Electrical engineering: CBI-electric

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CBI-electric’s greatest resource is experience. We have built a diversified group of vertically-integrated companies, each with a major footprint in different sectors of the electrical and telecommunications industries. One of the key competitive capabilities of CBI-electric is commitment to the continual development of new technology and intellectual property.




Establish CBI-electric as a significant supplier for the intended R18 billion South African spend on renewable energy solutions over the next few years.
R250 million of orders were received for cables, inverters and installation services in Window 1 of the renewable energy programme. The business is well placed to repeat the performance on Window 2. Continue to drive operational efficiencies.

Pursue industrial cable and electrical protection equipment opportunities in the African market focusing on the mining sector.

Secure major infrastructure contracts.

Expand product lines and grow sales in our overseas subsidiaries.

Continue with the strategic development of our solutions businesses.

Supply optical fibre cable for the initial phase of the square kilometre array project.

Maintain stable labour relationships.
Increase export activity into Africa, Europe and the USA.
African Cables and Low Voltage increased exports by more than 40% year-on-year.

Telecom cables supplied 50% of MTN’s fibre cable requirement in Nigeria.
Participate actively in Eskom and Transnet expansion plans.
African Cables is an approved long-term supplier of cables and conductors to Eskom. The business is expected to benefit from increased sales under this supply contract as Eskom rolls out additional infrastructure as part of its expansion plans.

Low Voltage is the approved supplier for the supply of circuit breakers to Prasa for its rail infrastructure rollout.
For more on our products and services visit www.cbi-electric.co.za
CBI-electric’s results were impacted by the slower than expected rollout of infrastructure projects, challenging labour conditions in South Africa and reduced capital expansion in the mining industry. Revenue decreased by 4% to R3,5 billion while operating profit declined by R87 million to R506 million.
Utility tender activity showed a slight improvement in the second half of the financial year. Future demand will be driven by:
Eskom’s capacity expansion programme;
renewable energy projects;
low-cost housing projects;
opportunities in our export markets; and
Prasa’s investments in new railway infrastructure.
However, competition from low-cost global manufacturers remains a threat and margin pressures are expected to continue.

The group continues to focus on building its solution offerings through its Power Installations division and newly established CBI-electric: Solutions division. These businesses leverage group products in delivering turnkey energy solutions and maintenance services. CBI-electric continues to develop innovative solutions such as its CBiD cable theft prevention system.
The copper price remained fairly stable during the period under review providing an element of product cost stability. Exposure risk on raw materials is managed through a dual supply strategy, rigorous stock control and forward cover on certain projects.

Investment in capital expenditure increased, principally as a result of African Cables’ investment in a new high-voltage production line, which will allow for the manufacture of larger 275kV cable.

Although CBI-electric did not experience any strike action in the last year, labour unrest in other industries has had a ripple effect on the business. Given that the three-year wage agreement, negotiated in 2011, comes to an end in 2014, industrial action cannot be excluded. The workforce at CBI-electric is unionised with the majority of factory employees belonging to a recognised union. The metal industry, through the Steel and Engineering Industries Federation of South Africa (SEIFSA), has commenced formulating its position with regard to the three-yearly wage negotiations with the metal workers’ union.

Learnership and apprenticeship programmes are in place to ensure a healthy pipeline of future middle management. This year, 73 learners participated in programmes in the CBI-electric group. Employment equity targets have been set and are monitored at executive committee level. In total R10 million was spent on training, including salaries paid to learners.


The year under review was a challenging one for African Cables. Muted demand in orders for transmission line projects and the ongoing instability in the mining sector hampered revenue growth.
While supplies to the general electrical contractors’ market have grown, international suppliers entering the market have contributed to lower margins being achieved on these sales. The local cable industry was designated by the Department of Trade and Industry (DTI) as a preferred supplier for state-owned entities in April this year. This move will assist in supporting local manufacturing capacities.

Factory capacity utilisation in the medium voltage plant improved in the second half of the year as production for renewable energy cables was completed and operational efficiencies improved.

The Power Installations division had a mixed year and, while turnkey installations were down due to project delays, the services business continues to improve. We were awarded the extra high-voltage contract for the Eskom Ingula pumped water storage scheme towards year-end, which together with a better project order book, will contribute to a stronger performance in 2014.

Tank Industries, the cable accessories business which was acquired last year, performed well, albeit off a low base, and improved market share countrywide. Export revenue accounted for 30% of total sales and the business expects growth in the export market in 2014.

African Cables has strengthened its manufacturing capability by adding additional cross-linked polyethylene manufacturing capacity. This capital project will be partly funded through the Manufacturing Competitiveness Enhancement Programme incentive offered by the DTI.

African Cables is the largest user of electricity in the group. Further reduction in energy consumption was achieved through the continued focus on energy efficiency projects.

Consumption targets have been set for management and are monitored on a monthly basis. Since 2010, African Cables has managed to reduce its electricity usage by 8,3% per cable tonne manufactured.

The entity retained its Level 2 BBBEE rating, while also improving its BBBEE procurement score. Investment in skills development increased from R4,9 million a year ago to R5,6 million.


Low Voltage delivered a commendable performance during the past financial year. Stable local volumes were augmented by a strong drive in exports and a weaker rand, which resulted in both revenue growth and improved operating profit.
Export volumes increased significantly and Europe performed well as the demand for our circuit breakers used in the rollout of the 4G telecommunication network continued. The USA provided another year of solid growth.

Exports into Africa improved and this expansion is expected to continue in the new financial year. Australia’s results, however, were disappointing. Management changes were effected before year-end and an improved performance is already evident. A recovery in the mining sector and demand for specialised circuit breakers is expected to drive growth.

The local residential market remained subdued, while commercial markets showed a slight improvement. The mining industry was driven primarily by essential maintenance and “stay-in-business” projects.

A successful legal process against an importer of counterfeit products highlighted the risk of inferior products to consumers.

Low Voltage remains a market leader in energy efficient and quality circuit breakers and associated energy solutions.

Additional machinery and investment in human capital in the engineering division improved the quality of existing products.

Several new product launches were concluded and our products are approved for the Prasa rollout which commences in 2014.

The medium voltage, automation and control and ITmatic businesses were integrated into a single solutions business unit focussing on the material handling, energy systems and process sectors of the market. The manufacturing facility of the combined business unit comprises an area of 24 000m2 and was established at Reunert Park Boksburg. It provides an improved solutions offering that will provide an additional channel for the group’s products. CBI-electric: Solutions established the largest e-house electric system manufacturing facility in Africa. These systems are used by the photovoltaic inverter industry and for the integration of motor control centres at remote mines in Africa.

The company supported electrical engineering programmes at the University of Witwatersrand and University of Pretoria and continued to support the Reunert College.

A group of 28 learners participated in a number of learnerships, including an apprenticeship programme for electricians which started in February 2013.

CBI-electric: Low Voltage improved its BBBEE rating from level 6 to level 4 during the past year.
  2013 2012 2011 2010 2009

Low Voltage market segmentation as % of revenue

Residential and commercial
35 40 45 40
5 7 9 10
8 12 12 12
Automation and control
7 12 10 11
5 6 4 1
5 2 5 1
2 2 0 0
Exports and offshore subsidiaries
33 19 15 25
24 000m2


Telecom Cables1 continued to underperform. The delay in infrastructure programmes resulted in marginal revenue growth for the year. Increased operating costs, as well as challenges experienced with the manufacture of new products, impacted negatively on operating profit.
Delays in the rollout of the national broadband strategy and the restructuring at Telkom led to lower than anticipated orders for copper cable. Telkom remains the entity’s primary customer.

Actions are in place to improve labour efficiencies. Further, management targets have been set to reduce the overconsumption of raw materials in the manufacturing process. These steps are expected to result in improved efficiencies in future periods.

Fibre optic cable demand improved, but international competition, specifically from European and Chinese manufacturers, is suppressing margins. Our focus on exports – originally to the Middle East – has now shifted to Africa, where greater opportunities exist for both industrial and fibre optic cables.

The fibre market remains dominated by mobile operators investing in terrestrial optical fibre networks. Micro blown cable is provided to Telkom for the multi-service access nodes (MSAN) project currently being rolled out. Following earlier successes, we remain optimistic in securing a large share of the fibre optic cable and duct requirements for the rollout of the long-haul fibre network between Durban and Cape Town.

Industrial cable demand looks promising and will contribute to the company’s strategy to reduce its reliance on specific markets and a single major customer. Orders for instrumentation, fibre and data cables are expected to be buoyant and driven mainly by infrastructure, petroleum and mining projects as well as by the upgrade and construction of Eskom power stations. Demand for signalling cable is expected to increase from Transnet and Prasa as the railway systems are upgraded. Product designation should assist in securing local sales, specifically from state enterprises.

Telecom Cables maintained its level 4 BBBEE rating. Amongst its initiatives, 24 learners participated in a cable maker’s programme and an additional 11 learners were employed in various apprenticeship programmes.

The company received its ISO 14001 accreditation early in the financial year and incremental improvements have been made, including the harvesting of rainwater.
1 Following the change in Accounting Standards for joint ventures, the results of CBI-electric: Aberdare ATC Telecom Cables will be equity accounted effective 1 October 2013.
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