RAK Ceramics Announces Q2 2020 Financial Results
- Early signs of recovery due to the implementation of COVID-19 operational initiatives
- Total revenue decreased by 37.3% year on year to AED 411.3 million due to COVID-19 lockdowns in India, Bangladesh and Europe
- The decrease in revenue and shutdown costs impacted gross profit margins and the bottom line
- Total EBITDA remained positive at AED 40.5 million
- Saudi Arabia demonstrated growth due to an increase in demand for RAK Ceramics’ products
Ras Al Khaimah, United Arab Emirates, 11 August 2020
RAK Ceramics PJSC (Ticker: RAKCEC: Abu Dhabi), one of the largest ceramics’ brands in the world, announced its financial results for the quarter ended 30 June 2020.
Early signs of recovery across global operations
RAK Ceramics’ implementation of operational measures to mitigate the impact of COVID-19 has resulted in early signs of recovery from June 2020 onwards across the business.
Production has restarted in Bangladesh and India in June and July in phases; however, the tableware business has been severely impacted due to the slowdown in the hospitality and airline industries and is currently operating at 65% capacity.
In the UAE, production lines were optimised to meet demand. From July, UAE production began running at optimal capacity due to an increase in demand from Saudi Arabia.
COVID-19 impact on revenue
RAK Ceramics revenue in all markets except Saudi Arabia was negatively impacted due to COVID-19 in the second quarter of 2020. There was a decrease in revenue in April and May as the business began to feel the impact of lockdowns and reduced demand in the construction, hospitality and airline industries.
The decrease in revenue had an impact on the bottom line and RAK Ceramics’ reported a net loss after minority of AED 11.6 million for the second quarter of 2020. The decrease in revenue also had an impact on gross profit margins, due to AED 25 million of unabsorbed fixed costs driven by the temporary shutdown of production plants. EBITDA remained positive at AED 40.5 million.
However, as economies began to reopen in June, revenues have started to recover and the company saw a surge in demand from Saudi Arabia and Bangladesh
Growth in Saudi Arabia
The imposition of anti-dumping duties on tiles imported from India and China and the reopening of Saudi borders in June supported increased demand for RAK Ceramics products. The company was able to successfully meet demand by scaling up production in the UAE and transporting products across the borders.
Abdallah Massaad, Group CEO, RAK Ceramics commented: “Q2 2020 was a difficult period as our business is closely linked to the construction, hospitality and airline industries, which were severely impacted by lockdowns in all our major markets.
However, in June, we began to see signs of recovery in revenue as borders opened and economies restarted. Our business in Saudi Arabia contributed to overall revenue recovery, as the implementation of duties on tiles from India and China led to an increase in demand for our products.
In Europe, revenue improved month by month despite continued lockdowns in the UK and Italy.
Looking ahead, our priority will be to continue to manage the impact of COVID-19 by protecting our market share in the UAE, Bangladesh and in India, driving growth in Saudi Arabia, and investing in our brand.”
Post period, RAK Ceramics held its Board of Directors’ meeting where Mr. Yousef Ali and Mr. Khalid Al Eisiri were appointed as members of the board effective till February 2021. The new members will replace Sheikh Ahmed Bin Humaid Al Qassimi and Mr. Khalid Al Yahmadi following their resignation from their positions as members of the board.
About RAK Ceramics
RAK Ceramics is one of the largest ceramics’ brands in the world. Specialising in ceramic and gres porcelain wall and floor tiles, tableware, sanitaryware and faucets, the company has the capacity to produce 123 million square metres of tiles, 5 million pieces of sanitaryware, 24 million pieces of porcelain tableware and 1 million pieces of faucets per year at its 22 state-of-the-art plants across the United Arab Emirates, India and Bangladesh.
Founded in 1989 and headquartered in the United Arab Emirates, RAK Ceramics serves clients in more than 150 countries through its network of operational hubs in Europe, Middle East and North Africa, Asia, North and South America and Australia.
RAK Ceramics is a publicly listed company on the Abu Dhabi Securities Exchange in the United Arab Emirates and as a group has an annual turnover of approximately US$1 billion.
RAK Ceramics FTI Consulting
Steven Allen Debjani Mukherjee
Tel: +971 (0) 7246 7400 Tel: +971 (0) 50 165 8989
Further information is available online at www.rakceramics.com