East African Cables premises: A new line will boost copper production by more than 60 per cent. Photo/FILE
East African Cables will expand its operations to more than 12 African countries in the next three years, up from the current five.
It will also commission a new copper cable production line and a major upgrade later this year of its recently commissioned Ksh1 billion ($13 million) manufacturing facility in Nairobi’s Industrial Area.
“The new line will boost copper production by more than 60 per cent,” said new chief executive officer George Mwangi (right).
The firm’s affiliation with Nexans, the global expert in cables and cabling, is also bearing fruit, he said.
Addressing an investors’ briefing, Mr Mwangi said the company would spare no effort to attain its targets.
Chairman Zeph Mbugua said the firm is investing more than $5 million in capacity enhancement projects in its manufacturing plants in Kenya and Tanzania.
He said the company would strengthen its local market position and expand its continental reach by enhancing its distribution and sales.
By moving into key markets such as Ethiopia, Somalia, Southern Sudan, Djibouti, Burundi, eastern Congo, Zambia, Zimbabwe and Mozambique, the company will focus on a diversified customer base, he added.
EA cables will rely on local partnerships to penetrate the new markets.
It will integrate its production in Kenya and Tanzania for increased efficiency.
Regional markets are expected to grow due to rural electrification programmes and construction projects.
Currently, the company operates in the five East Africa countries —Kenya, Uganda, Tanzania, Rwanda and Burundi.
Its exports have grown to 57 per cent of the turnover in 2008, compared with 31 per cent the previous year.
On the downside, Mr Mwangi cited fluctuations in aluminium sale to the local utility, Kenya Power and Lighting Company, which accounted for 10 per cent of the company’s turnover, down from 28 per cent the previous year.
He said fluctuations in metal prices, coupled with competition from imported subsidised and substandard products, plus the effects of the global financial crisis, may impact on key markets.
Other reasons cited were currency and political and economic risks in emerging markets.
In the audited results for the year ended December 31, 2008, the group posted 13.5 per cent and 12 per cent growth in turnover and profit before tax, respectively.
This was despite a shaky start owing to the post election violence in Kenya.
Turnover was Ksh 3.9 billion ($51 million), up from Ksh 3.5 billion ($45 million) the previous year.
Profit before tax was Ksh 670 million ($8.7 million), up from Ksh 597 million ($7.7 million).
Cash-flow also improved due to strict management of debtors and inventory.
The company’s subsidiary in Tanzania, as well as exports to the region, recorded improvement in turnover and profit.
EA Cables shareholders are set to receive a first and final dividend of Ksh1.00 (US cents 0.01), up from the Ksh 0.90 (US cent 0.009) payout last year.
Products manufactured by East African Cables include copper cables and conductors for domestic and industrial applications.
The next range of manufactured products include aluminium conductors and cables for power distribution and transmission over national gridlines.
