RAK Ceramics global revenue up 11% in Q2

Monday, 8 August 2016 00:03 - - {{hitsCtrl.values.hits}}

Ras Al Khaimah-based RAK Ceramics, a global manufacturer of ceramics solutions, posted a revenue of Dh757 million ($ 206 million) for the second quarter (Q2) of 2016, decreasing by 5.9% year-on-year, mainly due to a decline in non-core revenues.

Net profit decreased by 24.1% year-on-year to Dh65.3 million but normalised net profit decreased by 12.6% at Dh83.5 million where provisions and impact of strategic decisions were excluded.

Despite a slowdown in construction activity in the GCC and the impact of geopolitical uncertainty in some of the regional export markets, RAK Ceramics continued to successfully deliver on its long-term Value Creation Plan in the first half of 2016. Integrating the European distribution alongside continued expansions in Bangladesh and the UAE were some of the main initiatives in the quarter confirming efforts from the group to continue strengthening its core businesses in strategic markets.

Consolidated gross margin for the period rose to 29.5%, increasing by 220 base points (bps) year-on-year, driven by improved non-core margins according to plan (H1 2016 at 29.8%, increasing by 190 bps year-on-year).

Earnings before interest, tax, depreciation and amortization (EBITDA) for Q2 2016 decreased by 7.6% year-on-year at Dh144.3 million (held strong with a slight decrease of 0.8% in H1 2016 to Dh282.6 million). EBITDA margin in Q2 2016 remained stable at 19.1% (in H1 2016, it increased by 50 bps at 18.9%).

During the period, RAK Ceramics performed a series of restructuring activities across Asia and Europe. In India, a new CEO was appointed and over the coming months will be building a team to strengthen its Indian operations. Europe achieved a significant milestone with the integration of the British and German teams under the RAK Ceramics Group, following the acquisition of both subsidiaries in February 2016; cost synergies expected in 2017. Additionally, consolidation of the Italian subsidiary is under way and is expected to be complete in Q3 2016.

Despite a slower growing economy across Europe, overall sales increased by 11.1% QoQ, showing the positive impact of control on improving operations. Tiles sales increased by 11.7% and sanitary ware sales increased by 9.4% QoQ in Q2 2016.

RAK Ceramics’ Group Chief Executive Officer Abdallah Massaad said: “We are focused as a group to strengthen the company’s global presence by carrying out strategic global initiatives despite the ongoing challenges in our region.”

“There are a number of encouraging signs that will support RAK Ceramics’ growth and we have an ambitious plan for the group’s future development. In Q2, we maintained our approach of focusing on increasing efficiencies by strengthening our core businesses, consolidating our operations in core markets and streamlining costs.

“With 25 years of ceramics expertise, the company is in a very strong position to capitalise on its global network, wide product range and revitalised brand proposition to deliver long-term growth. RAK Ceramics is a real global competitor with solid foundations,” he added.