Uganda Clays profits drop due to supply chain disruptions

Uganda Clays has warned that it expects a decline in profits, resulting from a number of factors including supply chain disruptions. 

The decline, which Uganda Clays says will be 25 percent for the period ended December 2022, is expected to be cause for concern for investors and shareholders, given that the company had for  many years posted losses, before it returned to profitability in 2019. 

During the period ended December 2021, Uganda Clays reported an increase in profits to Shs5.9b from Shs4.8b in the same period in 2020. 

However, in a profit warning issued last week, Eng Martin Kasekende, the Uganda Clays chairman, cautioned investors and shareholders, noting that the company is expected to record a drop in profits due to a product shortage caused by a temporary shutdown of its factories to carry out extension works.

This, he noted, was further exacerbated by supply chain disruptions due to geopolitical tensions in Europe, where majority of the equipment and spare parts it uses are produced.

“The low economic growth rate caused by Covid-19 and imported inflation dampened consumer demand and increased our overall operating and production costs, negatively impacting the bottom line,” Eng Kasekende said. 

Uganda Clays operates two plants in Kajjansi in Wakiso District and Kamonkoli, in eastern Uganda, producing roofing and other building material. 

However, it has in the last 10 years suffered under an increase in alternatives, worsened by lower than projected performance and rise in cost of business. 

On Thursday, Uganda Clays recorded a drop in the volume of traded shares, declining from 10,000 to just 5,057.

The drop in profits is also expected to negatively impact shareholders’ dividend payout .   

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