RAK Ceramics: making a steady progress

RAK Ceramics: making a steady progress

RAK Ceramics posts strong profit rise

The company’s strategy, which includes exiting non-core businesses, has helped it to increase margins and enhance returns for its shareholders

September 2017

RAK Ceramics, a leading manufacturer of floor tiles and bathroom ceramics, reported increase in profits for the second quarter driven by strong tiles and sanitaryware growth in the UAE and Bangladesh as Saudi continues to recover.

The company, based in Ras Al Khaimah in the UAE, reported a net profit of Dh113.2 million ($ 30.81 million) for the second quarter  ended June 2017, which represents a strong year on year increase of 73 per cent compared to the same period last year and a quarter-on-quarter rise of 76 per cent.

Like-for-like profit (excluding extraordinary net gain and provision) increased by seven per cent year-on-year and 66 per cent quarter-on-quarter to Dh85.1 million, it said in a statement.

Core revenues increased 6.5 per cent quarter-quarter to Dh661.1 million, and remained stable year-on-year, driven by strong growth in the UAE and Bangladesh markets.

RAK Ceramics: continues to show positive momentum

RAK Ceramics: continues to show positive momentum

Core revenues contributed 92 per cent of total revenues following a non-core revenue decline of 38 per cent year-on-year, which is in-line with the company›s strategy to divest non-core operations and delivering on the VCP.

The decrease in non-core led to a decrease in total revenues by five per cent year-on-year to Dh721 million.

According to the company, despite continued pressure in the Mena region due to the macro and political situation, revenues in the UAE, the company›s largest market, continued its growth momentum led by strong demand and robust project sales. Growth was driven by an increase in tiles and sanitaryware by 13 per cent year-on-year.

Abdallah Massaad, group CEO, of RAK Ceramics, said: “RAK Ceramics has made steady progress in the second quarter and our strategy, which includes exiting non-core businesses, has helped lighten the balance sheet, increase margins and enhance returns for shareholders.”

“We are delivering on our initiatives, including market share growth in the UAE, restructuring India, executing Saudi strategy to drive further profitability and continue investing in the brand which has been rolled out in the Middle East and Bangladesh, and initiated in Saudi. The second half of 2017 should benefit from various strategies to maintain cost efficiencies and to drive stable margins.”

Saudi Arabia had a steady performance in the second quarter, showing signs of recovery. Saudi tiles and sanitaryware revenues increased by 27 per cent quarter-on-quarter at Dh64.6 million but remained below last year›s levels. The steady progress signals continuation of a slow market recovery that started earlier this year, it said.

Bangladesh delivered strong revenue growth this quarter following last year›s capacity expansions and maintaining high margins. Tiles and sanitaryware revenues in Bangladesh increased 21 per cent at Dh76 million year-on-year.

India continued its upward trajectory in the second quarter. Revenues grew four per cent at Dh76.6 million. The Indian subsidiary is studying the possibilities of acquiring 51 per cent JV equity stake in an outsourced manufacturing facility in Morbi, Gujarat, it added.

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