EA Cable’s net earnings grow to Sh314m
East African Cables Ltd grew its net earnings by 70 per cent despite the high cost of doing its mainly trans-border business last year.
Growing export earnings and launch of new products helped to boost the company’s income.
Profit grew to Sh314.7 million from Sh183.8 million buoyed by a rise in sales, which increased 38 per cent to Sh4.9 billion. This saw its earnings per share grow to Sh1.15 from Sh0.89 in 2010.
“The increase was attributed to a good response from our new product lines and growth of sales in the export markets,” said the company chief executive George Mwangi.
However, analysts noted a substantial fall in its second-half performance.
“Despite strong year-on-year performance, half-on-half figures showed weakness with revenue up 11.4 per cent and profit after tax down 17.3 per cent,” said Standard Investment Bank.
“We believe second-half was negatively impacted by higher copper and aluminium costs following depreciation of local currencies.”
Currencies in the eastern African region last year lost ground against the dollar due to eurozone debt problems, which spurred demand for the dollar exposing the region to inflation.
Cables’ sales were partly shielded by high prices and growth in export earnings though.
The TransCentury firm’s dividend payout dropped by 20 per cent to Sh0.80 a share from Sh1 last year despite a growth in net earnings after it issued bonus shares last year. Total dividend payout remained unchanged at Sh202 million.
The cable maker said it introduced new products such as fire retardant and aerial bundled cables for overhead transmission in the market to grow sales.
The company is banking on the new products and a stable economy to drive its growth this year.
It has been relying on regional markets of South Sudan, eastern DR Congo, among others, against the backdrop of heightened domestic competition from imports and rivals to grow its revenues.
Mr Mwangi said the firm expects increased sales in Uganda as the country plans to invest heavily in infrastructure following the discovery of oil.
Copper and aluminium prices have dropped by 15 per cent and 12 per cent to Sh688,000 and Sh180,000 a tonne respectively compared to the same period last year, giving the company legroom to cut raw material costs this year.
The company has in the past years suffered low sales due to the poor performance of its Tanzania subsidiary, which has since turned around.