CAFCA sees Q3 sales volume jump 31%

…but margin pressure persists from import competition, soaring costs

By ETimes

HARARE – CAFCA Limited maintained operational stability in its third quarter ended 30 June 2025, even as heightened competition and soaring costs for copper and aluminium squeezed its profit margins.

The Cable manufacturer, in a trading update, said the quarterly volume improvement signalled a recovery in domestic demand, particularly from construction and manufacturing clients.

But volumes, a key indicator of demand, remained 14% lower than the same period last year.

It highlights the clash between macro-economic stability and market liberalization for Zimbabwean industry.

“However, the introduction of S.I. 157 of 2024, which opened the electrical cable market to imports, led to increased competition, eroding margins and volume growth.

“CAFCA continues to engage authorities to ensure fair competition that preserves industry capacity and commercial viability,” the company said in a trading update.

The update revealed a starkly mixed performance across its key customer sectors.

While construction sector sales rose 19% year-on-year and retail distribution was up 23%, this was offset by a “persistent liquidity constraints” which caused a 49% plunge in sales to state utilities.

Accordingly, a slowdown in commodity prices earlier in the year hammered demand from the mining sector, where volumes collapsed 62%.

On the cost front, CAFCA said average material costs for copper were up 15% year-to-date, while aluminium had surged 28%.

In a competitive market, it has been unable to fully pass these costs on to customers.

“Due to heightened competition, increased material costs were absorbed into margins,” the company said.

Operationally, CAFCA said it has moved to a two-shift system from three to improve efficiency and commissioned new machinery to boost aluminium output.

The company also reported a significant improvement in safety, with its incident rate falling to 0.43 from 0.7.

Looking ahead, CAFCA said it expects the stable trading environment to continue, with Zimbabwe’s GDP growth projected at around 6%.

However, it anticipates margin pressure will “persist as the company defends its market share.”

Its strategic priorities include “strengthening engagement with utilities” and “enhancing internal efficiencies to improve margins.”

Financial Brief: CAFCA’s financial performance for the quarter and year-to-date period was defined by a significant margin squeeze, overshadowing a sequential volume recovery. While Q3 sales volumes improved 31% from Q2, they remained 14% lower than the same quarter last year, contributing to a year-to-date volume decline of 16%. Revenue followed this trend, sitting 5% lower year-to-date. Critically, the company faced a 15% increase in average copper material costs and a 28% increase in aluminium costs. Due to heightened competition from imports following SI 157 of 2024, these increased costs were absorbed into margins rather than passed on to customers, severely pressuring profitability.