Companies

EA Cables banks on Kenya Power orders to propel business

cables

East African Cables manufacturing plant in Nairobi’s Industrial Area. FILE PHOTO | NMG

Listed wires manufacturer East African Cables #ticker:CABL is servicing Sh5.2 billion orders received from Kenya Power’s #ticker:KPLC last-mile connectivity contractors and implementers of the State's affordable housing projects, as well as private power companies to boost earnings amid the firm’s recent return to profits in the 2019 half year.

Chief executive Paul Muigai said the company is looking to fulfill the orders largely made by the State utility firm which is currently implementing multi-billion shilling electrification projects, as well as orders from private companies such as solar-powered mini-grid operator PowerHive.

“We have the capital to fulfill all contracted business and this will expand our margins. We implemented several cost cutting measures from waste reduction, product and customer diversification," he said.

The firm, owned by investment firm TransCentury #ticker:TCL, has however decried counterfeits, but said it had benefitted from the war against substandard electrical cables to register a 10 percent rise in demand for its products.

“The fight against illicit trade creates a new market for our products and boosts quality of goods in the market. This means less incidents where fire engulfs homes and businesses leading to enormous loss of investments”, he said.

The cables manufacturer recently restructured its debt that saw it reduce by Sh1.65 billion representing 44 percent of total debt where its majority shareholder, TransCentury Group imposed a two year moratorium on principal repayment and six months on interest payments put in place.

After restructuring, current liabilities whittled down by Sh2.1 billion although the company was still insolvent by Sh542 million. It was not immediately clear whether the investment firm, which holds a 68.38 percent stake, has forgiven part of the debt owed by EA Cables.

But Mr Muigai noted that alleviation of the firm’s debt burden had freed up more money for its operations and marketing.

Aside from delivering on orders to corporate clients, the wire maker is also targeting the Jua Kali and agricultural sectors with new products such as welding and submersible cables.

This comes amid recent upgrades of EA Cables’ aluminium and copper factories that increased the firm’s production capacity from 250 to 750metric tonnes annually.

East African Cables jumped back to profits despite a 19 percent decline in turnover, posting net earnings of Sh634 million in the six months to June from a loss of Sh303 million last year.