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Uganda: Qcil posts 68 percent growth in net profit to Sh32 billion

Kampala, Uganda – Quality Chemical Industries Limited (QCIL) reported a 68% growth in its net profit to Sh32 billion for the year ended March 31, 2024, driven by increased manufacturing efficiency and a reduction in raw material costs.

Financial results released on May 13 show that QCIL’s total revenue increased from Sh221 billion to Sh265 billion during the period under review. The company managed to reduce financial costs by more than half, from Sh1 billion to Sh432 million.

These are QCIL’s first full-year financial results following the exit of Indian drugmaker Cipla six months ago with the sale of its majority stake to a Mauritius-based investment firm, Africa Capital Works SSA 3 (ACW) by 25 million dollars to focus. its investments in developed markets in Europe and Asia.

The financial report, signed by Chairman Emmanuel Katongole and CEO Ajay Kumar, said strong momentum was experienced across the company’s core customer segments.

“Orders from sovereign customers increased by Sh48 billion, while institutional orders grew by Sh6.4 billion, an increase of 15%. Sales to the Ugandan government increased by Sh7 billion, or 5%,” the executives said.

However, contract manufacturing revenue decreased by Sh15.8 billion due to lower demand from Cipla Ltd. However, QCIL entered into a three-year manufacturing and supply agreement with Cipla Medpro, now in place.

The share of artemisinin-based combination therapies (ACT) in total sales increased from 26% to 38%, while sales of antiretroviral treatments (ARVs) decreased from 72% to 60% during the period under review.

Similarly, general administrative expenses increased from Sh54 billion to Sh59.3 billion, citing higher selling costs and inflationary pressures. However, repayment of a term loan reduced interest expenses by 60%, from Sh1.1 billion to Sh400 million.

Financial income benefited from short-term investments and foreign exchange movements, increasing from Sh0.6 billion to Sh2.6 billion, driven by a strong cash position resulting from a strong operational performance.

The pharmaceutical company posted a record pre-tax profit of Sh47.8 billion, the highest in the company’s history, up from Sh31.8 billion a year earlier, which included a one-time collection of an impaired trade receivable from 14.7s. billion from the Zambian government.

Net cash from operating activities increased from Sh41.8 billion to Sh67 billion, reflecting strong operating performance. Net cash used in investing activities decreased from Sh10.6 billion to Sh3.8 billion, mainly due to maintenance of equipment and machinery.

Net cash used in financing activities decreased from Sh28.9 billion to Sh20.5 billion, influenced by loan repayments and dividend payments.

QCIL’s total assets grew from Sh213 billion to Sh231 billion, while total liabilities increased slightly from Sh42 billion to Sh44 billion.

Dividend payment set at 5.7 shillings per share

In response, the Board recommended a final dividend of Sh5.7 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 improve its market presence to drive value creation to long term.