Uganda Clays profit streak cut short, registers Shs722m loss

Friday September 6 2019

Tough competition. Uganda Clays’ products have

Tough competition. Uganda Clays’ products have faced a lot of competition from other roofing materials that are produced within and outside the country. FILE PHOTO  

By Christine Kasemiire

Uganda Clays Limited (UCL) has recorded a Shs722m loss for the half year ended June.
The loss covers a period running from January to June.
After an averagely good three years of profitability, the roofings and clay products manufacturer has plunged back into losses.
According to UCL’s half year results, the sixty nine year old company registered a drop in profitability from Shs1.2b in 2018 to a Shs722m loss in 2019.
However, the company grew its revenues by 4 per cent during the period to Shs14.9b from Shs14.4b in 2018 but saw a 30 per cent increase in cost of sales to Shs11.2b from Shs8.6b.
An increase in overhead costs also resulted into an operating loss for the period.
In a notice issued by Mr George Inholo, the UCL managing director on Tuesday, the company had warned shareholders of an impending loss for the period ending June.
“It is expected that the company shall record a loss attributable to the shareholders for the period of January-June 2019 as compared to a profit for the same period in 2018,” the notice reads in part.
The loss, he said, was a culmination of reduction in revenue, which was spent on fixed costs, specifically maintenance of the Kamonkoli factory, in eastern Uganda, which closed for one and a half months.
The closure, UCL noted was longer than expected.
Uganda Clays also said a reduction in the firing capacity occasioned by scarcity of the main fuel source – coffee husks due to the current offseason in the country - had affected the company’s operations and income.

Performance of Individual factories

UCL operates two factories in Kajjansi and Kamonkoli.
Kamonkoli: The company has suffered under a largely huge investment - Kamonkoli factory – whose capacity has not held up to projected returns.
According to details contained in the results, UCL suffered a Shs618b loss resulting into its Kamonkoli factory after cost of sales superseding the revenue generated.
Shs5.5b was spent in production to collect only Shs4.9b in revenue from Kamonkoli factory.
Kajjansi: The Kajjansi factory, however, contributed the bulk of the company’s revenue, pooling Shs10b against a Sh5.6b expenditure.
Performance of individual products during the period under review
The revenue, which was below Uganda Clays Limited’s Shs17.5b projected target for the period was a result of a run out of stock of desired materials, leaving Shs3.3b worth of orders unfulfilled.
Of the manufactured products, Uganda Clays Limited’s mangalore tiles, despite a reduction in units sold during the period compared to 2018, contributed the most revenue with 3,028 units sold, earning the company Shs6.9b before discount.
Half bricks and Max pans also contributed more to the company’s revenue with 2,033 units and 1,167 units sold respectively.
It is now a site to see, whether Uganda Clays Limited will be able to turn the leaf on losses come December 31, or plunge even further into the abyss of losses.