Ducab, the leading manufacturer of high-quality power cables in the Middle East, Wednesday reported record sales of Dh2.4 billion for the first six months of 2011 — a 50 per cent jump from last year — and volume growth of 13.5 per cent.
Cables sales led the way with Dh1.4 billion and copper products, Ducab's newest product line, accounted for the balance. The sales growth was driven by strong sales in all GCC markets with the UAE, particularly Abu Dhabi, providing significant growth.
"We are pleased with the results although market conditions remain very competitive and pricing still has a long way to go before margins are restored to reasonable levels. We are optimistic that these volumes are yet another positive sign that the UAE and regional economies are recovering," said Andrew Shaw, managing director.
Despite continued high copper prices affecting working capital, Ducab's cash flow remained positive in the period with the company repaying Dh302 million of loans, compared to Dh73 million in the previous year.
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Looking forward to the second half of the year, Ducab is working to complete the final commissioning of the Dh500 million joint-venture with Dewa and Adwea. The new plant extends Ducab's product range into the Extra High Voltage cable segment — manufacturing cable systems of 400kv grade. First sales are expected in the second half of the year.
Ducab, a 50:50 joint venture between the governments of Dubai and Abu Dhabi, occupies 683,000 square metres of land in Jebel Ali, Dubai and nearly 330,000 square meters in Mussafah, Abu Dhabi spread over two factories. Today, Ducab produces over 110,000 copper tonnes equivalent of low-voltage, medium- and high-voltage cables.
Ashish Chaturvedi, marketing manager of Ducab, said the new high-voltage factory and new opportunities will help the company to increase profitability.
High copper prices
"The higher price of copper is putting additional pressures on margins. However, Ducab is a very profitable company," he told Gulf News.
"However, going forward, we see opprtunities in new markets and products —such as the nuclear power plant and transmission lines, as well as the new rail project where a large quantity of specialised cables will be needed.
"We are closely working with the UAE's nuclear power authority to offer specialised cable solutions. Similarly, we are also in touch with the Etihad Railway to develop new cable for them."
Besides, the new Dh500 million Extra High Voltage cable manufacturing plant that is being commissioned this summer, will start production later this year. "Although there are some orders for delivery this year, we expect the impact of the new plant to reflect in the next year's results. The high voltage cable plant has been constructed just in time for value addition and will give us wider market access," he said.