Uganda Clays Anticipates Return to Profitability Following Capacity Expansion

The year 2023, marked the end of Uganda Clays Ltd’s 5-year strategic plan. Despite revenue declining from UGX 36.6 billion in 2022 to UGX 30.1 billion in 2023 due to geopolitical tensions and supply chain disruptions, the company remains focused on returning to profitability and is confident in its future.

During the Uganda Clays Annual General Meeting, Eng. Martin Kasekende, Uganda Clays Board Chairperson, reassured shareholders and stakeholders of the company’s continued commitment to profitability.

“To address the aging condition of our plant and machinery, we invested UGX 7.9 billion into our capacity expansion project. This investment is paying off as we achieved improvements in production performance in the second half of the year. The company is seeking external financial support to further enhance our production capacity and product quality,” he said.

He added, “Our significant order book and project pipeline reflect the competitive position of our business, and the pressing domestic housing needs in our market provide us with good opportunities for sustainable earnings growth in the medium to long term. With the housing market poised for growth, we are confident in the future.”

Kasekende noted that the last strategy, themed “Build the Capabilities for Success,” set a solid foundation on which they will develop the new 5-year strategic plan.

Uganda Clays Ltd is developing a new 5-year strategic plan focused on customers, shareholders, and employees. With strong market demand for housing and a solid foundation established by the previous strategy, the company is optimistic about achieving sustainable growth and delivering value.

According to Reuben Tumwebaze, Uganda Clays Managing Director, in 2023 they registered a recovery rate of 79% and a staff engagement index of 71%, both exceeding targets.

He stated that the company maintained a positive EBITDA of UGX 3.6 billion despite the challenges. ( EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure used in business to assess a company’s overall financial performance and profitability from core operations.)

“Equipment issues led to longer delivery times, but new tile presses at the Kajjansi factory showed promising improvements, with full benefits expected in 2024. Efforts to make products more affordable through discounts and hire purchases are yielding positive responses,” he said.

Tumwebaze revealed that the company secured important mining permits aligned with authorities for a seamless setup of new equipment.

However, he noted that profit dropped from UGX 14.8 billion to UGX 8.7 billion. While 2022 saw a net profit of UGX 2.4 billion, the revenue drop and marginal cost adjustments resulted in a net loss of UGX 2.8 billion in 2023.

“Consequently, earnings per share decreased from UGX 2.7 in 2022 to negative UGX 3.6 in 2023. Given this performance, the board has decided not to recommend a dividend for the financial year 2023,” he said.