Stable performance in line with expectations

 

RAK Ceramics PJSC (Ticker: RAKCEC: Abu Dhabi), one of the largest ceramics’ brands in the world, announced its financial results for the year ended 31 December 2018.

 

The company reported total revenues of AED2.78 billion, a slight decline of -2.8% due to lower non-core revenue contribution, in line with the company’s strategy to divest non-core entities.

 

Reported net profit was AED225.1 million, -28.7% year on year, however net profit in 2017 included a net extraordinary gain of AED38.6 million from the sale of non-core entities RAK Warehouse and Electro RAK.

 

RAK Ceramics reported ‘all time high’ total gross profit margins of 33.2%, +160bps YoY, as a result of operational efficiencies, the consolidation of Saudi Arabian entities and higher gross profits in the UAE and tableware businesses. ‘All time high’ total gross profit margins were achieved despite significant increases in energy costs relative to its peers.

 

The tableware business continued to show strong growth with revenues reaching AED264m, +11.0% YoY, supported by growth in US, European and Asian markets.

 

Saudi Arabia expansion

RAK Ceramics announces their intention to invest in a state-of-the-art production facility that utilises the latest technology in ceramics manufacturing and, in the first phase, will initially add approximately 10 million square metres per annum to RAK Ceramics’ tile total production capacity.

The company is optimistic for growth in Saudi Arabia due to increasing construction and real estate activity and the attractive cost advantages for manufacturing due to competitive energy costs.

 

India turnaround on track

In October 2018, RAK Ceramics began commercial production in its recently expanded Indian facility. The Greenfield project for producing slabs began trials production in January 2019 with commercial production expected to commence in Q1 2019.

 

Abdallah Massaad, Group CEO, RAK Ceramics commented: “2018 was an important year for RAK Ceramics; our record gross profit margins and reported net profit of AED225.1 million is a significant achievement in light of challenging market conditions and continued increases in energy, raw material and freight costs.

 

Looking ahead for 2019, there are a number of external macro factors which will continue to affect our business. However, we are focused on enhancing our brand and optimising operations across the group, while continuing to protect our strong market share in the United Arab Emirates, India, Bangladesh and Saudi Arabia.

 

We are pleased to announce our intention to invest in a state-of-the-art production facility in Saudi Arabia, which has historically been one of our most important markets in the region.

 

We are also focused on improving the profitability of our Indian and European operations and the growth of our tableware business in the US, European and Asian markets.”