Uganda Clays Limited Tuesday said high costs incurred while trying to improve production efficiency and the increase in fuel prices, which pushed up distribution costs, offset higher sales in its most recent financial year.
Uganda Clays, the manufacturer of clay building products, said net profit for the year ended December 31 was Shs1.9bn, compared with Shs2.3bn a year earlier, on a surge in revenue costs and higher operating expenses.
Revenue rose 10.5% to Shs30bn in the year as the company was able to sell more of its products. Sales of roofing tiles increased by 6.6% to Shs17.9bn, while maxpans rose 30.2% to Shs6.6bn.
Cost of sales rose faster than in the previous fiscal year, increasing by 17.5% to Shs19.4bn compared to growth of 6% in the year before. Production costs rose 7.7%, driven by an increase in salaries and allowances for production staff, clay processing and product moulding costs, and sales outlet expenses.
Gross profit fell 0.3% to Shs10.6bn compared to an increase of 2.2% in 2017, the company’s financials show.
Operating expenses for the year increased to Shs8.5bn from Shs7.8bn in 2017, although they rose at slower pace than in the previous year. The rise in operating expenses was driven by growth in ‘other operating expenses’, particularly salaries and allowances and termination pay, and distribution costs.
Uganda Clays said an increase in fuel prices during the period and transport incentives to agents and other corporate customers contributed to the increase in distribution costs.
Operating profit fell 15.7% to Shs2.6bn, while a surge in finance costs — the result of foreign exchange losses — from Shs2.9m in 2017 to Shs172.7m ate into pre-tax profit, which declined 21.2% to Shs2.4bn.
The tax on the company’s profit was Shs508.4m versus Shs769.1m in 2017.
The company said it plans to pay a dividend of Shs1 per share. The The book closure date, the day when the company determines shareholders entitled to receive the dividends for last year, is August 15 while dividends will be paid on August 25.
Uganda Clays will hold its annual general meeting on July 26 at the Sheraton Kampala Hotel.