride out COVID-19


LISTED cable manufacturer Cafca says it believes it will remain in business in the foreseeable future mainly due to no foreign debts and consistent supply of raw materials, despite the effects of COVID-19 threatening the survival of businesses globally.

By Fidelity Mhlanga

“Management has assessed that the company will continue operating as a going concern on the basis that the company has no exposure to foreign liabilities, stock of six months deliveries in finished goods. Raw materials suppliers are still shipping,” the company said in its half year results for the period ended March 31, 2020.

The company’s optimism also derived from the fact that it has secured loans and overdraft facilities to the tune of $31 million and its operations have been classified as an essential service.

Cafca said despite the impact of coronavirus on the market, it was still pursuing a monthly sales model of
140 tonnes to the export market.

“Assisting Cafca to mitigate these threats are our finished goods stock of 746 tonnes and our export consignment stock arrangements. We have commitments from our raw material suppliers that our immediate needs will be met with only our imported spare parts requirement being a minor challenge. Despite the expected local market liquidity constraints, indications from our local customers are that local sales expectations will be met,” the company said.

During the period under review, inflation-adjusted revenue tumbled 77% from $165,5 million to $294, 2 million in the prior year.

However, profit for the year jumped 318% to $98,3 million from $23,5 million the previous year. The company’s total assets decreased from $462,7 million to $383,2 million.

Volumes for the six months period to March 31, 2020 were marginally low at 836 tonnes from 844 tonnes recorded the same period last year.

Export volumes increased from 11% to 14% of sales.

In historical terms, turnover has moved from $18,6 million in the comparative period last year to $206,9 million in the current half year period.

“The impact of hyperinflation on working capital is well illustrated when comparing the investment in inventories and other trade receivables between March 2020 and March 2019. The amounts invested therein as at March 31, 2020 are $151,6 million against the investments as March 31, 2019 of $11,2 million,” it said.

The increase in investment in working capital has been funded by profits generated in the period and borrowings at March 31 of $23,6 million.

Total liabilities were slowed to $63,2 million from $90 million in the prior year.

Net cash generated from operating activities improved from a negative position of $13,2 million to $7 million.

Net cash generated from financing activities also increased to $15,4 million from $168 853.


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