A sharp spike in global copper prices has dealt a heavy blow to CAFCA Limited’s bottom line, slashing its profit after tax by a staggering 72% for the half-year ended March 31, 2025.
By Ryan Chigoche
Despite a robust 76% rise in revenue to ZWG478.5 million, profits tumbled to just ZWG15.7 million from ZWG58.2 million recorded in the same period last year.
The drastic drop in profitability underscores the immense cost pressures facing the country’s only listed cable manufacturer, largely driven by copper price volatility.
Copper, which is the ZSE-listed entity’s primary raw material, has surged 30% this year alone, spurred by tariff fears, rising global demand in the energy and technology sectors, and sustained appetite from China.
This spike has intensified a bullish trend that began in 2023, with copper prices rising 18% into 2024 and now outpacing even gold’s 16% rise this March.
With the world projected to meet only 70% of copper demand by 2035, price pressures are expected to persist.
CAFCA, unable to pass rising input costs to customers due to an influx of counterfeit and informal competitors, was forced to absorb the cost increase.
The situation was exacerbated by a 30% hike in foreign currency surrender requirements to the Reserve Bank of Zimbabwe, further eating into export earnings.
To mitigate the copper burden, CAFCA has shifted focus to aluminium—an abundant, cost-stable alternative.
This strategic pivot drove volume growth in key sectors, with utilities up 75% and commercial business increasing by 39% year-on-year.
Aluminium’s affordability and adaptability to infrastructure projects made it an appealing substitute.
Yet, the transition isn’t without trade-offs. Aluminium’s lower conductivity demands thicker cables, complicating precision-dependent applications such as industrial machinery.
Additionally, retooling production lines for aluminium introduced short-term costs and operational strain.
Despite efforts to cushion the impact, copper’s central role in premium and high-performance products means CAFCA could not completely sidestep its pricing pains.
Copper cable volumes fell 12%, contributing to an overall 5% decline in total sales volumes. Aluminium volumes also dropped by 10%, reflecting worsening market conditions in the second quarter.
The retail and distribution segment was particularly hard-hit, suffering a 27% volume plunge due to the spread of counterfeit products and competition from informal markets.
Amid these headwinds, CAFCA maintained its delivery efficiency, achieving hit rates above 100% even as production scaled down. However, the company’s future resilience may hinge on adopting advanced technologies.
Artificial intelligence could help CAFCA navigate commodity price swings and streamline production transitions between copper and aluminium.
AI-enabled quality control might also differentiate CAFCA’s genuine products from counterfeits.
As copper’s soaring cost has sharply narrowed CAFCA’s margins, this illustrates the challenges manufacturers face when core input costs spiral beyond control even in the face of strong revenue growth.
