For several years, Uganda Clays Ltd, the country’s oldest maker of clay building materials, has not been making profits.
As a result, the company share price dropped from an average of Shs75 ($0.019) in 2011 to less than Shs35 ($0.009) in 2019.
The company hired and fired top managers in a desperate attempt to revive its fortunes but none was paying off. Things got worse in 2018 when National Social Security Fund (NSSF) put a part of its shares in Uganda Clays Limited on sale. This was an attempt to cut back on losses linked to the struggling building materials manufacturer.
However, the partial sale failed to materialise for nearly two years due to scarcity of buyers and concerns over the company’s growth outlook.
But in May 2021, Uganda Clays announced that it returned to profit making in the year ended December 2020. The company reported that profit after tax for the period increased by 5639% to Ushs 4.9 Billion from a loss of Ushs 88.4 Million that was registered in 2019.
The directors and management of the company expressed delight that the turnaround was recorded in a year that has been difficult for all sectors in Uganda and globally due to the effects of the Coronavirus (COVID-19) pandemic, a sign that it will stabilise.
“The year 2020 was unprecedented because of the impact of the COVID-19 pandemic on most businesses. Despite the tough times, the company’s business continued to show resilience but was not immune to the impact of the COVID-19 pandemic,” says the statement.
So what unique thing did the company management do to revive their fortunes?
According to Uganda Clays Limited chief financial officer John Muhumuza, the outbreak of the pandemic helped management go back to the drawing board in bid to cut down costs, as well as remodel its marketing and sales distribution strategy.
“We also found that most of the costs were too high compared to the market prices. We acquired new suppliers and renegotiated some contracts,” Muhumuza says.
“We significantly reduced our firing costs. Coffee husks are a major product in our costs which we reduced from the highs of sh320 per kilogramme to lows of between sh150 to sh170 per kilogramme. We are looking at all the costs, analysing them and doing market surveys to get new suppliers on board and ensure that we get value for money,” he adds.
UCL says it plans to cut down wastage at its two factories located in Kajjansi, Wakiso district and Kamonkoli in eastern Uganda to about 5%, from the current 20%.
“We want these two plants to operate at 95% at the end of next year. The board of directors has aggressively approved the investment plan within our production systems both in terms of capacity and quality to deliver this,” UCL managing director Reuben Tumwebaze Byaruhanga says.
“By end of next year, we want to achieve sh72b in revenue and our ambition by 2026 is to grow to sh200b annual revenue. We are confident that we will deliver this given the support of the board and the public,” he adds.