Cafca says ops under threat due to forex shortages
HARARE – CAFCA Limited says its raw material stock turn covers until this February and there are fears that further delays in foreign receipt payments will see the company run out of some products in March and April.
Managing Director Rob Webster in a trading update for the four months to January 2017 at the company’s annual general meeting said the company has a cash balance of $2.2 million which cannot be readily converted to US Dollars to purchase raw materials.
“Whoever has ‘contacts’ at the bank gets top priority however we are up to date until February and as such my pro-forma at the bank is to get currency to see me through March. We have a supplier from Europe who takes six weeks to deliver and only works on pre-payments. So there is one line item which we will not make in March and raw material for other products will start biting in March and April,” he said.
Webster said the company is currently at a 200 tonnes per month model with an average of 15% destined for the export market in order to generate foreign currency. “We are looking at doubling our exports. Currently we are exporting to Zambia, Malawi and Mozambique, realising at least $750 000 per month,” he said.
In terms of performance in the four months period, Webster said with the company is coming from a low base last year, volumes are 6% below last year while turnover is also 10% lower.
Margins, due to import pressure, are 2% below prior year at 33% from 35%. However, Webster said due to a big cost cutting initiative done at the end of the first half last year, profit is up 95% year on year.
Meanwhile, turnover and volume are projected at half year in March to be slightly ahead of prior year while profit is forecast to grow 65%.
Webster said securing foreign currency to acquire raw material will be the company’s biggest challenge. He said the company is also in constant negotiation with government seeking protection from cable imports.
At the AGM audit fees were approved at $58 740 and directors fees at $90 270.