RYAN CHIGOCHE
CAFCA Limited reported a sluggish volume performance in the six months to March 31, 2022, with the cable manufacturing company blaming the delay in getting regulatory approval to extend its barter deal with the Zimbabwe Electricity Transmission and Distribution Company (ZETDC).
The blame comes after CAFCA registered a marginal 2% volume increase to 1199 in the reviewed period from 1175 tonnes achieved in the prior comparable period.
“Volumes were adversely affected by the delay in getting regulatory approval to extend our barter deal with ZETDC and exchange control delays in getting paid by our Malawi customers which affected further sales,’’ the company secretary ,Caroline Kangara, said.
CAFCA , has over the years entered into a barter trade deal with ZETDC whereby it supplies ZETDC aluminum electricity conductors in return for copper scrap, a critical input for the cable manufacturer.
But the deal expired. An application for renewal was done. But, CAFCA is awaiting approval.
It comes at a time when the Competition and Tariff Commission has been condemning the barter agreement accusing the two of engaging in restrictive trade practices.
The commission further recommended that ZETDC flight open tenders for aluminium conductor cables.
In 2019, the company said it needed 100 tonnes of used copper every month for repurposing into cables for its markets.
Meanwhile, albeit raising concern on the exchange rate volatility, Kangara said the company is expecting a strong volume performance for the remainder of the current financial year to be driven by anticipated improved economic activity.
“ Exchange rate volatility is a cause for concern but the upside of it is increased economic activity as consumers invest to hedge their savings. We are therefore forecasting an increase in volumes in the second half of the year over the first half,’’ Kangara said.
Despite the sluggish volume growth, revenue for CAFCA jumped 44% to ZWL$3.3bn in the period under review from ZWL$2.3bn reported in the prior comparative period.
The bottom line for the group grew to ZWL$512 m from ZWL$115m in the prior comparable period.
Total assets increased 33% to ZWL$4bn from ZWL$3.2bn in 2021.
