Uganda Clays net profit has dropped by more than half to Shs2.7bn for the first six months ending June.30 but management insists there are no worries at least for now.
“We project the economy to improve in the second half of the year resulting in a steady growth in revenue,” the company said in published financial results.
Its executives said the capital expenditure projects for the enhancement of production capacity are progressing well.
The clay products maker is investing Shs17.8billion towards the acquisition of more land with clay as well as machines to boost production as industry competition tightens.
The company has also embarked on several key transformational projects to optimize the management of its clay quarries and improve materials management across the clay factory value chain.
In addition, it is also investing in talent development and leadership programs to attract, retain and develop the leaders of tomorrow.
The company’s new investments are expected to act as a springboard towards ensuring that it remains on the market in the clay products business.
UCL invested Shs10.5bn in revamping its two plants – Kajjansi and Kamonkoli – last year involving the installation of new kilns, artificial driers, and land expansion as a source of raw material.
This boosted its production capacity at the Kajjansi plant, with volume doubling to 600,000 tiles per month.
Kamonkoli plant, too, doubled its production capacity to 400,000 tiles per month and is expected to more than double this volume with the latest extension.
The company’s revenue grew by 3% to Shs18billion boosted by improved production efficiencies and expansion of the domestic market.
However, the overhead costs increased by 23% to Shs6.6billion during the period under review driven by increased funding of the business initiatives and increased operating costs resulting from increased inflation during the period.
Last year, Uganda Clays recorded a profit after tax of Shs5.9billion, representing a 21% growth compared to the previous year.
UCL main shareholders include National Insurance, Central Bank of Kenya Employee Pension Fund, Bank of Uganda Staff Retirement Plan, and the National Social Security Fund among others.