LISTED cable manufacturer, Cafcas’ profit plunged 34% to US$573 954 in the six months to March 31 2013, owing to stiff competition from imports that hit margins and liquidity problems in the economy.
Company secretary, Caroline Kangara said stiff competition from imports reduced margins by 5%.
“The current liquidity crisis arising from the political uncertainty could drag for the rest of the financial year,” said Kangara in a statement attached to the company’s financial results.
“Net profit after taxation was 34% below last year. We will reduce the deficit to last year by year -end, but whether we will recover the full amount is not certain.”
Turnover increased to US$12,7 million from US$10,9 million recorded in the prior comparative period which was largely buoyed by a 25% jump in sales volumes.
Exports contributed 93% to sales but this failed to improve profits because exports were at a lower unit price in the period, the company said.
Basic earnings per share dropped to 1,76 US cents compared to 2,68 UScents recorded in the same period the previous year while headline earnings per share also plummeted to 1,76 US cents from 2,76 US cents.
The company, however, said its balance sheet remained strong but was less liquid owing to high inventories and debtors as the copper barter project was not yet to speed.
Cafca last month said it was lobbying through various industry groups for the further scrapping of duty on aluminium cable following an announcement by Finance minister Tendai Biti that duty on cable had been reduced by half to 5%.
The company said scrapping of duty would improve the competitive advantage of the manufacturing industry in the country against imports.