East African Cables Plc has issued a profit warning for the year ending December 31, 2020. This means that the company expects its earnings to drop by at least 25 per cent compared to last year.
The cable manufacturer says the expected slump in profitability is primarily due to a one-off write back that was recorded as other income in 2019.
The Capital Markets Authority (CMA) and the Nairobi Securities Exchange (NSE) regulations require a company listed on the bourse to inform investors if it expects its profits to shrink by more than one quarter.
"While the Group revenues are projected to grow by 10 per cent year-on-year, the impact of Covid-19 on the economy reduced chances for more aggressive top-line growth to match prior year performance," the firm's board said in a notice to investors.
The firm said it is continuing to implement recovery measures for a full turnaround of the Group.
Last month, the firm reached an agreement with Ecobank Kenya Limited, which had appointed a receiver to take over some of its assets after it failed to pay a Sh188 million loan.
Ecobank had advanced the cash to the company through debentures -an agreement in which the borrower pledges several assets to the creditor as collateral.
The board also on Wednesday appointed Julius Waita Mwatu as a non-executive independent director to fill a casual vacancy.