By Our Writer
Despite having good strategic plan in place, Uganda Clays Ltd registered a decline in profits in 2023.
However Reuben Tumwebaze, Managing Director of Uganda Clays Ltd, is optimistic of better future.
He says despite facing significant operational hurdles and market pressures in 2023, Uganda Clays Ltd, a key player in the construction and building materials sector, remains optimistic about its future.
“Factors such as increased demand for housing, a growing middle class, improved living standards, and a vibrant diaspora community are all expected to drive future growth,” he said.
Tumwebaze says Uganda’s macroeconomic environment remains favourable, with a GDP per capita of approximately US$1,200, an economic growth rate of 6.7%, and inflation kept below the central bank’s target of 5%.
He added that despite these positives, geopolitical tensions in Europe and domestic infrastructure challenges disrupted logistics, leading to product shortages and impacting operations.
Giving high lights of 2023 performance report Tumwebaze reported kiln recovery reaching 79% and a staff engagement index of 71%, both surpassing targets. However, the company underperformed in customer satisfaction and financial metrics, with a net promoter score of 13% and revenue at UGX 30 billion, falling short of the targets of 60% and UGX 31 billion respectively.
Uganda Clays Ltd maintained a positive EBITDA of UGX 3.6 billion, showcasing strong management and financial resilience.
“The year 2023 was particularly tough operationally, with equipment failures and machine breakdowns severely affecting production. The average product delivery turnaround time increased from 3 days in 2022 to 45 days in 2023, resulting in decreased customer satisfaction. The net availability index (NAI) of machines dropped to 55%, below the budgeted target of 65%,” he said.
Among the undertaking last year , Uganda Clays Ltd commissioned two new tile premises at the Kajjansi factory.
Tumwebaze also addressed increased competition in the roofing sector, with 70% of households opting for iron sheets. To counter this trend, the company introduced incentives like discounts and hire purchase schemes, which have been well-received, as detailed in the company’s sales and marketing commentary.
Despite the operational challenges, Uganda Clays Ltd improved its industrial safety rating to 67% in 2023 from 53% in 2022. “There were no reported fatalities, and the company enhanced the use of personal protective equipment, making factories safer for employees and visitors.”
Furthermore, the company successfully obtained mining permits and secured a waiver to excavate the Nsaggu quarry. It also achieved environmental compliance with a NEMA certificate and an audit report from Morando. Payments for the Italian tile line are nearly complete, ensuring a smooth setup of the equipment arriving from Italy.
The company remains committed to its slogan, “Beauty to last!” and aims to continue supporting its customers, developing its employees, and delivering sustainable growth and value to shareholders and stakeholders.
Engineer Martin Kasekende, Board Chairman said despite the setbacks, the company made substantial investments in capacity expansion, amounting to UGX 7.9 billion, which have started to yield improvements in production performances.
Mathias Nalyanya, the Company Secretary, underscored the financial strain the company faced with a candid acknowledgement of the financial downturn. He informed the shareholders, the majority of whom attended virtually, that there would be no dividends to be paid it owing to the loss of position.
“The company registered a net loss of 2.85 billion during the year under review, a stark contrast to the net profit of 2.4 billion in the previous year,” Nalyanya stated.
“As a result of this financial outcome, the board has decided against proposing a dividend for the fiscal year 2023.”
Eng. Kasekende also highlighted the board’s efforts to navigate the company through these challenges, including seeking external financial support to enhance production capacity and product quality.
“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,” he added.
