RAK Ceramics, one of the largest ceramics brands in the world, has reported a net profit of AED102.2 million ($27.8 million) for the second quarter (Q2) of the year, an increase of 7.7% year on year.
The company posted a total revenue of AED927 million ($252 million) for the period, an increase of 32.3% year on year.
Abdallah Massaad, Group CEO, RAK Ceramics said: “Despite the unprecedented economic environment and increased global volatility, RAK Ceramics achieved a remarkably strong performance in Q2 2022, supported by key strategic and operational initiatives realized during Q2 2022.”
“We remain focused on our goals to achieve a sustainable and continued growth in scale and profitability. In Q2 2022, we reinforced brand perception and customer experience, strengthened retail footprint and visibility, further increased production efficiencies and enhanced capacity utilization.
“We remained diligent on optimising logistics operations with better supply chain management and inventory control, to mitigate rising challenges. We were also successful in maintaining an adequate liquidity position for Q2 2022, despite consolidation activity and challenging environment, enabling us to comfortably meet pay-out commitments.
“We are also proud to announce that we have concluded the acquisition of KLUDI Group, launched the process of buying out RAK Porcelain’s minority positions, and approved RAK Ceramics Bangladesh expansionary project.
“We remain committed to solidifying our positioning as a global provider of premium ceramic lifestyle solutions and to continuously adding value to our shareholders by focusing on market share preservation, brand positioning, product differentiation, sustainable investments and digital transformation,” he added.
Total revenue for the first half (H1) of 2022 increased by 20.1% to AED1.71 billion year-on-year, driven by a strong growth across all core businesses. Kludi Group consolidation, effective 1st of June 2022, added AED50.4 million in Q2 2022 revenue.
Reported net profit increased to AED171.9 million for H1 2022 due to higher revenue and gross profit margins.
Total gross profit margin increased by 0.3% year on year to reach 38.4% for Q2 2022 and by 1.2% year on year to reach 37.8% for H1 2022 despite increase in production costs and the imposition of 12% custom duty by Saudi Arabia, effective July 1, 2021.
Tiles revenue increased by 25.9% year on year to reach AED595.1 million in Q2 2022 and by 11.9% year on year to reach AED1.1 billion in H1 2022. Growth was driven by increase in volumes and in selling price across all markets – except for a stabilization felt in H1 2022 figures for the Saudi Arabian market given introduction of custom duty and supply disruption in Q1 2022.
Sanitaryware revenue grew by 7.5% in Q2 2022 and by 10.3% in H1 2022 at AED146.3 million and AED301.2 million, respectively, driven by growth in all markets except the Saudi Arabian market.
Tableware revenue increased by 60.0% year on year to AED89.3 million in Q2 2022 and 70.3% year on year to AED164.9 million in H1 2022 following market rebound post-pandemic.
Segmental Review – Tiles and Sanitaryware
In the UAE, revenue grew by 24.5% compared to same period last year, driven by growing construction demand and favourable real estate market conditions, increase in selling prices and an uplift in the brand’s retail presence.
RAK Ceramics’ position in Saudi Arabia increased by 25.6% compared to same period last year. Company continues to focus on growing its presence in KSA by securing highly profitable projects and expanding its retail footprint.
In Europe, RAK Ceramics witnessed rigid growth in top-line following a strengthened brand positioning despite market slowdown; revenue increased by 1.8% year on year while higher shipping costs weighing in on bottom-line performance.
In the Middle East (excluding UAE and KSA), RAK Ceramics continued its solid growth with revenue up by 27.0% for the reported period compared to Q2 2021 underpinned by an increased brand exposure and expanding the distribution network.
In India, revenue up by 55.4% year on year, driven mostly by increased tiles sales, on the back of increase in dealers network footprint and expansion in retail presence.
In Bangladesh, revenue increased by 11.3% year on year supported by better brand visibility and price adjustments following increase in input costs and import freight. Despite the registered growth in revenues, higher energy costs and currency devaluation weighed in on Q2 2022 bottom-line.
Stable liquidity position
Net debt increased by AED351 million quarter-on-quarter to reach AED1.32 billion as of June 2022, following the acquisition of Kludi Group and RAK Porcelain during Q2 2022. The net debt to EBITDA increased from 1.93x to 2.37x quarter-on-quarter. – TradeArabia News Service