Rak Ceramics, the Ras Al Khaimah-based ceramic major, has announced a net profit of Dh169.7 million ($46.2 million) for the year 2007, registering a 10 per cent increase from Dh153.7 million in 2006.

The annual general assembly of the company held at Hotel Al Hamra Fort also approved a 20 per cent bonus share issue to the shareholders.

Dr Khater Massaad, CEO of Rak Ceramics, said that the the company was able to deliver a solid performance and achieve an impressive 35 per cent revenue growth in 2007, despite the high energy prices and increase in freight and raw material costs.

Dr Massaad said that the annual revenue of the company touched Dh2.27 billion, posting a 35 per cent increase from Dh1.68 billion in 2006.

He said that the company achieved global production of 98 million sq m of tiles and 3.3 million pieces of sanitary ware in 2007.

“The company will strive to maintain its leadership position by sustaining the growth momentum through superior performance, identifying and entering new markets and offering unmatched product quality and service.

The company is looking forward to having good results from the current investments and improving the sales and marketing efforts,” he added.

According to the annual report the total assets of the company surged to Dh4.26 billion in 2007 from Dh3.82 billion the previous year.

The total cost of sales has jumped from 1.27 billion in 2006 to 1.83 billion in 2007. The financial summary presented at the meeting noted that the company has maintained its growth momentum even in the face of abnormally rising LPG prices, which rose from $531 per tonne to $912 per tonne, thus resulting in an additional expense of $75 million. 

The company is looking forward to obtaining natural gas for a minimum of nine months in 2008 to offset expensive LPG consumption.

Another factor which has contributed to increase in cost of sales was the volatility in USD-Euro rates which contributed to 15 per cent to 35 per cent increase in commodity and raw material prices and the rise in international freight costs.

According to the report, Rak Ceramics has made considerable investments in new joint ventures, with the company involved in a total of 32 joint ventures and projects, including 12 operating joint ventures, 11 ceramic distribution companies and nine new JVs.

The investment of Rak Ceramics in distribution companies and other joint ventures stood at Dh133.1 million as on December 2007.

The company's total share of profit from these joint ventures stood at Dh90.4 million in 2007.  The new joint venture projects which would be set up in 2008-09 include RAK Paints, RAK Warehouse Leasing, and 70 per cent stake in Acacia Hotels which would set up four- star hotels.

On the growth front, the financial summary presented a favorable picture with the company looking forward to leveraging the opportunities presented by the huge demand for building materials in the GCC, which has over $1.6 trillion worth of announced projects.

The company has orders in hand of 18 million sq m of tiles and 1.4 million pieces of sanitary ware.

Sheikh Ahmed bin Humaid Al Qasimi, member of the board of directors and Hamad Mutawaa, managing director of the company were present at the meeting.-TradeArabia News Service