Production at RAK Ceramics

RAK Ceramics, one of the world’s biggest makers of floor and wall tiles, will likely see benefits to its fourth-quarter earnings onwards after it exits some of its non-core businesses, its chief executive said, according to Reuters.

Abdallah Massaad was speaking after the firm reported an 18.3 per cent fall in third-quarter net profit to Dh57.4 million ($15.6 million) as the company continued to book an accounting provision for hyper-inflation in Iran and Sudan and reduced its non-core business earnings.

RAK Ceramics has been working to exit its non-core businesses this year, Massaad said, adding there would likely be announcements in the fourth quarter.

“Hopefully in quarter four, it will materialise. We started our work (to exit) but for it to materialise, it needs some time,” he said.

He would not be drawn further and declined to specify exactly which assets the company wanted to exit or how it would do it.

The company, whose main business also includes sanitary ware, defines its non-core assets as “contracting and other activities”. Its subsidiaries include a hotel, a mechanical, electrical and plumbing contractor, a utility firm and a construction firm, according to the 2014 corporate profile.

Asked if the firm would continue to make provisions for hyper-inflation, Massaad said “we’re trying to find solutions” as the impairment – Dh19.4 million ($5.28 million) in the third quarter – was “affecting us in a big way”. He did not elaborate.

Revenue from core operations in the UAE, India and Bangladesh were flat year on year in the first nine months of 2014 but this was expected to grow in coming quarters due to investment in production capacity, he said.

RAK Ceramics would announce an expansion proposal for the UAE sanitaryware business in the fourth quarter, Massaad said, building on the $80 million allocated for improving production in India and Bangladesh and its technology.

This would help sanitaryware production in India to more than triple between the end of 2013 and the first quarter of 2015 and production in Bangladesh would rise 30 per cent.