Rak Ceramics posts Dh62.7m net profit

RAK Ceramics has announced its financial results for the quarter ended March 31, 2021, with the company's net profit standing at Dh62.7 million, outperforming pre-pandemic levels of profit, such as the Dh36.9 million recorded in Q1 2019.

Operations across global markets continued to improve in Q1 2021, leading to the strongest start to the year recorded by RAK Ceramics since 2016. Total gross profit margin for Q1 2021 reached an all-time high of 35 per cent driven by an increase in revenue, an improvement in efficiencies and the optimisation of production lines.

Total revenue for Q1 2021 is the highest it has been in five years, increasing by 21.9 per cent year on year to Dh722.8 million driven by growth in all core markets. The company has reported that Q1 2021 revenue grew by 78.5 per cent in Saudi Arabia, 2.1 per cent in the UAE, 67 per cent in India, 18.9 per cent in Bangladesh, and 22.7 per cent in Europe when compared to the same period in 2020, driven by improved economic activity.

In Saudi Arabia, the company’s strategy continues to yield results. The imposition of anti-dumping duties on tiles from India and China in the Kingdom initially led to an increase in demand for RAK Ceramics’ products. Capitalising on this demand, the Company invested in differentiated tiles and new showrooms, developing significant brand equity in the market. RAK Ceramics is now the go-to provider of premium ceramic products in the Kingdom.

In the UAE, despite the impact of Covid-19, the workforce was not reduced, and production reached the highest level in five years due to increased demand from Saudi Arabia.

Abdallah Massaad, group CEO, RAK Ceramics, said: “I am pleased to report strong financial results for the quarter, driven by record levels of revenue and profitability. While 2020 was a difficult year for the business, however early implementation of measures to manage the impact of the pandemic has led to an accelerated recovery beginning as early as Q3 2020. Today, RAK Ceramics is in a position of strong growth, surpassing pre-pandemic levels of operation, with gross profit margins reaching an all-time high."

He added: "Our production levels are at the highest they have been since 2016, on the back off increased demand across our key markets. We will capitalise on this demand by continuing to build our brand equity and positioning RAK Ceramics as a global provider of premium ceramic lifestyle solutions. Revenue continues to recover across all markets; however, we expect revenue to be impacted by the second wave of Covid-19 crisis in India and Bangladesh. The health and safety of our employees will remain a priority as we manage our business in that market."

"Looking ahead for the remainder of 2021, our priority will be to invest in brand equity, grow our business in Saudi Arabia and protect our market share in the UAE and Bangladesh,” he said.

In India, the company implemented several initiatives to streamline the business. The sales strategy was improved. Improved economic activity and positive business sentiments in the real estate sector led to increased demand and steady growth in revenue.

In Bangladesh, production is running at optimum capacity. RAK Ceramics introduced new products for the rural and urban segments of the market, improving brand visibility. This has led to an increase in market share.

In Europe, the business surpassed pre-pandemic levels of operation. RAK Ceramics was able to increase its customer base in Central Europe and the UK by differentiating itself from competitors and providing superior product management.

With an eye on future growth, RAK Ceramics continues to invest in branding initiatives including collaborations with premium designers, franchising of retail concepts and the launch of outlet stores in the UAE and Saudi Arabia.

business@khaleejtimes.com