Quality Chemicals profit jumps 39% as firm expands production capacity

KAMPALA: Pharmaceutical manufacturer Quality Chemical Industries Limited (QCIL) posted a 39 percent increase in net profit for the financial year ended March 2026, driven by higher sales, improved manufacturing efficiency and recovery of long-standing receivables.

The company’s audited results show profit after tax rose to Shs56.4 billion from Shs40.7 billion recorded a year earlier, while revenue increased by 8.7 percent to a record Shs290.5 billion.

Profit before tax climbed 26.3 percent to Shs77.9 billion, supported by stronger margins, lower finance costs and the reversal of previously impaired receivables.

The results mark one of the strongest performances by the Kampala-based drug manufacturer, which produces antiretroviral medicines (ARVs) and anti-malarial drugs for Uganda and regional markets.

In a statement accompanying the results, the board said the performance was achieved despite the appreciation of the Uganda shilling against the US dollar, a development that reduced the value of export earnings when converted into local currency. Revenue would have grown by 12.1 percent on a constant currency basis.

Gross profit rose by 25.2 percent to Shs135.8 billion, with the gross profit margin improving from 40.6 percent to 46.7 percent. The company attributed the improvement to better manufacturing efficiencies and tighter control of raw material costs.

QCIL also benefited from the recovery of outstanding receivables owed by the Government of Zambia, allowing the company to reverse impairment provisions that had been recognised in previous years. The company said the collection concluded a long-running recovery effort and strengthened confidence in its receivables management systems.

Operating profit increased to Shs73.8 billion from Shs59.4 billion a year earlier, while earnings per share rose from Shs11.1 to Shs15.5.

Shareholders are set to benefit from the improved performance after the board recommended a total dividend of Shs16.6 per share, up from Shs13.5 paid in the previous financial year. The proposed payout remains subject to shareholder approval at the annual general meeting.

The company generated Shs67.5 billion in operating cash flows during the year, more than double the Shs30.3 billion recorded in FY2025, reflecting stronger profitability and improved working capital management.

Part of the cash was invested in expansion projects. Capital expenditure rose significantly during the year, including investments in factory maintenance, new product development, information technology systems and the commencement of a new manufacturing facility in Luzira.

According to the board, the new plant is expected to be commissioned within the next 24 months and will expand production capacity, support entry into new therapeutic areas and strengthen the company’s long-term competitiveness.

However, management warned that some of the gains recorded in FY2026 were boosted by non-recurring recoveries and may not be sustained in future periods. The company said it is facing increasing pricing pressure arising from global competition, procurement trends and changing market conditions.

The board also cited foreign exchange volatility, supply chain disruptions and fluctuations in pharmaceutical input prices as risks that could affect profitability going forward. Nevertheless, directors expressed confidence that the company’s strong market position and ongoing investments would support long-term growth.