CAFCA seeks timeous foreign currency to increase volumes

Source: CAFCA seeks timeous foreign currency to increase volumes | The Herald

Tapiwanashe Mangwiro Senior Business Reporter

 Listed cable manufacturer and exporter CAFCA said provided foreign currency is timeously distributed, it will boost its volumes per month. 

Delayed access to foreign currency is a manufacturing sector problem in which if sorted out production will increase, according to the company.

The company’s capacity remains at 250 tonnes a month with next year’s budgeted requirement taking them to about 90 percent of capacity.

 Managing director, Mrr Robert Webster said in a statement, “The biggest challenge the manufacturing sector has at the moment is to access sufficient foreign currency to maintain the momentum and growth that all stakeholders desire, provided timeous availability of foreign currency. We are confident that volumes will grow in the coming year both in the local and export market.

CAFCA said it was only getting foreign currency for raw materials and spare parts and could not invest in any new plant despite ageing equipment. The cable manufacturer therefore said it was hindering its capacity to increase volumes.

“Again no investment was made this year on the new plant as all the foreign currency we could source was prioritised to procuring raw materials and spare parts. 

“The age of our equipment requires us to have a significant investment in engineering spares and at year end we were carrying $63,8 million in engineering spares,” he continued.

In its 2021 annual report, the cable exporter noted that the 43 percent increase in volumes was the main driver in turnover increasing in historical terms by 293 percent to $3,3 billion.

Profitability was at 31 percent of turnover ahead of the company’s benchmark and this was attributed as a  benefit of carrying stock in a hyperinflationary environment.

In historical terms the statement of financial position values of the company was just over $1 billion of which $930 million is invested in stock.

 CAFCA said the declaration of a dividend has been waived until such a time when inflation is controlled and the auction system pre-financing requirement is also removed.

“Cash is being set aside to cater both for the auction system requirement and the impact that hyperinflation will have on financing future working capital,” the company said.

In their outlook, the company said they are not anticipating any material changes in the current environment either locally or regionally and accordingly the board is confident that moderate increase in volume in forthcoming year will be achieved.