Cable maker bets on new products to turn around dwindling fortunes

East African Cables is betting on aggressive marketing of new products to turn around its fortunes.

The firm, which has concentrated on making electricity conductor cables, has expanded its product offering by venturing in importation and distribution of telecommunication and IT networking cables from Korea.

The move into data cables is aimed at deflecting competition from cheap copper and aluminium cables imported from China.

EA Cables’ share price is showing signs of recovery following the announcement of the new product offering.

The firm has added telecommunication, data, LAN, and fibre optic cables to its product list to shore up profits.

The company’s share price rose from Sh18 in July to Sh19.35 at Friday’s trade.

Company chief executive George Mwangi said the new products were meant to shove up the company’s profitability and standing at the Nairobi Stock Exchange.

“We have signed agreements with a Korean company, LS Cables, which is part of LG Electronics Group. The products are of very high quality and the prices are reasonable. We shall be launching this partnership soon, but we are already getting orders. The products will give us additional business through distribution,” said Mr Mwangi.

EA Cables, the only cable maker quoted at the Nairobi Stock Exchange, issued a profit warning in July after forecasting “significant loss” in the Tanzanian operations as a result of poor sales to that country’s utility sector.

The company has come under intense competition from other producers of cables such the Nairobi based Kenwestfal Works Limited and importers of cheap products.

The cable maker said bad debts forced its Tanzania outfit to record losses.

The company, which manufactures aluminium and copper cables for both local and export markets, blamed the drop in profits in 2009 on unstable prices.

Diminishing stockpiles

EA cables is yet to declare its half year results, but full year results for 2009 dipped to Sh526 million from the Sh670 million recorded in 2008.

Trade at the London Metal Exchange on Friday saw copper gain for the fourth consecutive day, erasing earlier losses as diminishing stockpiles improved the outlook for demand.