Profit warnings stir uncertainty on Ugandan Securities Exchange
TLDR
- Uganda Securities Exchange (USE) sees wave of profit warnings from listed companies
- Companies including Quality Chemicals Industries Ltd and New Vision Printing issue profit warnings
- Unprecedented number of profit warnings raises investor concerns at USE
A wave of profit warnings issued by listed companies since September 2023 has stirred uncertainty at the Uganda Securities Exchange (USE), as these companies grapple with challenging business and economic conditions.
The latest profit warnings issued at the USE have been attributed to Quality Chemicals Industries Ltd, New Vision Printing and Publishing Company Ltd (NPPCL), NIC Holdings Limited, Umeme Ltd, and Uganda Clays Ltd (UCL). These warnings underscore the significant challenges faced by companies operating in Uganda's business environment, prompting concerns among investors at the USE.
According to the latest regulatory filings, the number of profit warnings issued by locally listed companies reached five at the beginning of February. While this number may appear small, it is unprecedented in the USE's trading history, which dates back to 1998.
Key Takeaways
Last year, Uganda's economic landscape was characterized by low government spending, household financial distress, and struggling enterprises, factors that contributed to the depressed financial performance experienced by many companies. The introduction of stronger trading rules by the Uganda Securities Exchange (USE) in April 2021 aimed to address this by compelling listed companies to promptly disclose any material changes in their operations and financial results. These new regulations marked a departure from previous rules that were perceived as vague on certain disclosure requirements and lacked a fine schedule to penalize poor disclosure practices. By enforcing stricter disclosure standards, the USE sought to enhance transparency and accountability in the market, providing investors with timely and accurate information to make informed decisions.
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