Printing Corporation’s profit declines by Shs2.2 billion
What you need to know:
UPPC’s profit dropped by more than half to Shs1.204b by June 2022, down from Shs3.383b recorded in the same period ended June 2021.
Uganda Printing and Publishing Corporation (UPPC) recorded a 60 percent reduction in profit in the period ended June 30, 2022, according to the Auditor General’s report.
The report, which details financial performance of UPPC and other 50 government agencies, indicates that the Corporation’s profit dropped by more than half to Shs1.204b, down from Shs3.383b recorded in the same period ended June 2021.
Auditor General John Muwanga indicated that UPPC blamed its profit reduction to stiff competition in the market from the growing printing business.
However, economists and analysts say in a liberal market, stiff competition is not washed away but entities have to plan to deal with it.
Dr Fred Muhumuza, a renowned economist, told Daily Monitor that it will be wrong for UPPC to point out stiff competition as the reason for its reduced profit is pegged to their failure.
“If it was about stiff competition, those enterprises in the same business would not be in the game,” he noted.
He added that enterprises like the Monitor Publication’s management have done everything possible even when they faced state threats to close the business.
“They (Monitor) did everything to stay afloat, because competition is where we hire the best and if someone eats into your space, either you are going to sleep or you are incompetent,” Muhumuza added.
Adapt new technology
Muhumuza’s advice to UPPC is to consider adapting to the changing technologies to offer the best to their clients and grow the business into profitability.
“Let management of UPPC do self-reflection, scan the environment and adapt to the changing world and innovate to survive in the market,” Muhumuza concluded.
UPPC is mandated to print and publish all laws of Uganda as passed by Parliament. We are the only publishers of the Uganda Gazette-the official Government newspaper of record, ideally gives them a privilege. But what went wrong?
Mr Kenneth Oluka, managing director UPPC breaking down other reasons behind the reduced profit in the period ended June 2022 said: “Some Ministries, Departments and Agencies (MDAs) do not respect the President’s directive that requires them to give their printing jobs to UPPC”.
He added that the situation was worsened by the Covid-19 pandemic that ravaged the economy resulting in a reduction in funding to MDAs.
To manage the situation, these MDAs are now forced to prioritise and rationalise their printing activities.
To turn around sales, UPPC is looking into diversifying its product and revenue streams in addition to building strategic partnerships.
The Corporations broadened product pillars are; publishing (including e-publishing), commercial printing, promotional items, stationary production, branding solutions, and projects.
“Not forgetting digitalisation, debt management, and recapitalisation of UPPC through the acquisition of new and modern assets (machinery) boost revenues,” Oluka added.
Auditor General further, indicated that return on assets (ROA) which shows the percentage of how a company’s assets are generating revenue, with emphasis on measuring management’s efficiency in using the enterprise’s assets to generate earnings, UPPC was among the entities that scored 5 percent.
“Management explained that it has income generating strategies such as utilising one of the properties as a printing school. Should resources become available, the properties shall be overhauled to attract investment opportunities,” Auditor General shared in the report.
Ideally, Public Corporations and State Enterprises should meet their short and long-term debt obligations.
Gearing (debt) ratio measures the proportion of the enterprises’ assets that are financed by debt. Although the risk levels vary from industry to industry, a debt ratio of more than 50 percent is considered undesirable.
Further analysis noted that UPPC was among the eleven Public Corporations and State enterprises which had very low gearing levels below 10 percent.
During the period, the Auditor General also noted that UPPC was rated at 0.13 percent, indicating availability of untapped source of financing for growth.
Ideally, the ability of Public Corporations and State enterprises to meet their short-term financial obligations, the ratio of Current Assets to Current Liabilities between 1.5 and 2 is desirable, although acceptable current ratios vary between different industries or sectors.
The Auditor General indicated that in his analysis, UPPC scored 2.8 from 2.1 in the period ended June 2021.
In this case UPPC, according to the Auditor General’s findings, has strategies to utilise its current assets by managing payments well and intensifying debt collection.
Printing in digital era
Last year UPPC acquired a state-of-the-art HP Indigo printing machine that delivers high-quality prints with the widest colour capabilities and substrate versatility. With unique digital printing technologies, colour, and ink coverage capacity, HP digital printing solutions routinely match and, at times, exceed the quality of traditional offset printing.
This machine is top of the range in security printing because a lot of security can be embedded in a document, making it hard to forge. Each document, can be embedded with unique security features.
At the same time, UPPC is upgrading old machines and in the process of procuring new machinery that can ably compete in the market.