RAK Ceramics, one of the largest ceramics brands in the world specializing in ceramic and porcelain wall and floor tiles and sanitaryware, has reported an operating profit of AED 102.2 million (USD 27.8 million) for the second quarter, an increase of 7.7 percent in year on year growth.
The company posted total revenue of AED 927 million (USD 252 million) for the period, an increase of 32.3 percent year on year.
Abdallah Massaad, Group CEO at RAK Ceramics stated that the business achieved an amazingly robust performance in Q2 2022, aided by key strategic and operational initiatives implemented during the quarter, despite the unprecedented economic environment and increased global volatility.
Massaad further added that to achieve a sustainable and continued growth in scale and profitability, the company would remain focussed on their goals. In Q2/2022, the team reinforced customer experience and brand perception, strengthening visibility and retail footprint, further increased production proficiencies and enhanced capacity deployment.
RAK Ceramics remained diligent in optimizing logistics operations with superior supply chain management and inventory control to mitigate increasing challenges. The company was also effective in maintaining an adequate liquidity position for Q2 2022, regardless of consolidation activity and a challenging environment, enabling them to securely meet pay-out commitments, stated the CEO.
Massaad said that the Group is proud to announce that it has completed the purchase of KLUDI Group and launched the process of buying out RAK Porcelain’s minority positions, in addition to approval of RAK Ceramics Bangladesh expansion project.
The company remains committed to solidifying its position as a global provider of premium ceramic lifestyle solutions and to continue adding value to its shareholders by focusing on product differentiation, market share preservation, sustainable investments, brand positioning, and digital transformation, he stated.
Total revenue for H1 2022 increased by 20.1 percent to AED 1.71 billion year-on-year, powered by robust growth across all core businesses. Effective 1st of June 2022, KLUDI Group consolidation added revenue of AED 50.4 million in Q2 2022.
Reported operating profit increased to AED 171.9 million for H1 2022 due to higher revenue and gross profit margins.
Total gross profit margin increased by 0.3 percent year-on-year to reach 38.4 percent for Q2 2022 and by 1.2 percent year-on-year to achieve 37.8 percent for H1 2022 despite the rise in production costs and imposition of 12 percent customs duty by Saudi Arabia from July 1, 2021.
Tiles’ revenue increased by 25.9 percent year-on-year to achieve AED 595.1 million in Q2 2022 and by 11.9 percent year-on-year to achieve AED 1.1 billion in H1 2022. Growth was determined by an increase in volumes and selling price across all markets, excluding a stabilization experienced in H1 2022 figures for the Saudi Arabian market due to the levy of customs duty and supply disruption in Q1 2022.
Sanitaryware revenue increased by 7.5 percent in Q2 2022 and by 10.3 percent in H1 2022 at AED 146.3 million and AED 301.2 million respectively, powered by growth in all markets apart from 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 AED 164.9 million in H1/2022 after a market bounce post-pandemic.
RAK Ceramics performance -Tiles and Sanitaryware
In the UAE, revenue increased by 24.5 percent compared to the same period in 2021, propelled by rising construction demand and favourable real estate market conditions, alongside the surge in selling prices and an uplift in the brand’s retail presence.
RAK Ceramics’ position in Saudi Arabia increased by 25.6 percent compared to the same period in 2021. The firm continues to focus on expanding its presence in KSA by securing extremely profitable projects and developing its footprint in the retail industry.
In Europe, RAK Ceramics observed rigid growth in excellence following a strengthened brand positioning, despite a slowdown in the market. The revenue increased by 1.8% year on year at the same time as higher shipping costs balancing in on bottom-line performance.
RAK Ceramics continued its solid growth with revenue up by 27.0 percent for the reported period compared to Q2 2021 underpinned by an increased brand exposure and expanding the distribution network in the Middle East, apart from the UAE and Saudi Arabia.
In India, revenue continued upward by 55.4 percent year on year, enhanced primarily by increased tiles sales and increase in dealers’ network footprint along with growth in retail presence.
In Bangladesh, revenue soared by 11.3% year on year backed by price adjustments and improved brand visibility after increase in import freight rate and input costs. Regardless of the registered growth in revenues, elevated energy costs and currency devaluation weighed in on Q2/2022 bottom-line.
Stable liquidity position
As of June 2022, net debt was raised by AED 351 million quarter-on-quarter to achieve AED 1.32 billion, following the acquisition of 100% stake in KLUDI Group and minority stake in RAK Porcelain during Q2/2022. RAK Ceramics announced that the Board of Directors approved an interim dividend of ten fils per share for H1/2022.