Gulf Construction Online - RAK Ceramics upbeat despite reduced profit

Manufacturers & Procurement

RAK Ceramics’ total gross profit margin increased by 110 bps.

RAK Ceramics upbeat despite reduced profit

01 July 2020

RAK Ceramics, one of the largest ceramics brands in the world, said its total revenue for the first three months was Dh592.8 million ($161.3 million), decreasing by 2.7 per cent when compared to the same period in 2019, primarily due to lower sanitary ware and tableware revenue.

Announcing its financial results for the quarter ended March 31, RAK Ceramics said its net profit fell by 18.1 per cent year-on-year to Dh30.2 million, with a margin of 5.1 per cent decrease in revenue and investments in upgraded branding and showrooms, as well as higher freight costs.

Total gross profit margin increased by 110 bps due to improvements and efficiencies in operations of the tiles business. This was largely driven by efficiencies in the UAE, where production lines were optimised to match demand.

The Emirati company pointed out that the working capital and days remained stable, reflecting the strength of the business.

A specialist in ceramic and gres porcelain wall and floor tiles, tableware, sanitary ware and faucets, RAK Ceramics has the capacity to produce 123 million sq m of tiles, five million pieces of sanitary ware, 24 million pieces of porcelain tableware and one million pieces of faucets per year at its 22 state-of-the-art plants across the UAE, India and Bangladesh.

RAK Ceramics was proactive in implementing a raft of measures designed to mitigate the impact of Covid-19 pandemic and the corresponding lockdowns across all its markets.

Alternative sales channels have been opened in markets where retail operations are closed, and the company’s website now includes a virtual reality showroom experience.

RAK Ceramics has taken measures to manage its liquidity, reducing discretionary expenses and placing non-essential capex plans on hold.

Total revenue in Saudi Arabia increased significantly when compared to the same period last year, driven by an 80.8 per cent increase in tiles revenue.

On the Q1 performance, Group CEO Abdallah Massaad said: “RAK Ceramics delivered satisfactory results in Q1 2020 considering the Covid-19 pandemic began to impact our business from the end of January.”

“The nature of our business is closely linked to the construction and hospitality sector, which were heavily affected by the pandemic. We expect this situation to impact our performance in the next few months but we are confident given our stable results in Q1, our strong foundations and a sound business model, we will be able to face this unprecedented challenge and move forward,” stated Massaad.