Uganda Clays Limited reported a sharp increase in annual profit for 2021 and has promised to return Shs 1.35 billion to shareholders as dividends subject the annual general meeting approval.
The clays products manufacturer on April.14 reported a profit after tax of Shs 5.9billion, representing a 21% growth compared to the previous year amidst coronavirus pandemic.
The company executives – Board Chairperson, Martin Kasekende and Managing Director, Reuben Tumwebaze – said improved efficiencies in production and a change in the sales model to the use of agents to reach more customers contributed to the profitability.
UCL’s revenue for the period increased by 24% to Shs 36.7 billion compared to Shs 29.7 billion in 2020, as gross profit increased by 27% to Shs 17.2 billion during the period under review
However, the company’s overhead costs increased by 28% to Shs 12.1 billion. Similarly, net cash from operating activities increased from Shs 6.1 billion to Shs 9.3 billion during the same period citing increased production and sales volume.
In addition, the value of assets increased by 8% to Shs 74.5billion driven by deliberate investment investments in factories – Kajjansi and Kamonkoli, clay reserves, and trucks to move raw materials and products.
This is the second time in arrow that the UCL is recoding growth in profits in the past three years. Listed on the Uganda Stock Exchange in 2000, UCL registered a persistence growth in profits until 2009 when it registered a Shs707 million loss from a profit of Shs2.15 billion in 2008 with the global financial crisis to blame.
However, its woes worsened with the timing of the establishment of the second plant at Kamonkoli, in eastern Uganda in 2009, as it led to a sharp surge in operating costs amidst the slowdown in the economic activities.
The plunge into red led to negative investor sentiments on the USE leading to a drop in share price from Shs60 in 2009 to Shs 15% in 2015.
Efforts to return the company to profitability only yielded positive results in 2016 when it posted Shs2.3 billion in net profit, up from a loss of Shs1.2 billion recorded in 2015. This led to a sharp rise in the share price on USE to Shs 24 per share in the subsequent year.
But this was followed up with the increase in pay-cheques for its managers as the company doubled the pay rise for the Board of Directors in fulfillment of the latter’s request citing improved […]