Uganda Clays Limited said on Wednesday that its half-year profit rose 70% in the first half of 2017, driven by a reduction in costs of production.
The building materials manufacturer, listed on the Uganda Securities Exchange, reported an after-tax profit of Shs2.17bn in unaudited financial results for the six months in ended June 30, compared with Shs1.27bn in the same period last year. It is the second successive profit for the period, following a loss in the first six months of 2015.
Revenue increased 4% to Shs12.86bn, with the company saying realisation of projections was difficult because of “the general tough operating environment in the economy including low liquidity, heightened food inflation due to a long drought period, the continued civil conflict in South Sudan.”
The company improved its gross profit by 42.8% to Shs6.31bn from Shs4.42bn in 2016. This was due to costs of production falling by 17.77% to Shs6.54bn. Reducing these further is “a priority area in the business,” Uganda Clays said in a statement, and that it will import more spares in the second half of the year to that end.
Uganda Clays did not incur any financial costs in the first six months of the year, it said. These have been responsible for dragging the company into the red in previous periods. Last year, however, its largest debtor, NSSF, waived interest on the Shs11.05bn loan it gave UCL in 2010. The two entities are in negotiations for NSSF to turn the loan and interest into equity.
Uganda Clays provides 55% of all baked clay building products used in Uganda, according to its annual report for 2016. Most of its revenue in 2016, 65%, was from roofings tiles.