Uganda Clays profit shoots to Shs2.1b

Kampala. In its half year results, Uganda Clays Limited (UCL) has posted a profit after tax of Shs2.1b up from the Shs1.2b in June last year.
The manufacturer, whose luck changed for the better in 2016 after National Social Security Fund (NSSF) transferred its Shs20b debt to shares, has recovered with a 70 per cent upsurge in profit, incurring no finance cost during the period.
The clay products manufacturer attributed the profit to proper management, appraisals, distribution and aggression in the market which lowered costs of sales that dropped from Shs7.9b last year to Shs6.5b.
A restructuring exercise that started in 2014 and ended in 2016 to cut operating costs, saw 80 employees lose their jobs, and contributed to the large profit.
The managing director, Mr George Inholo, said laying off the workers had a minor positive effect.
But it was majorly distribution and aggression of the company in the industry that increased the profit.
“Laying off the workers did help a little but it is mainly proper management, energy saving management, appraisals, aggression in market and distribution of products that led to a big profit. Wherever you want to receive products be it Kampala, Jinja or Mbale, we shall distribute them to you because it is what we do,” he said.
In addition, a cheaper alternative of substituting expensive furnace oil for coffee husks was introduced at the end of 2015, to curtail the expense incurred to cut the operating costs.
Mr Inholo said the coffee husks are a cheaper, available and convenient option for UCL.
Controlling costs of production remains a key aspect for the company to ensure constant growth in the gross margin which was boosted to 49 per cent from 36 per cent last year.
The company’s revenue performance improved by 4 per cent from Shs12.3b last year to Shs12.8b.
The slow growth was blamed on the low liquidity, heightened food inflation due to long drought period and continued civil conflict in South Sudan.

Intensified marketing
Despite these shortcomings, management of UCL said it has intensified marketing activities in the second half of the year in order to improve revenue performance.
Share value of the company has also seen a boost to Shs2.4m per share, up from Shs1.4m previously.
But shareholders will have to wait on the next general meeting where they will decide if dividends will be awarded.
Ms Salima Nakiboneka, an investment analyst at Stanlib Uganda Limited, said since the shift of NSSF debt to shares, UCL now has breathing space for making profits since it incurs no finance costs.
“The company is now profitable because of the transfer of debt into shares which has given UCL a chance to concentrate on making a profit since it no longer incurs finance costs,” she said