Trading Update for the 3rd quarter ended 30 June 2025

CAFCA LIMITED
Incorporated in terms of the laws of Zimbabwe
(Zimbabwe Registration number: 401/1945)
Share code: CAC
ISIN: ZW0009011942
("CAFCA" or "the Company")


Trading Update for the 3rd quarter ended 30 June 2025


Overview of trading environment

The trading environment remained relatively stable during the quarter, supported by
low month-on-month inflation and limited exchange rate volatility since April 2025.

Increased liquidity and renewed confidence in infrastructure-related projects were
driven by the recovery of the agricultural sector, notably the record tobacco output
from the recently concluded farming season.

The mining sector benefited from a rally in gold prices, resulting in higher export
receipts and output. Encouraging signs of recovery in platinum group metals also
emerged, providing a positive outlook on possible expansion and extension projects
which fuel demand for electrical cables.

Government efforts to curb smuggling and the importation of substandard products—
through the Local Content Steering Committee—positively influenced the market.
This collaboration between industry and government is a welcome development, and
CAFCA remains committed to supporting industrialisation through sustainable
frameworks.

However, the introduction of S.I. 157 of 2024, which opened the electrical cable market
to imports, led to increased competition, eroding margins and volume growth. CAFCA
continues to engage authorities to ensure fair competition that preserves industry
capacity and commercial viability.

Operational Performance

Sales
Sales volumes improved by 31% compared to the previous quarter (Q2) but were 14%
lower than the same quarter last year. Year-to-date volumes are 16% behind prior year
with Copper cables 6% down and Aluminium conductors and cables 37% down against
prior year.

Liquidity constraints affected utility sector's uptake, which declined by 49% during the
quarter under review compared to prior year. CAFCA is actively engaging the related
stakeholders to improve terms and conditions that facilitate increased uptake.

Commercial activity during this quarter was buoyed by the construction sector, which
was 19% up and the manufacturing sector which was 11% up compared to the same
period last year. However, mining sector volumes declined by 62%, impacted by a
slowdown in commodity prices.

Retail and distribution volumes for the quarter rose by 23% year-on-year, reflecting
successful engagement with distributors and end consumers. CAFCA also enhanced
customer experience by upgrading the factory shop's sales reception.

Export volumes remained flat due to persistent liquidity challenges in key markets
affecting payment remittances.

Factory Operations
Management continued to pursue manufacturing excellence through equipment
upgrades to eliminate bottlenecks, moving to a 2-shift system from a 3-shift system
and introduction of a new production planning philosophy. The commissioning of a
new stranding machine notably boosted Aluminium conductor and cable capacity.

Despite a 4% decline in production compared to the prior year—aligned with reduced
demand—hit rates exceeded expectations, stock levels remain sufficient to meet
market needs.

CAFCA will continue exploring partnerships with utilities and export markets to
optimise factory utilisation.

Safety Performance
Safety metrics improved significantly following a review of hazard identification and
risk assessment protocols. Total Recordable Incident Rate was 0.43 down from 0.7 in
the previous quarter. The team remains vigilant and committed to prioritising
workplace safety.

Financial Performance

Revenue performance followed volume performance with year-to-date revenue 5%
lower than prior year. Margins were affected by increases in average material costs for
copper which were 15% up and Aluminium 28% up on a year-to-date basis. Due to
heightened competition, increased material costs were absorbed into margins. Other
operating costs remained largely unchanged.

Management is focused on expanding EBITDA margins through supply chain
optimisation, conversion cost efficiency and administrative modernisation.

Outlook & Strategic Priorities

The stable trading environment is expected to continue, with GDP projected to grow
by 6%, driven by agricultural recovery. While CAFCA anticipates a rebound in sales
volumes, margin pressure will persist as the company defends its market share.

Going forward, the priorities include strengthening engagement with utilities, mines,
distributors, and contractors, enhancing internal efficiencies to improve margins,
pursuing manufacturing excellence and safety as well as increased communications to
reinforce brand strength.

By order of the Board
C. Kangara
Company Secretary
19 August 2025


JSE Sponsor
Merchantec Capital

    Directors: H.P. Mkushi (Chairman) V.Nyakudya(Chief Executive Officer) E.T.Z. Chidzonga T.Chigumbu L.Corte
                                  S.Mangwengwende S.Maparura J. Tapambgwa

Date: 19-08-2025 09:24:00
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