TransCentury’s subsidiary East African Cables (TCL owns 68.38% according to the 2014 Annual Report, 2015 Annual Report yet to be released) through Cable Holdings (Kenya) Limited announced its full year results for the financial year ending 31 December 2015 during the week.
East African Cables Limited is engaged in the manufacture and sale of electrical cables and conductors. The Company’s products are manufactured cables for applications in domestic and Industrial lighting, as well as transmission and distribution of electricity. The company has four manufacturing facilities; two in Nairobi, Kenya, one in Dar es Salaam Tanzania and one in Eastern DRC. Its product portfolio includes Copper electrical cables and conductors for domestic as well as industrial applications PVC and XLPE based products, Aluminum conductors and cables used for power distribution and transmission over national gridlines AAC, ACSR and ABC products and Telecommunication and data cables. Telecommunication and data cables include local area network cables, fiber optic cables and related accessories.
Now to our surprise the results were not the very best, revenues fell by 27% to KES 3.724 Bn, Administration Expenses rose by 53% to KES 401Mn. There was also an impairment cost of receivables amounting to KES 329Mn and forex losses amounting to KES 312Mn. All these contributed towards the loss before income tax of KES 1.087Bn.
East African Cables attributes the undesirable performance due to:
- Interruptions in production processes as it concluded process flow re-alignment in the refurbished Kitui road plant.
- Foreign Exchange losses due to sharp depreciation of regional currencies against the dollar.
- Decline in London metal exchange prices by 20% within the year which negatively impacted revenues and overall margins
- Low demand from export markets due to the prevailing political environment in the region.
- Impairment of receivables. East African Cables found it prudent to make a provision on these receivables though efforts are in place to recover these debts.
In the market East African Cables took a big hit and set a new 52 week low of KES 6.20. In this period the share price has fallen by around 59%. What a ride!!!
Going forward the company began 2016 with a strong order book due to the developments in the energy and construction sectors and is positive that the expanded factory will eventually give value to its stakeholders.
