RAK Ceramics Announces Q4 2020 Financial Results
- Performance rebounds across global operations starting from Q3 2020, leading to strong revenue in Q4 2020 with an increase of 5.1% year on year.
- Q4 2020 Like for like net profit increased by 3% year on year to AED 77.5 million.
- Total EBITDA in Q4 2020 increased by 2.5% year on year to AED 137.8 million.
- Total gross profit margin for Q4 2020 increased by 80bps to 34.4%.
- Total revenue was AED 2.35 billion for FY 2020, impacted by lower revenue in Q2 due to COVID-19 lockdowns. Excluding Q2 2020, revenue increased by 1%.
- The Company registered a real estate impairment loss and provisions of AED 236.3 million as a result of the COVID-19 impact on the real estate and hospitality sector.
- Board proposes a 7.5% cash dividend for the year 2020.
Ras Al Khaimah, United Arab Emirates, 10th February 2021
RAK Ceramics PJSC (Ticker: RAKCEC: Abu Dhabi), one of the largest ceramics’ brands in the world, announced its financial results for the quarter and year ended 31 December 2020.
Impact of COVID-19
COVID-19 has had a significant impact on real estate and tourism, with lockdowns and restrictions resulting in reduced demand for RAK Ceramics’ products in the first half of 2020.
Additionally, due to the slump in real estate, and in line with the Company’s accounting policy to assess impairment to the carrying values of investment properties annually, RAK Ceramics revalued its land assets which resulted in an impairment loss of AED 213.2 million.
The Company also recorded a provision of AED 23.1 million in relation to one of its hotel assets.
Strong performance in Q4 2020
Operations across global markets in United Arab Emirates, Saudi Arabia, India, Bangladesh and Europe continued to rebound in Q4 2020, leading to a 15% quarter on quarter increase in Q4 revenue to AED 719.7 million.
The Company reported a strong like for like net profit in Q4 which increased by 39.3% year on year to AED 77.5 million.
Total gross profit margin increased by 80bps year on year to 34.4% in Q4 2020 and tiles gross profit margin is at an all-time high of 34.8% - increased by 350bps year on year.
The increases in gross profit margins reflect improved efficiencies and streamlined operations, placing the company in a strong position to continue to recover from the impact of COVID-19.
FY 2020 performance remains stable and rebounds across international operations
The Company reported total revenues of AED 2.35 billion, a decline of 8.7% due to a decrease in Q2 2020 revenue caused by COVID-19 lockdowns.
Excluding Q2 2020, revenue increased by 1% to AED 1.94 billion.
Performance started well in Q1 2020 but was negatively impacted in Q2 2020 due to COVID-19 pandemic lockdowns across all of the Company’s core markets. Markets recovered to pre-COVID levels in Q3 2020 in both tiles and sanitaryware segments; however, tableware performance continued to suffer due to the second wave of COVID-19 lockdowns and hotel closures.
In Saudi Arabia, revenue increased by 57.9% year on year, due to the introduction of differentiated tile sizes and a focus on retail and wholesale sales and also backed by the imposition of anti-dumping duties. There is strong demand in Saudi Arabia for RAK Ceramics’ premium products.
In Europe, revenue increased by 2.7% year on year, driven by growth in the sanitaryware and tiles market.
In the Middle East (excluding UAE and KSA), revenue increased by 12% year on year.
Total gross profit margin decreased by 120bps to 32% year on year due to lower revenue and losses from plant shutdowns during lockdowns in Q2 2020.
Reported net loss was AED 126.2 million due to decrease in revenues and impairment and provisioning costs in relation to the impact of COVID-19.
Like-for-like net profit was AED 147.3 million demonstrating RAK Ceramics’ healthy performance, when excluding the one-offs.
Healthy cash position
Despite the pandemic, RAK Ceramics was able to increase their cash flow from operating activities from AED 466 million in December 2019 to AED 523 million in December 2020.
Additionally, the Company’s Net Debt level decreased by 10.6% year on year to AED 1.23 billion, reflecting the strength of the business.
Abdallah Massaad, Group CEO, RAK Ceramics commented: “2020 was a challenging year across the board. RAK Ceramics was particularly impacted due to our exposure to the hospitality and real estate industries.
However, given our ability to act decisively during times of crisis, we were able to implement measures to manage the impact of COVID-19 which allowed us to achieve an accelerated recovery starting from Q3 2020 where we reached pre-COVID levels of operation and performance, ending the year with strong results in Q4 2020 while delivering healthy revenue for the year.
We were able to capitalise on the opportunity in Saudi Arabia and enhance our business in that market, while managing costs and delivering stable revenue in other markets. Our operations in Europe and India have improved, reflected in our gross profit margins.
Looking ahead to 2021, our priority will be to enhance our global operations, while diversifying and improving profitability in export markets. We will also continue to invest in branding by opening new showrooms in core markets, while implementing measures to continue to manage the impact of COVID-19.”
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
 Excluding receivables provision, impairment loss on real estate properties, provision for dues to leased hotel impacted by COVID-19 and hyperinflation impact and gains.