Monday 18 January 2021

RAK Ceramics Q2 profit down 37pc amid Covid lockdown

RAS AL KHAIMAH, August 11, 2020

RAK Ceramics, one of the largest ceramics’ brands in the world, has registered a total revenue of AED411.3 million ($112 million) down 37.3 per cent year on year due to the Covid-19 lockdowns in India, Bangladesh and across Europe. 
Announcing its financial results for the quarter ended June 30, RAK Ceramics said its implementation of operational measures to mitigate the impact of coronavirus has resulted in early signs of recovery from June onwards across the business.
Production has restarted in Bangladesh and India in June and July in phases; however, the tableware business has been severely impacted due to the slowdown in the hospitality and airline industries and is currently operating at 65% capacity.
In the UAE, production lines were optimised to meet demand. From July, UAE production began running at optimal capacity due to an increase in demand from Saudi Arabia.
RAK Ceramics pointed out that its revenue in all markets except Saudi Arabia was negatively impacted due to Covid-19 in the second quarter. 
There was a decrease in revenue in April and May as the business began to feel the impact of  lockdowns and reduced demand in the construction, hospitality and airline industries, said the statement from RAK Ceramics.
The decrease in revenue had an impact on the bottom line and RAK Ceramics’ reported a net loss after minority of AED11.6 million for the second quarter. 
The drop in revenue also had an impact on gross profit margins, due to AED25 million of unabsorbed fixed costs driven by the temporary shutdown of production plants. Ebitda remained positive at AED40.5 million, it stated.
However, as economies began to reopen in June, revenues have started to recover and the company saw a surge in demand from Saudi Arabia and Bangladesh, it added.
RAK Ceramics said the imposition of anti-dumping duties on tiles imported from India and China and the reopening of Saudi borders in June supported increased demand for its products. 
The company was able to successfully meet demand by scaling up production in the UAE and transporting products across the borders, it stated.
On the results, Group CEO Abdallah Massaad said: "The Q2 was a difficult period as our business is closely linked to the construction, hospitality and airline industries, which were severely impacted by lockdowns in all our major markets."
"However, in June, we began to see signs of recovery in revenue as borders opened and economies restarted. Our business in Saudi Arabia contributed to overall revenue recovery, as the implementation of duties on tiles from India and China led to an increase in demand for our products," observed Massaad.
In Europe, revenue improved month by month despite continued lockdowns in the UK and Italy, he said.
"Looking ahead, our priority will be to continue to manage the impact of COVID-19 by protecting our market share in the UAE, Bangladesh and in India, driving growth in Saudi Arabia, and investing in our brand," he added.-TradeArabia News Service


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