Uganda: Qcil Records 68 Percent Growth in Net Profit to Shs32 Billion

Kampala, Uganda — Quality Chemical Industries Limited (QCIL) has reported a 68% growth in net profit to Shs32 billion for the year ended March 31, 2024, driven by enhanced manufacturing efficiencies and reduced raw material costs.

Financial results released on May 13, show that the QCIL's total revenue rose from Shs221 billion to Shs265 billion during the period under review. The company successfully cut finance costs by more than half, from Shs1 billion to Shs432 million.

This is QCIL's first full-year financial results following the exit of Indian drug manufacturer, Cipla, six months ago with the sale of its majority stake to a Mauritius-based investment firm, Africa Capital Works SSA 3 (ACW) for $25 million to concentrate its investments in developed markets in Europe and Asia.

The financial statement, signed by Board Chairman Emmanuel Katongole and CEO Ajay Kumar, said strong momentum was experienced in the company's main customer segments.

"Orders from sovereign customers increased by Shs48 billion, while institutional body orders grew by Shs6.4 billion, a 15% rise. Sales to the government of Uganda increased by Shs7 billion, or 5%," the executives said.

However, contract-manufacturing revenue declined by Shs15.8 billion due to decreased demand from Cipla Ltd. Nonetheless, QCIL entered into a three-year manufacturing and supply agreement with Cipla Medpro, now in effect.

The proportion of Artemisinin-based Combination Therapies (ACTs) in total sales grew from 26% to 38% while sales of Antiretroviral Treatments (ARVs) declined from 72% to 60% during the period under review.

Similarly, general administrative expenses rose from Shs54 billion to Shs59.3 billion citing increased selling costs and inflationary pressures. The repayment of a term loan, however, reduced interest expenses by 60%, from Shs1.1 billion to Shs0.4 billion.

Finance income benefited from short-term investments and foreign currency exchange movements, growing from Shs0.6 billion to Shs2.6 billion, driven by a strong cash position resulting from robust operating performance.

The drug firm reported a record pre-tax profit of Shs47.8 billion, the highest in the company's history, up from Shs31.8 billion in the previous year, which included a one-off collection of an impaired trade receivable of Shs14.7 billion from the Zambian government.

Net cash from operating activities increased from Shs41.8 billion to Shs67 billion, reflecting strong operational performance. Net cash used in investing activities decreased from Shs10.6 billion to Shs3.8 billion, primarily due to maintenance of equipment and machinery.

Net cash used in financing activities decreased from Shs28.9 billion to Shs20.5 billion, influenced by loan repayments and dividend payments.

QCIL's total assets grew from Shs213 billion to Shs231 billion, while total liabilities increased slightly from Shs42 billion to Shs44 billion.

Dividend payout pegged at Shs5.7 per share

In response, the Board has recommended a final dividend of Shs5.7 per share, reflecting the company's strong performance and future prospects.

Executives emphasized that this should not be seen as a precedent for future dividends, as the company is in a growth phase and will reinvest in operations, expand its product portfolio, and enhance market presence to drive long-term value creation.

The final dividend is subject to shareholder approval at the Annual General Meeting on July 4, 2024, in Kampala.

QCIL, trading under the ticker QCIL on the Uganda Securities Exchange, has seen its share price remain stable at Shs55 in recent weeks.

As one of the largest pharmaceutical manufacturers in Sub-Saharan Africa, Cipla is recognized for producing antiretrovirals, artemisinin-based combination therapies, and Hepatitis medicines.

Cipla has also ventured into the Ugandan retail pharmaceutical market by acquiring the importation and distribution business of the Cipla range of products manufactured in India.

The company's commitment extends to multiple African countries, securing product registrations, increasing regulatory footprints, and actively exporting drugs to nations like Nigeria, Sierra Leone, Niger, Botswana, and Malawi.

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