Aluminium conductor manufacturer ECA Cables posts 27% decline in profit

East African Cables Group, which manufactures copper cables and aluminium conductors and cables among other items, is waging on increased cables manufacturing and investments to return to revenue growth.

This is after the regional manufacturer reported a 27 percent decline in its profits for the year 2015 of an undisclosed amount. The company has attributed the overall decline to the significant interruptions that facilitated the completion of the modernisation of the Kitui Road Copper Production plant.

“The overall decline in performance was attributable to significant interruptions in our production processes as we concluded the last phase of our capacity upgrades at the refurbished Kitui Road plant,” said the firm’s Group CEO Peter Arina.

EA Cables also singled out regional general elections such as those of Tanzania and Burundi to the drop in revenues.

According to the company, the political climate in Tanzania in specific saw the drop in revenues by 52 percent from Sh1.3 billion in 2014 to Sh630 million in 2015.

Other factors that led to the decline include the dip to forex exchange losses created by sharp depreciation of regional currencies against the United States Dollar.

“Both regional operations across the region were heavily impacted by the foreign exchange losses to the tune of Sh312 million,” he said.

Cost of metal globally was also part of the decline. “There was a decline in London Metal Exchange prices by 20pc and 11pc in copper and aluminium respectively within the year. This effectively impacted negatively on our revenues and overall margins by at least Sh958 million,” said Arina.

Going forward, Arina said the company is focused on a regional diversification and product development following the doubling of its capacity which will deliver an upward earnings trajectory for this financial year.