Uganda Clays Limited announced a sharp increase in its annual profit for 2021 and promised to return 1.35 billion shillings to shareholders, with dividends subject to the approval of the annual general meeting.
The clay products maker reported an after-tax profit of 5.9 billion shillings on April 14, up 21% from a year earlier amid the coronavirus pandemic.
Company executives – chairman of the board, Martin Kasekende and chief executive, Reuben Tumwebaze – said improved production efficiency and a shift from the sales model to the use of ‘agents to reach more customers contributed to profitability.
UCL’s revenue for the period increased by 24% to Sh36.7 billion from Sh29.7 billion in 2020, with gross profit increasing by 27% to Sh17.2 billion during of the period under review.
However, the company’s overhead increased by 28% to 12.1 billion shillings. Similarly, net cash from operating activities increased from Sh6.1 billion to Sh9.3 billion during the same period, due to an increase in production and sales volume.
In addition, asset values increased by 8% to 74.5 billion shillings thanks to deliberate investments in factories – Kajjansi and Kamonkoli, clay reserves and trucks to move raw materials and products.
This is the second skyrocketing time that UCL has recorded growth in its profits over the past three years. Listed on the Ugandan Stock Exchange in 2000, UCL enjoyed persistent profit growth until 2009, when it recorded a loss of 707 million shillings on a profit of 2.15 billion shillings in 2008, the global financial crisis being to blame.
However, its woes were compounded with the timing of the establishment of the second factory in Kamonkoli, eastern Uganda in 2009, as it led to a sharp increase in operating costs amid a downturn. economic activities.
The plunge into the red led to negative investor sentiments on the USE, driving the share price down 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 a net profit of 2.3 billion shillings, compared to a loss of 1.2 billion shillings recorded in 2015. This led to a sharp rise in the share price on USE to Shs 24 per share the following year.
But that was followed by increasing its executives’ paychecks, as the company doubled the board’s pay rise in response to the latter’s request citing improved profitability.
But before the dust could settle on the old financial statements, UCL recorded a drop in net profit in 2018 to 1.9 billion shillings and a loss of 88 million shillings in 2019. This triggered a the share price fell to 8 shillings, prompting the board to show the direction of the times. Director, George Inholo, alongside Head of Production, Head of Human Resources and Support Services for release in March 2020.
Jacqueline Kiwanuka, the finance manager, meanwhile appointed a new interim managing director, who then returned the business to profitability, posting 4.9 billion shillings in 2020. Reuben Tumwebaze was appointed managing director in March from last year. .
Major shareholders of UCL include the National Insurance Corporation, the Central Bank of Kenya Employees Pension Fund, the Bank of Uganda Employees Pension Scheme and of course the National Social Security Fund, among others.