• Mon. Jun 5th, 2023

Uganda Clays Faces 67% Drop in Dividend as Profits Fall

UGANDA, Kajjansi | Real Muloodi News | Uganda Clays Ltd, a leading clay products manufacturer in Uganda, has announced a 67% drop in its dividend payout to its shareholders, compared to the previous year. This year, shareholders will earn USh450 million or USh0.5 per share, due to a 59% decline in profit after tax.

Uganda Clays recorded a 14% dividend drop to USh14.8bn as revenues declined by 0.2% to USh36.6bn due to an increase in production costs triggered by high inflation during the year-end of December 31, 2022.

The company’s board chairman, Martin Kasekende and CEO Reuben Tumwebaze, said that Uganda Clays had operated in challenging business conditions in 2022.

The dampened global economic environment was characterised by high inflation and increased interest rates, which increased the costs of production and dampened consumer demand, ultimately affecting the company’s profitability.

The devaluation of the local currency also impacted the company. Despite the challenges, the company posted positive results.

Bank of Uganda statistics indicated that the value of the local currency weakened from about USh3,500 in January 2022 to about USh3,750 in December 2022 per US Dollar, as inflation rose from merely 2.7% to as high as 10%, the highest ever in ten years driven by an increase in food and fuel prices.

However, the company continued to focus on maintaining business continuity, enhancing production capacity and product quality by improving production efficiencies, while ensuring the health and safety of staff and customers.

Last year, the executives announced plans to invest USh17.8 billion to acquire more land with clays and boost production amidst the escalating competition in the baked clays products market.

Uganda Clays overhead costs increased by 12% to USh13.5bn due to costs associated with the production capacity enhancement project and an increase in the depreciation expense arising from asset additions.

Kasekende said during the Annual General Meeting held virtually in June last year that the company also intends to develop a high-performance culture and systems with a key focus on creating a customer-focused business.

In 2021, UCL invested USh10.5bn in the procurement of a tunnel kiln, a tunnel drier, and related works at the Kajjansi factory, repair and extension of the Kamonkoli kiln, and purchase of 140 acres of clay reserves near the Kajjansi area.

This helped the clay products producer, which initially operated at 90% on natural drying capacity at the Kajjansi factory, to increase its production capacity from 300,000 tiles to 600,000 tiles per month.

The Kamonkoli plant located in eastern Uganda also recorded an increase in tiles production from 270,000 to 360,000 per month.

Currently, Uganda Clays assets stand at USh76.9bn, following a 3% increase last year due to deliberate capital investment in the two factories that included the Kamonkoli kiln extension and installation of new tile presses at both of their factories.


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