ACL Cables profits soar as cable maker rides on construction sector resilience

From left: ACL Cables Chairman Upali Madanayake and Managing Director Suren Madanayake

• Company however confronted with rising cost of copper and metal while weaker rupee added to pressure 

ACL Cables PLC reported strong top and bottom line figures for the three months ended in September, as the company rode on a wave of robust growth in the construction sector activity in both the infrastructure and commercial development spheres. 

ACL Cables, the eponymous cable and switch maker for a variety of use, reported earnings of Rs.3.47 a share or Rs.831.3 million in the July-September quarter, on revenue of Rs.9.09 billion, recording 85 percent and 49 percent growths, respectively from the corresponding period in 2020. 

Meanwhile, for the six months to September, the company reported earnings of Rs.4.82 a share or Rs.1.15 billion, compared to Rs.414.6 million in the comparable period last year, which translated into a 179 percent rise. The sales were at Rs.15.8 billion, up 66 percent. 

The performance was possible due to the rapid rebound made in the construction activities soon after the first wave of the pandemic, which sparked strong demand for the company’s cables, switches and other expansive line up of electrical accessories. 

In a letter to the shareholders dated September 30, the company’s Chairman U.G. Madanayake acknowledged the strong demand came from the nationwide infrastructure development drive and other commercial sector developments.

The company said it has a market share of 70 percent in the cables market.  
Buoyed by the surge in demand and future prospects in the construction sector, the company is planning to add more muscle into its operations by expanding its in-house production capacity in the ongoing financial year.
“We are in the process of making plans to meet the surge in demand and are putting in place measures to expand our in-house production capacity during the next financial year,” he said in reference to the incumbent fiscal year. 
The company is also looking at exploring new markets, both at home and abroad, while investing in R&D to come up with new innovative products in the field. 

The company will also continue to make its investments into advancing its technologies to stay in line with the pivot towards eco-friendly power generation.

There is a stronger and swift push for green energy from across the world as underscored at the COP26 climate summit concluded in Glasgow, Scotland two weeks ago, as the world leaders reached a rare consensus to cut carbon emissions with clear targets and pledged to accelerate the transition from the conventional energy sources such as coal and thermal to more environmental friendly renewable energy sources. 

Sri Lanka set a target to generate 70 percent of its power through renewable energy by 2030. 
The Ceylon Electricity Board remains ACL Cables’ single largest customer.

The company however confronted headwinds from the soaring global commodities prices, a condition which was exacerbated by the weaker rupee against the dollar. 

For instance, the company, which predominantly uses copper and aluminium to make cables, saw their prices soaring, prompting the company to revise the prices of its cables by multiple times, the company’s Managing Director Suren Madanayake told in his letter to the shareholder in September. 

“We hope to continue the momentum for the next two quarters as well and ensure we post a great end to the current financial year,” Madanayake said in a statement on its September interim results, projecting optimism on the future. 

Both Madanayakes together held a 60.36 percent stake in ACL Cables while the Employees Provident Fund had a 4.93 percent stake in the company being its third largest shareholder while the government through its state-owned banks and insurance company held another 3.24 percent by September-end.