November 2022
- Total revenue in Q3 2022 increased by 32.4% YoY to AED 906.4 million
- Reported net profit increased by 42.0% YoY to AED 90.1 million in Q3 2022
- Q3 2022 total EBITDA increased by 18.3% YoY to AED 145.8 million
- Stake in RAK Porcelain reached 91% following 4% addition in Q3 2022
- Executed contract for sale of land in Australia for a consideration of AUD 28 million
Ras Al Khaimah, United Arab Emirates, 9th November 2022: RAK Ceramics PJSC (Ticker: RAKCEC: Abu Dhabi), one of the largest ceramics lifestyle solutions providers in the world, announced today its financial results for the quarter ended 30 September 2022. RAK Ceramics reported a total revenue of AED 906.4 million, an increase of 32.4% YoY and a reported net profit of AED 90.1 million, representing an increase of 42.0% YoY during Q3 2022.
Commenting on the results, Abdallah Massaad, Group CEO, RAK Ceramics said:
“RAK Ceramics achieved a solid performance in Q3 2022 supported by strong operational capabilities despite navigating through challenging macro-economic conditions.
This quarter we strengthened our foundation, especially in terms of brand positioning, productivity, efficiency and sustainability, to further solidify our growth and build shareholder value. Additionally, we progressed notably on various expansionary fronts, and we remain in line with our expansionary priorities set for this year. We also focused on advancing in terms of integration plan for KLUDI Group and on finalizing our position in our Tableware subsidiary, RAK Porcelain; we foresee the fruits of such acquisitions to be seen progressively over the upcoming quarters.
Today, we are humbly proud of our performance as we were capable not just to withstand current market dynamics, but also to continue recording growth in top-line and increase in profitability. It is truly our diversification strategy and our strong brand equity that allowed us to be well positioned against current macro-economic headwinds and we continue to invest our efforts to maintain both.
As we set to wrap up this year, we remain cautiously optimistic about the future and we are confident that we are in a good position. We continue to work relentlessly through these unprecedented times to protect our market share by expanding our offering and solidifying our retail presence, and to boost our operations by optimizing production and investing in digital transformation.”
Strategic Highlights
RAK Ceramics realized further advancements in terms of expansionary plans and Greenfield projects. In the UAE, the Company is working on enhancement and additions to its capacity for Tiles, Sanitaryware and Tableware divisions; commercial production post completion of such projects are estimated to be materialized in 2023. In Bangladesh, the Company acquired land in Aug 2022 for the set-up of recently approved greenfield project.
As of 30 September 2022, the company acquired 4% stake in RAK Porcelain, bringing RAK Ceramics ownership position up to 91% following an all-cash proposal shared to minority shareholders.
In Saudi Arabia, RAK Ceramics signed a Conditional Investment Agreement with the Royal Commission of Jubail & Yanbu, which stipulates the allocation of Yanbu land to RAK Ceramics.
Additionally, RAK Ceramics executed contract for sale of land in Australia, for a consideration of AUD 28 million, which is equivalent to almost AED 65 million, recording a net gain of AED 18.5 million after tax for Q3 2022.
Operational Review
In the UAE, revenue grew by 28.2% YoY compared to same period last year, driven by growing real estate market and solid brand positioning following refurbishment showroom projects executed in Q3 2022. E-commerce sales continue to pickup QoQ basis as the company’s online offering continues to grow and expand.
RAK Ceramics’ performance in Saudi Arabia remained strong with an increase of 15.1% YoY compared to same period last year, given its continuous focus to secure projects and to expand its retail footprint amidst optimistic market outlook for Saudi Arabia’s real estate sector.
In Europe, currency devaluation impacted revenue and reflected a 1.3% YoY decline, whereas revenue in local currency increased by 12.6% YoY. High inflation and energy crisis continue to impact activity in the European market.
In the Middle East (excluding UAE and KSA), RAK Ceramics continued its solid growth with revenue up by 19.3% YoY for the reported period compared to Q3 2021 underpinned by increased brand exposure and expanding the distribution network.
In India, revenue declined by 14.4% YoY given challenging macroeconomic conditions, however performance remained strong given growth in dealers network footprint and improved efficiency albeit energy price increase.
In Bangladesh, revenue recorded 4.4% YoY growth compared to same period last year, slight increase hindered by devaluating currency albeit better brand visibility, increase in prices and product mix shift.
Financial Highlights
RAK Ceramics delivered a robust performance supported by strong operational capabilities midst macroeconomic headwinds.
Total revenue for Q3 2022 increased 32.4% YOY to AED 906.4 million and 9M 2022 increased by 24.1% YoY to AED 2.62 billion compared to same period last year, driven by increase in tiles, Sanitaryware, Tableware and following faucets consolidation.
Reported net profit increased to AED 90.1 million for Q3 2022 and AED 262.1 million for 9M 2022.
Total gross profit margin decreased by 3.2% YoY to reach 35% for Q3 2022 and remained almost stable YoY at by 36.8% for 9M 2022 despite higher input prices, supply chain challenges, KLUDI Group consolidation and most recently disruption in Bangladesh operations.
Tiles revenue increased by 12.2% YoY at AED 527.0 million in Q3 2022 and by 12.0% YoY to reach 1.63 billion in 9M 2022. Growth was driven by increase in volumes and in selling price.
Sanitaryware revenue declined 2.7% in Q3 2022 due to the economic slowdown in European markets but increased by 6.1% in 9M 2022 at AED 428.2 million, driven by an increase in selling price.
Tableware revenue increased by 33.5% YoY to AED 90.3 million in Q3 2022 and 55.2% YoY to AED 255.2 million in 9M 2022 given market post-pandemic rebound and introduction of differentiated products.
Faucets revenue stood at AED 117.8 million in Q3 2022 and AED 180.5 million in 9M 2022, out of which KLUDI Group revenue amounted to AED 111.6 million and AED 162.0 million, respectively, following consolidation effective 1st of June 2022.
Net Debt position
Net debt increased QoQ by AED 89 million in Q3 2022 to reach AED 1.41 billion as of September 2022, following interim dividend payment of AED 99.4 million and RAK Porcelain minority stake acquisitions of AED 22 million. The net debt to EBITDA increased from 2.37x to 2.48x QoQ.
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 118 million square metres of tiles, 5 million pieces of sanitaryware, 24 million pieces of porcelain tableware and 2.5 million pieces of faucets per year at its 24 state-of-the-art plants across the United Arab Emirates, India, Bangladesh and Europe.
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.
