Home » Business » Big Sacrifices at CAFCA

CAFCA’s brave stance against the influx of foreign products into a market that has been paralysed by harsh policies and imports becomes the only such publicly declared sacrifice.

CAFCA Holdings Limited, which reported a 41 percent rise in revenue to US$14,2 million during half-year to March 31, 2015, says it could have turned over higher sales had it not placed heavy discounts on its cables to limit cheaper cables imports.

The listed cables maker had turned over US$10 million during the prior comparable period in 2014.

CAFCA assets were sweated at a higher scale during the half-year to March 2015, minting 72 percent more power cables, according to company secretary, Caroline Kangara, who commented as the firm lifted operating profit eight percent to US$1,1 million in 2015, from US$1 million in 2014.

But revenues remained depressed as a number of negative fundamentals continued to frustrate growth, among them the heavy imports.

CAFCA’s brave stance against the influx of foreign products into a market that has been paralysed by harsh policies and imports becomes the only such publicly declared sacrifice.

Several key manufacturers, such as the listed electronic goods producer, Powerspeed, have rolled out plans to abandon production in Zimbabwe and import finished products as a result of high costs of doing business that has made them extremely uncompetitive at a regional scale.

“In terms of volumes, we have pushed 72 percent more volume through the factory this half-year against the last half-year,” Kangara said in a commentary.

“The volumes have generated less revenue per tonne than in the previous period for a number of reasons. Firstly, exports were at low margins reflected in revenue per tonne 20 percent lower than in the local market. Secondly, sales in the local market were discounted 15 percent at the beginning of the year as a strategy to combat imports. Thirdly, sales on the barter deal are mainly aluminium where aluminium per tonne sells for around a third of the revenue per tonne from copper,” said Kangara.

Government has battled to strike a viable formula to arrest the debilitating effects of imports on such products as cars and textiles.

There has been a huge swing towards cheaper imports, which has exposed hundreds of industrial firms to insolvency as markets have shrunk and revenues hammered at a terrifying pace.

The Ministry of Finance and Economic Development says over 55 000 jobs were lost between 2011 and 2013 after 4 600 firms folded following a serious erosion of disposable incomes and a bloodbath on key industries.

Producers have blamed exorbitant interest rates for high prices, while banks have pointed at the volatile market that has seen them accessing lines of credit at a premium.

It has been a vicious cycle.

Source : Financial Gazette

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