CAFCA battles economic headwinds amid declining sales and export challenges

SAMANTHA MADE 

Zimbabwe’s leading cable manufacturer, CAFCA Limited, has expressed deep concern over the country’s deteriorating trading environment, which has resulted in reduced sales volumes and mounting operational pressure. In its latest trading update, the company warned that volatility in both local and regional markets is straining its operations, prompting the board to continuously assess and recalibrate its strategies to safeguard market share and ensure long-term viability.

Caroline Kangara, the company’s secretary, revealed that CAFCA has been forced to rapidly adapt to the turbulent economic climate by revisiting its market approach to remain competitive.

“While the outlook remains challenging, the Board will continue monitoring the strategies put in place to navigate the turbulence in the trading environment,” Kangara said.

She noted that the company’s sales volumes for the half-year period were 5% lower than during the same period last year, attributing the decline directly to worsening trading conditions. This contraction also affected the company’s production of key raw materials, with copper and aluminium volumes declining by 12% and 10%, respectively, compared to the same period in the previous year.

Kangara further explained that export markets were also under pressure due to persistent foreign currency shortages in Malawi and Mozambique, CAFCA’s key regional trading partners.

“Foreign currency challenges in Malawi and Mozambique slowed down export business during the period. This coincided with the transition to a more direct sales arrangement without distributors from the previous consignment stock arrangement, in a bid to improve working capital efficiency in the export business,” she said.

Despite the challenges, Kangara highlighted that CAFCA managed to maintain a high level of delivery performance. “CAFCA’s delivery performance was sustained, with hit rates maintained at over 100%,” she stated, underscoring the company’s resilience in the face of adversity.

However, due to liquidity concerns, the board opted not to declare an interim dividend—contrary to other firms in the sector that announced payouts to shareholders as signs of financial stability.

“The Board decided not to declare an interim dividend considering cash flow considerations,” said Kangara.

She reassured stakeholders that the company’s financial foundations remain solid, and efforts are ongoing to manage working capital proactively.

“The balance sheet remains strong, with continuous effort being put to organise working capital for balance sheet preservation and agility to react to market conditions,” Kangara said.

CAFCA’s cautious yet strategic approach to navigating Zimbabwe’s unstable economic terrain reflects the broader challenges confronting local manufacturers. With inflationary pressures, foreign currency shortages, and regional exchange rate instabilities continuing to affect trade, the company’s response will likely serve as a bellwether for other exporters operating in similar environments.