Uganda Clays see more losses in six months

BUSINESS | UCL 

Construction clay product maker, Uganda Clays Limited (UCL) has issued a cautionary statement (or profit warning) indicating that the firm's bottom line for the last six months to June is unlikely to meet shareholder's expectations. 

"Uganda Clays Limited (the Company) wishes to inform its shareholders and the general public that the Company's unaudited financial statements for the six-month period January -June 2020, which are due to be published soon, are likely to return a loss position."

Accordingly, the shareholders are advised to exercise caution when dealing in the Company's securities," Martin Kasekende, chairman of the board, said in a statement. 

Essentially, this means that the company will announce a loss for the period under review.

A profit warning is a declaration issued by a listed company to investors through a stock exchange, advising shareholders and the public that the company's earnings results will likely not meet expectations. 

UCL was listed on the Uganda Securities Exchange in January 2000, making the clay manufacturer the first equity to be listed at the bourse.

The yet to be published results will only add to the misery of several shareholders after many years of loss making. 

During their annual general meeting last year at the Sheraton hotel, several shareholders tasked the board to come up with decisive actions to turn around the business. 

Part of the major cost drivers for the business over time has been the high cost of product transportation, clay processing, staff salaries and allowances.

In March this year, UCL board fired several top executives including George Inholo, the then UCL managing director in a bid to turn around the business.

In the 2019 calendar year, the company announced a loss of sh88m. 

In its 2018 financials, the Company reported a 17% dip in profitability to sh1.9 billion after tax. 

The decline was attributed to the general increase in prices within the economy, more specifically the importation of requisite spares to keep the factories running and an increase in the prices of its firing fuel, the coffee husks.