Efficiency gains help Qcil offset revenue slowdown in half year results

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The board of Quality Chemical Industries Limited (Qcil) has recommended an interim dividend of sh4.2 per share, up from sh3.5 per share in half year (H1) FY25.

That payout translates to a proposed cash distribution of about sh15.3b for shareholders.

Qcil’s revenue for the six months to September 30, 2025 was sh148.2b, down 2.6% from sh152.2b a year earlier. However, much of that decline is not a failure of demand, but currency and geography.

Export sales were weaker, and the Ugandan shilling strengthened against the US dollar, which reduced the translated value of foreign currency receipts.

In the report, Qcil management said that on a constant currency basis, using last year’s average exchange rate, H1 revenue would have been sh154.6b, which would represent a 1.6% increase instead of a decline. In short, volumes and local sales held up reasonably well, but the stronger Uganda shilling trimmed the headline figure.

Gross profit rose to sh63.4b, lifting the gross margin to 42.4% from 38.6% a year earlier. The gain came from a combination of manufacturing efficiencies, tighter control of raw material costs, and a shift toward higher margin products.

The result was profit before tax of sh33.9b, up 6.2% on the prior year, and net profit of sh23.9b, producing basic earnings per share of sh6.54.

General and administrative expenses rose to sh29.9b, up 11%, largely because of higher staff costs tied to inflationary pressures and salary adjustments. Those extra overheads partially ate into the margin gains, but not enough to reverse them.

Management is explicit that the company remains in a growth phase, with construction underway on a second manufacturing facility at Luzira that will add capacity and an injectable production line.