East African Cables banks on Sh2bn Kenya Power order for turnaround

 

East African Cables manufacturing plant offices in Industrial Area, Nairobi. PHOTO | DIANA NGILA  

By BRIAN NGUGI

Listed Cables manufacturer East African Cables is banking on Sh2 billion orders for conductors from state utility Kenya Power in the ongoing electrification drive to turn around its fortunes.

The company’s chairman Zeph Gitau Mbugua told the Business Daily the orders which the firm had already began delivering had boosted its prospects for a turn around.

The firm, which also makes cables for the telecom industry and households, reported a net loss of Sh741 million for 2015 in what it largely blamed on disruptions to output as it upgrades a factory in Kenya, as well as foreign exchange losses and depressed demand due to political uncertainty.

It posted a net profit of Sh341 million in 2014. In 2015, revenue dropped to Sh3.7 billion from Sh5 billion in 2014.

“The Sh2billion order received from Kenyan Power to supply conductors will go towards achieving our targets. The company continues to prospect for future orders in the current year,” Mr Mbugua said on the sidelines of the firm’s annual general meeting.

The government’s electrification drive, which Kenya Power is implementing, seeks to connect 70 per cent of Kenyans to the national electricity grid by 2017.

Mr Mbugua told shareholders that finished upgrades in its production units would now pave way for the firm to ramp up its production.

Unfair competition

The company manufactures copper cables and conductors  for domestic application as well as  industrial  power  applications  and  aluminium  conductors  and  cables  used for  power  transmission  and  distribution. 

The firm had earlier said its aluminum business experienced unfair competition from cheap imports, mainly from India and China, given their lower cost of production and export subsidies from country of origin, driving decline in its business volumes by 40 per cent.

The firm comprises of two manufacturing facilities in Nairobiand one in Dar es Salaam, Tanzania.

The company’s copper factory has been undergoing a major facelift that will see an increase in its production capacity to serve the market better.