RAK Ceramics posts 10% profit spike in 1st quarter

Ras Al Khaimah / Emirates Business

RAK Ceramics PJSC (Ticker: RAKCEC: Abu Dhabi), one of the world’s largest hi-tech manufacturers of lifestyle ceramics solutions, on Sunday announced its results for the first quarter ended March 31.
RAK Ceramics delivered a 10.8% increase in net profit to AED 65.9 million (Q1 2015: AED 59.5 million) for the period despite heightened levels of uncertainty in global markets, and a relatively unchanged overall revenue of AED 735.7 million (Q1 2015: AED 744.1 million) for the quarter.
Growth was led by a 3.3% increase in the sale of tiles to AED 496 million and a 0.5% increase in sanitaryware sales to AED 111.5 million supported by restructuring efforts in ‘core markets’’ and the continued improvement of ‘non crore businesses’. Overall core revenue increased by 2.9% to AED 644.7 million (Q1 2015: AED 626.4 million), while non-core revenue reduced to AED 91 million in Q1 2016 partly due to the sale of RAK Logistics (Q1 2015: AED 117.7 million).
Consolidated EBITDA rose by 6.7% to AED 138.3 million (Q1 2015: AED 129.6 million) and EBITDA margin increased to 18.8% (Q1 2015: 17.4%) as a result of higher gross margins and reduced general, selling and administrative expenses.
Revenue in core markets remained strong with a 5.9% increase in sales to AED 161.7 million in the UAE driven by market demand for tiles. In Bangladesh, sales increased by 6.8% to AED 61 million on the back of investments to expand capacity in sanitaryware by 25% in 2015.
In India, restructuring efforts and depreciation of INR by 8.4% year on year placed downward pressure on Q1 2016 performance. Whilst revenues declined by 18.4% to AED 81.1 million, the foundations have been laid to revamp operations and drive future growth for the business following the full acquisition of its Indian subsidiary in late 2015 and the recent appointment of a new Chief Executive Officer.
Despite a slower growing economy across Europe, RAK Ceramics’ sales to European countries rose by 7.5% year on year.
The first quarter of 2016 represented a continued momentum in gross margin improvement. Consolidated margin rose for the 4th consecutive period by 170 basis points to 30.2% (Q1 2015: 28.5%).
Abdallah Massaad, RAK Ceramics’ Group Chief Executive Officer said: “RAK Ceramics has maintained its prudent approach of focusing on key growth markets during the first quarter of this year with capacity expansions, senior appointments and further consolidation of key assets in core markets. While global financial conditions have presented the business with a challenging economic environment, we are confident that we will see a solid performance in the next three quarters, thanks to our ongoing efforts to strengthen the business, reduce losses and increase margins.”