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Investors are set to receive a higher payout after the board recommended a final dividend of Shs6.4 per share
Kampala, Uganda | THE INDEPENDENT | Quality Chemical Industries Limited (QCIL), the country’s largest pharmaceutical manufacturer, reported a 39% jump in annual profit after tax, helped by stronger sales, improved factory efficiency and the recovery of long-outstanding receivables.
Net profit rose to Shs56.4 billion for the year ended March 2026 from Shs40.65 billion a year earlier, the company said in its audited financial results released on Friday.
Revenue climbed 8.7% to a record Shs290.5 billion, driven by sustained demand for antiretroviral and anti-malarial medicines across Uganda and regional export markets. On a constant-currency basis, revenue growth would have been 12.1%, the company said, after the appreciation of the local currency reduced the value of its dollar-denominated sales.
The results underscore the growing strength of East Africa’s pharmaceutical manufacturing sector, which governments increasingly view as critical to reducing reliance on imported medicines.
Profitability improved sharply during the year as gross margins expanded to 46.7% from 40.6%, reflecting gains in manufacturing efficiency and tighter control of raw material costs.
Profit before tax increased 26.3%, supported by higher revenue, stronger margins, lower foreign exchange losses and the recovery of previously impaired receivables.
A key contributor was the final collection of outstanding debts owed by the Government of Zambia. The receivables had been fully provided for in previous years, allowing the company to reverse the impairment provision and boost earnings.
“The recovery underscores the company’s commitment to prudent financial management and reinforces confidence in the robustness of its receivables oversight,” the board said in its statement accompanying the results.
Operating cash flow more than doubled to Shs67.5 billion from Shs30.3 billion a year earlier, reflecting stronger profitability, improved working capital management and the one-off recovery from Zambia.
The stronger cash generation has enabled QCIL to accelerate investment in future growth.
Expenses, too, rose sharply
Capital expenditure rose to Shs20.8 billion from Shs6.3 billion in the previous year. The spending included factory maintenance, new product investments, information technology upgrades and the start of construction of a new manufacturing facility in Luzira.
The company said the plant is expected to be commissioned within the next 24 months and will increase production capacity while supporting diversification into new therapeutic areas.
QCIL is currently operating close to full manufacturing capacity, making expansion a strategic priority as demand for locally manufactured medicines continues to grow.
The company also disclosed that after the financial year-end it collected $14 million in receivables from South Africa-based Medpro Pharmaceutical under a manufacturing and supply agreement linked to Africa Capitalworks SSA 3’s acquisition of control of QCIL in 2023.
Investors are set to receive a higher payout after the board recommended a final dividend of Shs6.4 per share. This would bring the total dividend for the year to Shs16.6 per share, up from Shs13.5 per share in the previous financial year.
Cautious outlook
Despite the strong performance, directors cautioned investors against extrapolating the current year’s earnings into future periods.
The board noted that the results benefited from non-recurring items, including the reversal of previously impaired receivables, while warning that increased competition is putting pressure on pricing across several key product categories.
“Looking ahead, the company is experiencing pricing pressure on several key products arising from heightened global competition, procurement dynamics and evolving market conditions,” the board said.
Directors added that profitability remains sensitive to changes in product mix, foreign exchange movements and the cost of active pharmaceutical ingredients, many of which are sourced internationally.
The company said it continues to monitor geopolitical developments, supply chain disruptions and currency volatility, factors that have become increasingly important for pharmaceutical manufacturers worldwide.
Even so, Chairman Emmanuel Katongole and Chief Executive Officer Ajay Kumar Pal said the company remains focused on disciplined execution, operational efficiency and strategic expansion.
“While near-term performance continues to reflect prevailing market headwinds and a subdued operating environment, the board remains confident that the company’s strong fundamentals, operational resilience and strategic positioning will enable it to navigate current challenges and sustain its long-term growth trajectory,” the directors said.
