NAIROBI, Kenya, Feb 9 – East African Cables has reported a Sh183.85 million profit after tax for the full year ended December 31, 2010. The profits were however 37 percent lower than the Sh296 million posted by the regional cable manufacture in 2009.
Briefing investors on Wednesday, EA Cables Chief Executive Officer George Mwangi attributed the decline to a one-off loss and restructuring costs recorded by its Tanzanian subsidiary.
"There was an impairment loss and this related to write-offs to do with bad debts and inventory that cost us about Sh193 million," Mr Mwangi told investors.
The company recorded an after-tax loss of Sh56 million in the first half of 2010. However, a strong performance in the second half saw the group record a second half profit of Sh241 million.
During the year, turnover grew by 28 percent to Sh3.6 billion from Sh2.8 billion in 2009 helped by high product prices as the firm increased cable prices by more than 30 percent. Assets grew to Sh4.5 billion from Sh3.5 billion.
EA Cables has two main factories in Kenya and Tanzania with operations spanning to Uganda and Rwanda.
The Kenyan unit posted Sh272.9 million in net profit in 2010 while the Tanzanian unit posted a net loss of Sh89.1 million.
The group however foresees tremendous growth as demand for electrical cables increases in the region.
"From where we sit, we want to take 2010 as an exception and we are looking for the growth levels we recorded between 2008 and 2009," Mr Mwangi said.
East African Cables has outlined plans to further increase its market and shareholder value with expanded capacity and a mix of new products and market forays within and beyond the East Africa region.
The company has already commenced production of aerial bundled conductors as well as the introduction of crosslink polyethylene cables which have the ability to carry more current for the same size of cable compared to PVC cables and have better strength at high temperatures.
The company has also commenced manufacture of Halogen Free Flame Retardant cables, which is a first for any cable manufacturer in the region.
The CEO said the new products were in line with Kenya Power and Lighting Company\’s power distribution upgrade project as well as demand for cables in the region.
EA Cables Group Chairman Zephaniah Mbugua told investors the company intends to consolidate its presence in the region adding it was eyeing South Sudan, Congo, Ethiopia and Burundi as new markets.
The major concern for the company is the current price volatility for copper in the global market with prices expected to touch a high of $12,000 (Sh974,160) per metric tonne up from the current $9,800 (Sh795,564).
Mr Mwangi said this could lead to an increase in cables in the market, as the company would be forced to pass through the costs to the consumers.
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