CAFCA Limited, listed on the Zimbabwe Stock Exchange, has reported a significant growth in its aluminium product volumes for the first quarter that ended 31 December 2024, as the company navigates the challenges posed by fluctuating copper prices.
By Ryan Chigoche
Despite a challenging global trading environment, the company achieved a 23% increase in overall volumes, with aluminium leading the charge, surging by 74% compared to the same period last year.
This strategic shift toward aluminium reflects CAFCA’s response to the pressures on its copper division, leveraging rising demand for aluminium to offset the volatility in copper prices.
Meanwhile, the copper division saw a 13% increase in volumes. However, this performance comes against the backdrop of rising global copper prices, which surged by approximately 18% in 2023–24.
This increase was driven by supply chain bottlenecks and growing demand from the green energy sector. While such price increases would typically benefit copper producers, they have presented a significant challenge for manufacturers like CAFCA, which rely heavily on copper for cable production. The volatility in copper prices has led to higher production costs, impacting profit margins in an already competitive market.
CAFCA’s ability to fully offset these rising costs through pricing adjustments has been hindered by informal competitors and counterfeit products flooding the retail space, further squeezing margins. To mitigate these cost pressures, the company has increasingly shifted its focus toward aluminium, a more affordable and lightweight alternative to copper. This strategic pivot is evident in CAFCA’s Q1 results, where aluminium volumes saw an impressive 74% growth, outpacing the 13% growth in copper cables.
In addition, CAFCA reported substantial growth in its utilities and commercial business, with volumes increasing by 187% and 83%, respectively, compared to the same period last year. These impressive gains have helped offset some of the challenges faced in other areas.
However, retail and distribution volumes declined by 25% in the first quarter, largely due to the constrained trading space influenced by the informal sector, which continues to impact the market. Additionally, exports dropped by 39% compared to the prior year, mainly due to foreign currency supply gaps in key export markets such as Malawi, Mozambique, and East Africa.
On the operational front, the company faced several disruptions, particularly in power supply, with outages and surges causing equipment breakdowns. Despite these setbacks, CAFCA managed to meet customer production requirements and continued to engage distributors to ensure high product availability on the shop floor.
The company’s adaptability and commitment to customer satisfaction remain central to its strategy, even as it works to address the ongoing challenges in its operational environment.
Despite these hurdles, CAFCA’s performance underscores its resilience in a challenging manufacturing environment. The strong performance in aluminum, combined with steady copper growth and notable improvements in its utilities and commercial business, positions CAFCA to continue navigating the complexities of the global market effectively.
Looking ahead, CAFCA’s focus on balancing copper and aluminium production while managing cost inflation, power supply issues, and supply chain pressures will be crucial. With continued operational efficiency and strategic adaptability, the company is well-placed to sustain its growth throughout 2024.
