TAURAI MANGUDHLA
Listed electric cables manufacturer Cafca has bemoaned tight liquidity
conditions prevailing in Zimbabwe for hindering the company’s ability to generate working capital.
Hyperinflation, the company said in its half year results statement for the period to March, is seriously affecting ability to finance increased
investment in working capital.
“Access to bank facilities is being hindered by the inability of banks to increase facilities due to their own constraints,” Cafca said, adding “despite
bank facilities in place of ZWL$45m the most Cafca has been able to utilise is ZWL$26m.
As a result of the liquidity constraints, the board resolved to waive payment of an interim dividend until the situation improves in the local market.
The company reported growth in revenues to ZWL$294.3m from
ZWL$162.6m during the same period prior year.
Arising from the inflation benefit of carrying large stocks of finished goods and no foreign liabilities plus the gain on export debtors and foreign bank and cash balances, profit before taxation for the current six months period was ZWL$83.1m from ZWL$3.5m made in the comparative period last year.
After tax profit closed the half year at ZWL$98.3m from ZWL$23.5m in the first half of 2019.
Volumes for the six month period to 31 March 2020 were 836 tonnes in line with the comparative period last year of 844 tonnes, the company
said. Export volumes increased from 11 % to 14% of sales.
Turnover moved from ZWL$18.6m in the comparative period last year to
ZWL$206.9m in the current half year.
The impact of hyperinflation on working capital is well illustrated when comparing the investment in inventories and trade and other receivables
between March 2020 and March 2019. The amounts invested therein as at 31 March 2020 are ZWL$151.6m against the investment as at 31
March 2019 of ZWL$11.2m.
The increase investment in working capital has been funded by profits
generated in the period and borrowings at March 31 of ZWL$23,645,219.
Despite the impact of the Covid-19 on the local market and export market supply chain, Cafca is still pursuing a monthly sales model of 140
tonnes.
Cafca has finished goods stock of 746 tonnes and export consignment stock
arrangements which have come in handy mitigating the impact of Covid-19 on the business.
Despite the expected local market liquidity constraints, Cafca says indications from local customers are that local sales expectations will be met.
