RAK Ceramics Announces FY 2022 Financial Results
- Total revenue increased by 22.9% to AED 3.52 billion during FY 2022, highest level since 2009
- Reported net profit increased by 19.8% YoY to AED340.1 million in 2022, an all-time historical high full year performance
- Total gross profit margin remained stable at 36.1%
- Total EBITDA increased by 15.1% to AED 577.2 million during FY 2022
- The Board of Directors proposed a dividend distribution of 10 fils per share (AED 99.4 million) for H2 2022.
Ras Al Khaimah, United Arab Emirates, 9th February 2023: 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 year ended 31 December 2022. RAK Ceramics reported record high full year performance for 2022 with a total revenue increase of 22.9% to AED 3.52 billion and reported net profit increase of 19.8% to AED340.1 million when compared to 2021.
Commenting on the results, Abdallah Massaad, Group CEO, RAK Ceramics said:
“I am delighted to share our company's performance for the year 2022. Notwithstanding the current macro-economic conditions marked by high inflation and persistent energy crisis, we have managed to achieve remarkable results. Our total revenue increased by 22.9% YoY, reaching the highest level since 2009, driven by robust core business growth in Tiles, Sanitaryware, and Tableware in addition to growth in faucets on the back of KLUDI consolidation. This is a testament to our unwavering commitment to delivering value to our stakeholders.
Despite the challenging economic environment, we have managed to maintain our gross profit margin level, mainly due to our improved production efficiencies and optimized utilization in 2022. Growth was hindered by further costs associated with Saudi Custom Duty, higher input costs and energy challenges; nonetheless, we are working hard to overcome these challenges and are already seeing hints of correction in some instances.
Operationally, we continued to progress in our expansionary projects in the UAE across all lines of businesses and advance on multiple greenfield fronts, including in Bangladesh and in Saudi Arabia.
Strategically, we finalized our core businesses consolidation exercise: Our value creation plan for KLUDI is well underway, and we are closely monitoring its progress; additionally, we have reached 92% stake in RAK Porcelain following a series of minority acquisitions launched in 2022. We solidified our group position and we are committed to leveraging on synergies to strengthen operations across all core businesses.
Today, as we close the chapter for 2022, we are humbly proud of our achieved progress and growth and remain steadfast in our commitment to delivering value to our stakeholders. We are monitoring the economic environment closely and remain focused on executing our growth strategy.”
In the UAE, the tiles enhancement project is in progress and production is set to begin in Q1 2023 for 5 million square meters of GP tiles. The sanitaryware capacity enhancement has also been completed and production has commenced, with full utilization of additional capacity by Q3 2023 (260,000 pieces). The tableware capacity expansion is still underway, with commercial production estimated for Q3 2023 (additional 10 million pieces).
In Bangladesh, following Board approval of Tiles and Faucet Greenfield project in Q2 2022, the land acquisition, title ownership and registration process have been completed thus far, along with obtaining NOCs and approvals from municipal bodies. Today, the team is working on shortlisting consultants and preparing the factory design layout for the Faucets project.
In Saudi Arabia, an application has been filed to transfer the previously obtained gas allocation approval; the team is preparing the factory layout plan and seeking relevant environmental clearances and approvals.
Finally, RAK Ceramics reached 92% stake in RAK Porcelain (the company's Tableware division) as of 31st of December 2022, following the acquisition of 42% throughout the year. RAK Porcelain has also acquired a 9% minority position in RAK Porcelain Europe S.A., fully consolidating its subsidiary.
Operational Review – Tiles and Sanitaryware
In the UAE, revenue increased by 19.7% YoY in 2022. The strong performance was bolstered by solid market fundamentals in 2022. Retail expansion, launch of e-commerce, increased participation in international fairs, among other initiatives, resulted in further brand visibility and strengthened positioning.
In Saudi Arabia, revenue increase by 9.0% YoY in 2022, driven by growth in retail and projects despite the 12% custom duty charges. The focus remains on offering premium products, securing mega projects and expanding the retail footprint.
In Europe, revenue increased by 3.5% YoY in 2022 while in local currency increased by 14.5% YoY. Given the slowdown in economic activity and albeit the applied price increases in 2022, the macroeconomic pressure weighed in on bottom-line performance; Q4 2022 financials, however, we saw signs of relief, enabled by correction in exchange rates and decrease in freight rates.
In India, RAK Ceramics reported a revenue growth of 2.9% for FY 2022, versus 9.3% YoY in local currency implying impact of currency depreciation. Efforts were maintained in expanding distributors’ network and increasing retail presence via showroom openings. The performance remained solid, driven by growth in the top line and improved efficiencies, although hindered by rising input and energy costs.
In Bangladesh, revenue recorded a slight drop of 1.2% YoY in 2022. The macroeconomic challenges and the currency devaluation impacted top line growth, as revenue is seen increasing by 8.8% YoY in local currency. Gas supply shortages experienced from the 17th of September till the 7th of December 2022 caused production disruptions, weighing in further on its bottom-line performance.
In the Middle East (excluding UAE and KSA), revenue increased by 22.2% in 2022 mainly due to increase in brand exposure and growth in distribution network.
RAK Ceramics demonstrated a remarkable performance despite the tough macroeconomic conditions. The company's operational capabilities played a significant role in achieving strong results. This highlights the resilience and strength of the Company’s business model, and its ability to adapt and thrive even in challenging times.
Total revenue increased by 22.9% YoY to AED 3.52 billion in 2022, compared to AED 2.86 billion in 2021. The growth was driven by an increase in Tiles (11.0%), Sanitaryware (4.1%), Tableware (38.9%) and the consolidation of faucets (+AED 276.5 million).
The reported net profit increased to AED 340.1 million in 2022, an all-time record high performance in the history of the Company, compared to AED 283.9 million in 2021. The net profit margin stood at 9.7%, compared to 9.9% in the previous year.
Despite the full-year impact of the KSA customs duty and the rise in input prices, RAK Ceramics maintained a stable total gross profit margin of 36.1% YoY.
Tiles revenue increased by 11.0% YoY to AED 2.17 billion. Revenue from Sanitaryware increased by 4.1% YoY to AED 551.0 million in 2022. Tableware revenue saw a significant increase of 38.9% YoY to AED 353.2 million, supported by a post-pandemic economic recovery and a rise in selling price. The revenue from Faucets recorded for 2022 was AED 306.0 million, with a post-consolidation addition of AED 276.5 million to the top-line since transaction closing on the 1st of June 2022.
The revenue from other non-core units saw a growth of 25.4% YoY to AED 139.2 million, driven mainly by the company's ceramic raw material trading business.
Net Debt position
Net debt increased by AED 330 million to reach AED 1.30 billion as of December 2022 compared to December 2021, mainly due to acquisitions in faucets and tableware business.
Net Debt to EBITDA has also increased from 1.94x in Dec 2021 to 2.26x in December 2022.
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, 5.7 million pieces of sanitaryware, 26 million pieces of porcelain tableware and 2.6 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.
RAK Ceramics FTI Consulting
Nadine Nasr Talal Almoallem
Tel: +971(0) 52 5453348 Tel: +971(0) 56 5612667
Further information is available online at www.rakceramics.com