Quality Chemical Industries weathered a tough first half to September, a stretch marked by a stronger shilling and softer demand, but still managed to come out with higher earnings, record cash, and a bump in dividends.
The shilling rose about 4 to 5 percent against the dollar during the period, according to Bank of Uganda.
And because Quality Chemical sells much of its output in sub-Saharan Africa and invoices in dollars, those same foreign sales are converted into fewer shillings on paper.
That is why reported revenue slipped 2.6 percent to Shs148.2b even as the business itself didn’t weaken because of the unusually strong shilling.
If exchange rates had stayed the same as the ones in the first half of 2025, Quality Chemical’s sales would have been about Shs154.6b, roughly 1.6 percent higher.
Profitability drivers
What changed, in a good way, was how much profit Quality Chemical squeezed from each shilling of sales.
Gross profits rose 7.9 percent to Shs63.4b, and gross profit margin surged from 38.6 percent to 42.8 percent.
This means that Quality Chemical earned more from every product it sold as a result of factories running more efficiently, tighter control of input costs, and a shift toward higher-margin products.
‘The current gross margin reflects … global competition and dynamic pricing for our products and key inputs, such as active pharmaceutical ingredients, and product mix,’ Ajay Kumar Pal, Quality Chemical chief executive officer, said in a statement accompanying the results, but warned that shareholders should exercise caution in assuming that these margins will be sustained.
Cash generation
These gains lifted profit before taxes to Shs33.9b from Shs31.9b, but what stood out even more was that day-to-day expenses barely moved.
With costs held steady, each efficiency gain flowed straight through to earnings.
That same discipline showed in how money moved through the business. Cash generated from operations rose to Shs51.4b from Shs9.3b, more than five times higher than the year before, due to faster collection of payments, less money tied up in stock, and on-time payment of suppliers.
Ajay said that the only cash that went out was mainly dividend payments (Shs22b) and ongoing factory investments (Shs10b). ‘As a result, we closed the period with cash and cash equivalents of Shs54.5b, up from Shs48b a year earlier,’ he noted.
Being in net cash gives the company options. It can keep investing, withstand shocks like forex swings or raw-material spikes, and still reward shareholders, without leaning on lenders.
The dividend
That is what the board signaled with an interim dividend of Shs4.2 per share in the first half of the 2026 financial year, up from Shs3.5 per share in the same period in 2025, a 20 percent lift.
The higher payout, backed by strong cash and no debt, shows that Quality Chemical can reward shareholders and still fund growth.
But Ajay warned that shareholders should note that this interim dividend does not set a precedent for future distributions, noting that the company is in a growth phase and may reinvest in its operations and capacity to drive long-term value creation.
Expansion
During the first half of the 2026 financial year, Quality Chemical continued to execute on its growth agenda with the introduction of 16 new products in the private market.
These launches advance the company’s mission to improve treatment outcomes through accessible, affordable, and high-quality medicines.
‘The new portfolio spans key therapeutic segments, including anti-malarials, anti-diabetics, anti-hypertensives, anti-fungals, anti-allergics, and antibiotics,’ Ajay noted.
In line with this commitment, construction has commenced on a second manufacturing facility in Luzira, Kampala.
The new manufacturing plant has an estimated cost of $36m (about Shs133b), an amount that is being financed through a debt facility secured from Stanbic Bank, with the funds dedicated to the construction of a second, World Health Organisation-compliant pharmaceutical manufacturing facility.
The investment is expected to significantly increase production capacity from 1.4 billion to 2.4 billion tablets, support entry into new therapeutic areas, and introduce a state-of-the-art injectable production line.
These additions will enhance Quality Chemical’s competitive position across public and private markets.