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Abdallah Massaad

RAK Ceramics swings to Q2 net profit; revenue at new high

RAS AL KHAIMAH, August 4, 2021

RAK Ceramics, a leading ceramic products manufacturer based in Ras Al Khaimah, UAE, has registered a net profit of AED94.9 million ($25.84 million) for Q2, compared to a loss of AED19.8 million last year, after considering a one-time net gain from the sale of assets in China and after writing-off excess rent from a leased hotel.
 
Announcing the results, RAK Ceramics said its total gross profit margin reached an all-time high in Q2 increasing by 9.6% year on year to 38.1%.
 
Operations across all of RAK Ceramics’ core markets continued to improve, leading to a revenue increase of 70.4% in Q2 2021 to AED700.8 million when compared to Q2 2020.
 
Total revenue for Q2 2021 surpassed pre-pandemic levels, increasing by 5% when compared to Q2 2019 driven by growth in all core markets.   
 
Q2 2021 net profit is 29.3% higher than pre-pandemic levels of profit in Q2 2019, indicating steady growth of the business. 
 
Operational efficiencies and increased revenue led to higher cash profits, enabling RAK Ceramics to make a significant reduction in net debt during the period. 
 
In addition, the board of RAK Ceramics have proposed a dividend of 10 fils per share for H1 2021. The dividend will be paid subject to regulatory and statutory approvals.
 
In Q2 2021 total gross profit margin reached an all-time high, increasing by +960bps year on year to 38.1% and by +310bps quarter on quarter due to improved efficiencies and reduction in costs across all of RAK Ceramics’ production plants. In 2020, gross profit margin was impacted due to Covid-19 lockdowns.
 
Q2 2021 revenue grew by 114.2% in Saudi Arabia, 142.6% in India, 214% in Bangladesh, 75.5% in Europe and 3.9% in the UAE, when compared to the same period in 2020, when lockdowns impacted operations.
 
In Saudi Arabia, RAK Ceramics has established itself as a premium provider of ceramic products. The kingdom is now a key market for RAK Ceramics and will continue to play a role in the company’s long-term growth strategy.
 
In India and Bangladesh, the second wave of Covid-19 induced lockdowns restricted the movement of goods and subsequently impacted revenue growth.
 
In Europe, the business continued to grow driven by revenue from the UK and Central Europe, supported by ongoing cost control measures.
 
In the UAE, production reached its highest level in 5 years due to increased demand from Saudi Arabia and other countries. The company continued to implement operational efficiencies in its UAE production plants, which led to all-time high gross profit margin.
 
Revenue from the tableware business increased by 160.2% year on year, indicating early signs of recovery. In 2020, the tableware business was impacted due to decreased demand from the airline and hospitality sector, which have now begun to recover. 
 
RAK Ceramics shut down their production facility in China in 2015. In Q2 2021, the Company sold their remaining assets in China, generating a gain of AED50.1 million.
 
Abdallah Massaad, Group CEO, RAK Ceramics commented: “I am pleased to report strong financial results for the quarter, reflecting continued growth of the business surpassing pre-pandemic levels of revenue and profitability.
 
“We have worked to implement measures across our core markets to improve brand visibility, customer service and production efficiency, which have increased revenue and profit, setting the stage for long-term growth.
 
“While our post-pandemic recovery in India and Bangladesh continues, we are closely watching the situation and monitoring the health and safety of our employees.
 
“Looking ahead for the remainder of 2021, our priority will be to protect our market share, continue to improve overall productivity and efficiency and turnaround the performance of our tableware business.”-TradeArabia News Service



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