Uganda Clays reports decline in revenue amidst operational challenges

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Uganda Clays reports decline in revenue amidst operational challenges
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Uganda Clays Limited has reported a significant decrease in revenue for 2023, concluding its five-year strategic plan on a challenging note.

Revenue fell from Shs 36.6 billion in 2022 to Shs 30.1 billion, attributed to a mix of external and internal factors.

These remarks were made during the Annual General Meeting for the year ended 31 December 2023, convened in Kampala.

Board chairman Eng. Martin Kasekende pointed to supply chain disruptions caused by geopolitical tensions in Europe, affecting the delivery of critical spares and consumables.

These interruptions led to product shortages and impacted overall revenue.

Despite these setbacks, Uganda Clays, a company with a 74-year legacy of producing high-quality baked clay building materials, remains committed to returning to profitability.

"The company invested Shs 7.9 billion in capacity expansion, leading to improved production performance in the second half of the year," Kasekende said.

He reassured shareholders and stakeholders of the company's dedication to maintaining its heritage of sustainable building solutions.

To address the aging condition of the company's plant and machinery, Uganda Clays Limited invested Shs 7.9 billion in a capacity expansion project.

This investment has already shown positive results, with improved production performance in the second half of 2023.

The company is now seeking additional external financial support to further enhance production capacity and product quality.

Employee engagement remains strong at Uganda Clays Limited, with a recent survey revealing a staff engagement index of 71%, underscoring the staff's commitment to the company.

Kasekende also acknowledged the unwavering support of shareholders, emphasizing the board, management, and staff's commitment to maximizing shareholder value in the future.

Managing Director Mr. Reuben Tumwebaze acknowledged the impact of external and internal factors on the company's operations.

"Geopolitical tensions in Europe and domestic infrastructural breakdowns interrupted our logistics, negatively impacting our operations and resulting in product shortages," he said.

A significant challenge in 2023 was equipment integrity.

"Equipment integrity and machine breakdowns hit us hard in 2023, increasing our average turnaround time for product delivery from 3 days in 2022 to 45 days," Tumwebaze stated.

To counteract this, the company commissioned two new tile presses at its Kajjansi factory, which showed promising results by the year's end.

Competition in the roofing sector has intensified, with a growing preference for iron sheets.

Tumwebaze noted, "At least 7 in every 10 households are currently using iron sheets for roofing, a trend we are trying to reverse by making our products more affordable through incentives like discounts and hire purchases."

Despite the challenges, Uganda Clays reported improvements in health, safety, and environmental standards.

"Our health and safety rating improved to 67% from 53% in 2022, with no fatalities and better use of personal protective equipment," Tumwebaze highlighted.

Additionally, the company secured mining permits and made significant progress on the Italian tile line project, with 98% of the costs already paid.

Staff engagement also saw positive developments.

"We conducted a staff engagement survey and are pleased to have a score of 71% compared to our target of 70%," Tumwebaze said.

This focus on employee welfare is part of the company's broader strategy to maintain high levels of staff engagement and continuous reskilling.

Looking ahead, Tumwebaze expressed gratitude to the stakeholders and emphasized the company's commitment to its strategic goals.

"I would like to extend our sincere gratitude to all our customers, shareholders, and other stakeholders for showing faith in these challenging times," he said.

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