Uganda Clays announces low dividend pay-out after decline in 2022 profits

Uganda Clays Ltd has announced that it will pay out a total dividend of Shs450 million, which is half a Shilling for every share, after the company registered a drop in profits for the year ended December 2022. 

According to a notice issued to shareholders on Tuesday, the pay-out was approved during the 2022 Annual General Members meeting held on Friday.

“In arriving at this recommendation, the board took into consideration the dividend policy of the company and the need to retain substantial cash for capital expenditure to improve production capacity at both factory plants and to improve product quality,” said Eng. Martin Kasekende, the Uganda Clays Limited Board Chairman.

 Eng. Kasekende said the company demonstrated remarkable resilience, registering Shs36.6b in annual revenue compared to Shs36.7b in 2021.

“We achieved 81% of the revenue target of UGX 45b. On the bourse, our investors earned a net cash return of 43.85%,” he said.

Eng Kasekende attributed the decline in revenue partly due to reduced sales after production, which was disrupted by the breakdown of equipment.

He said they plan to buy new state-of-the-art equipment and that with the easing effects of the COVID-19 pandemic and of the Ukraine-Russia war, they expect better business.

The fall in the dividend is mainly due to the fall in profit for the year, but also the need for cash by the company to expand production and pay off debts. Profits for the year fell by almost half to Shs2.44 billion from Shs5.92 billion registered in 2021, a scenario attributed to lower revenues. 

The company also confirmed the conclusion of negotiations to reschedule a Shs20.6 billion Sloan from the National Social Security Fund, NSSF. Mathias Nalyanya, the company secretary said they will clear the debt in five years in 10 equal instalments, starting January 2025.

Uganda Clays Limited was listed on the Uganda Securities Exchange (USE) in January 2000 and is currently the 15th most valuable stock with a market capitalization of 13.5 billion Shillings or about 0.077 percent of the USE equity market. Currently, the share price of UCL is 15.0 Shillings as per the last trading session, having begun the year with a share price of 17.20 Shillings, a 12.8 percent fall.