Uganda Clays Returns Profits in 2020 After Sacking Top Executives

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Uganda Clays Limited (UCL) has posted a net profit of sh4.9b for the period ended December 2020, seven months after sacking some top executives including its managing director.

Its performance for the period has seen the board of directors propose a dividend payout of sh1.2b (sh1.35 per share) for its shareholders.

In 2019, the building clay material manufacturer, which is listed on the Uganda Securities Exchange registered sh88m loss. The latest performance marks a major turnaround for the company and its shareholders after nearly three years of loss making.

In March 2020, the UCL board of directors relieved George Inholo (former managing director) of his duties alongside the Head of Production and Head of Human Resources and Support Services.

This followed concerns from the shareholders over the ballooning costs of sales year on year, which affected the company’s bottom line. Reuben Tumwebaze was appointed managing director.  

According to UCL financial statement for the period under review, the board of directors has expressed delight over UCL turnaround in a year that has been difficult for all sectors in Uganda and globally due to the effects of the Coronavirus (COVID-19) pandemic.

“Despite the tough times, the company’s business continued to show resilience but was not immune to the impact of the COVID-19 pandemic,” the board said in a statement. 

Gross profit for the period increased by 43% to sh13.5 billion from sh9.5 billion recorded in the year 2019, driven by cost management initiatives put in place during the year resulting in a decrease of production costs.

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The increase in profit amidst decline in revenues was due to a sharp reduction in the cost of sales. Costs declined to sh16.1 billion from sh21.3 billion that was recorded in the previous year.

Revenues decreased by 3% to sh29 billion for the period compared to sh30 billion in the year 2019, notably due to business affected by COVID-19 pandemic.  

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