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Company’s executive describes the year as good, reveals plan to cut costs
Kampala, Uganda | JULIUS BUSINGE | Clay products maker, Uganda Clays Limited has recorded an increase in total revenue from Shs27bn in 2017 to Shs30bn in 2018, according to its financial statements released on May 20.
George Ihnolo, the company’s managing director told The Independent on May 24 that general growth in revenue was attributed to a new a production approach that was largely market driven.
“…so we produced what the market was asking for,” he said, “We also intensified on our distribution reach by appointing dealers in several clusters.”
Gross profits remained flat at Shs10.6bn for the two years under review. However, the company recorded a drop in net profit from Shs2.3bn in 2017 to Shs1.9bn in 2018.
The drop in profit after tax revenue, according to the company’s top officials, was largely as a result of costs related to off season of coffee husks and increase in fuel prices in the period leading to the increase in cost of distribution.
There was a 9% increase in the total overheads due to incentives of transport to agents and corporate customers.
Cost of sales increased from Shs16.5bn in 2017 to Shs19.4bn in 2018. However, total income grew from Shs10.9bn to Shs11.2bn in 2018 which was partly supported by Shs296million recorded as income from land compensation and rent and other incomes.
Other operating expenses (undisclosed) increased from Shs3.9bn to Shs4.6bn as income tax expense reduced from Shs769million in 2017 to Shs508million. The company’s basic and diluted earnings per share reduced to Shs2.2 in 2018 from Shs2.6 a year before.
The company’s financial position remains solid with its net current assets growing from Shs16bn in 2017 to Shs18.8bbn in 2018. But liabilities are growing – recorded at Shs3.5bn in 2017 and Shs4.6bn in 2018.
Officials said that due to the high cost of production incurred trying to improve efficiency of production the company’s growth was negatively impacted.
The Board of Directors recommended a dividend for the year ended December 2018 of Shs1 per share subject to withholding tax, the same amount shareholders were paid for the year 2017. The payment date shall be August 25 and the book closure date is August 15, 2019.
Inholo said fuel expenses was a cost whose market average grew by about 10% during the year.
“Any cost to the business dilutes the bottom line. So we are reviewing every cost in order to realise shareholder value,” he said.
He added that 2018 was a good year overall on revenue growth and that going forward emphasis shall be placed on continually growing revenues and dropping costs.
The company has opened up distribution points in Arua, Lira, Gulu, Hoima, Mbarara, Forportal, Kabale and several others in Kampala Ntinda, Lugogo, Bukasa areas in a bid to get closer to the customers.
“With these outlets, our customers don’t need to come to our manufacturing points,” Inholo says.
Looking ahead, Inholo says that tastes and preferences for customers differ and are changing and that it is the reason the company is working on key innovations on its products.
Other areas the company is working on to improve are health and safety for staff to ensure that staff and customers are all safe and secure.
More selling outlets are to be opened up to make it easy for people to access the company’s products. The company also wants to grow more coffee to be able to get more coffee husks used in the making of the products.
Facts about UCL
- It has been in the business of manufacturing quality baked clay building products since 1950.
- It became publically owned after listing on the Uganda Securities Exchange in 2000.
- Its share price has remained at around Shs16 since 2019 begun
- It uses hoffman kilns to currently provide the building materials in a brick –red color.
- Company operates two factories – Kajjansi which churns 300 tones of clay a day and Kamonkoli which does 200 tons a day
- The company exports to South Sudan and the Democratic Republic of Congo and is exploring other new markets in the region
- The company’s total number of staff is 325
- It controls about 60% of the clay sector business in Uganda.
- It also features among the top 100 taxpayers in the country.
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