Production at RAK Ceramics

Production at RAK Ceramics

Ceramics firm’s focus

01 June 2015

RAK Ceramics reiterated it will focus on its core business while announcing an increase of 22 per cent in adjusted net profit for the first quarter.

Total losses from hyperinflation reached Dh15.4 million ($4.19 million) in Q1 2015. Consequently, adjusted net profit (excluding impact of hyperinflation) was Dh75.8 million, an increase of 22 per cent compared to Q1 2014. Ebitda was Dh130.5 million compared with Dh134.2 million. 

During the quarter the company concluded the sale of RAK Pharmaceuticals and Moshfly in Bangladesh and Laticrete RAK LLC in UAE, which resulted in a Dh39.1 million profit. Additionally, it signed a Share Purchase Agreement to sell RAK Sudan and during Q1 took a Dh48.4 million impairment charge on this investment. The sale of the Sudan unit will decrease the impact of hyperinflation in the long run.

Initiatives taken by the company on the cost side in Q1 to manage growth and improve operational efficiencies included savings on raw materials which led to cost savings of Dh7.8 million, while on the growth side the company launched 25 new formats of tiles at international exhibitions and appointed five new senior executives to strengthen corporate governance structures.

Saudi Arabia recorded an 18 per cent QoQ increase in revenues resulting, the company said, from a proactive strategy set up last year to strengthen and consolidate the distribution network and ramp-up B2B capabilities.

Total consolidated reported revenue increased by 0.4 per cent to Dh744.1 million.

Sanitaryware revenue increased by 0.7 per cent to Dh110.9 million in line with the company’s focus on expansions in the sanitaryware business across the UAE, India and Bangladesh. Sanitaryware sales in the UAE increased by 9 per cent to Dh83.4 million compared with Q1 2014.



Chief executive Abdallah Massaad said the results demonstrated “continued stability against a backdrop of very challenging conditions and market volatility.”

“As we continue implementing our re-focused strategy, we will proceed with our mission to divest from ‘non-core businesses’ and divest ‘non-strategic assets’ in line with our value creation initiatives,” Massaad said.

“Another major part of our focus will be on investing in strategic business activities across our focus markets with a highly disciplined approach. Like the rest of the markets, we feel the headwinds from oil and gas prices and currency fluctuations, but we’ve taken contingency measures against expected distress in 2015. We are flexible and agile, but must also ensure a relentless focus on our plan to invest in revenue generating tiles, sanitaryware, tableware and taps and faucets ‘core-businesses,” he added.

RAK Ceramics announced last year the intention to sell RAK Sudan and to reduce activities in China, the latter resulting in a Dh4.9 million reduction in losses in Q1 2015.

Highlights included a reduction in the net debt to Dh1.37 billion from Dh1.41 billion; tile revenues decreasing 13 per cent to Dh510.2 million from Dh586.8 million in Q1 2014 and Forex losses reaching Dh21.2 million caused by depreciation of the euro by nearly 10.5 per cent from Q4 2014, mostly a translation loss.


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