E.A Cables

EA Cables 9-Months Pre-tax Profit Rises 34%

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East African Cables ltd., a leading cable manufacturer in East Africa, has reported a 34% increase in pre-tax profit for their first nine months of the year 2008. The firms profit s rose to ksh.583.4 million up from Ksh.435.7 million declared last year. Its turnover grew by 16% to stand at ksh.2.9 billion from Ksh.2.5 billion made in 2007. The profit after tax went up by 32.5% to Ksh.391 million compared to Ksh.295 million last year.

The company’s total assets for the period rose marginally by 6.75 to Ksh.2.88 billion from Ksh.2.7 billion last year.

East African Cables diversification strategies on both the product and geographical fronts appear to be paying off and have been credited to be the principle driving forces in the firm’s growth. The company is shifting its market orientation towards fibre optic cables, to reduce its exposure to metal -based cables and reap from the on going fibre optic laying project in the region. Despite the resignation of Mugo Kabati as the firms CEO, the firm has not changed its strategy to date.

East African Cables is further targeting a connection programme by electricity distribution companies in Kenya and Tanzania, Kenya Power and Lighting Company and Tanzania Electric Supply Company, where its products are required.

To beat the ever growing demand for metallic cable in the world market the cable company entered into forward purchase agreements with international suppliers. This has helped them maintain low raw material prices in the volatile international market that’s skewed towards China. Although increases in normal international prices of metals do not affect the company directly, the company has had to adjust their product prices to reflect the increased inflation rate in the country that stood at 28% in September 2008.

East African Cables is one of the fastest growing publicly listed companies and a leading manufacturer of electrical cables and conductors, as well as a leading distributor of data and telecommunication cables and accessories for the East and Central Africa region. The firm mainly manufactures copper electrical cables and conductors for domestic as well as industrial applications.

East African Cables was incorporated in 1966. A public limited company listed on the Nairobi Stock Exchange (with great potential to cross list, especially in Tanzania), comprises of two manufacturing facilities in Nairobi and Dar es Salaam, with subsidiaries in Rwanda and Uganda. The Nairobi factory was commissioned in 1966 while the Dar facility was commissioned in 1977 and joined the East African Cables family in October 2005 after the former acquire 51% stake in the latter at a cost of Ksh.160 million.

Management Commentary on the results

The Group recorded growth in turnover and profit before tax of 16% and 34% respectively. The competitive landscape will continue to be challenge in the foreseeable future but the company will continue to entrench itself in new markets as well as diversify into extended cable range in order to maintain growth and market leadership.

Virginia Ndunge
Company Secretary
October 14, 2008

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