February 2024
- Group Revenue: Experienced a marginal decrease of 1.7% to AED 3.45 billion in FY 2023 while the Q4 period showed a modest decline of 3.8% to AED 866.4 million owing to macro-economic factors.
- Gross Profit Margin Expansion: Robust expansion of +30bps YoY, reaching 37.9% for FY 2023, attributed to a favourable shift in product mix and production efficiencies.
- EBITDA Performance: Significant YoY increase of 12.2% in FY 2023, reaching AED 647.4 million, accompanied by notable margin growth of +230bps.
- Net Profit before one off gain: Net Profit increased 3.7% YoY in FY 2023, reaching AED 320.9 million, and the net profit margin increased to 9.3% compared to 8.8% in FY 2022.
- Financial Health: Net debt increased by AED 120.3 million in December 2023 at 1.42 billion compared to 2022 and the net debt to EBITDA ratio improved slightly from 2.26x to 2.20x in FY 2023. The Board of Directors proposed a dividend distribution of XX fils per share (AED XX million) for H2 2023
Ras Al Khaimah, United Arab Emirates, 8th February 2023: RAK Ceramics PJSC (Ticker: RAKCEC: Abu Dhabi), one of the largest ceramics lifestyle solutions providers in the world, today announced its financial results for the year ended 31st December 2023. Despite net profit for the period increasing 3.7% to AED 320.9 million, an unfavourable market cycle, currency depreciation, and rising interest costs meant RAK Ceramics reported a slight revenue decline of 1.7% to AED 3.45 billion.
FY 2023 & Q4 Financial Highlights
Total revenue decreased 1.7% YoY to AED 3.45bn in 2023, primarily attributable to market volatility and continued macro-economic challenges across core markets except the UAE. Q4 revenue decreased 3.8% at AED 866.4m, mainly due to lower sales in tiles and faucets whereas sanitaryware revenue increased 2.9% YoY.
FY 2023 gross profit margin increased by 30bps YoY at 37.9% while Q4 gross profit margin increased by +70bps YoY to 35.6% due to increased sales and change in product mix in the UAE.
EBITDA for FY 2023 increased by 12.2% to AED 647.4m compared to 577.2m in the previous year. Margins increased to 18.7% compared to 16.4% in 2022. EBITDA for Q4 increased by 20.7% YoY to AED 166.0m and margin increased 390bps YoY to 19.2%.
The reported net profit before one off gain increased 3.7% YoY to AED 320.9m in 2023 compared to the previous year. (Last year profit included a net one-off gain of AED 30.8m). Net Profit margin for 2023 is 9.3% compared to 8.8% in last year. Net profit before one off net gain increased to AED 81.8m in Q4 2023 versus AED 65.3m in Q4 2022. Net profit margin for Q4 is 9.4% compared to 7.2% in last year.
Net debt increased by AED 120.3m in December 2023 at 1.42bn compared to December 2022 due to the payment of the dividend (AED 221.7m) and Capex of AED 273m. Net debt to EBITDA also improved from 2.26x in December 2022 to 2.20x in December 2023.
Income Statement Highlights
- Tiles revenue saw a YoY decline of 8.3% at AED 1.99 billion, primarily influenced by heightened competition from regional players and increased imports from India, impacting our core markets – mainly Saudi Arabia and the Middle East.
- Sanitaryware revenue experienced a YoY decline of 7.1% at AED 512 million owing to headwinds, notably in European markets – the UAE continued to perform well.
- Tableware revenue increased significantly, reaching AED 392 million YoY, an 11% raise compared with 2022. The increase was driven by the boost in demand from HORECA sector driven by the rising tourism, especially in the UAE.
- In 2023, Faucets generated a revenue of AED 456.2 million, mainly impacted due to the challenges faced in European market. Last year revenue accounted for 7 months as the consolidation was effective June 2022.
| Particulars | Q4 22 | Q3 23 | Q4 23 | YoY Growth | QoQ Growth | 2022 | 2023 | YoY Growth | |
| Revenue | 900.7 | 837.0 | 866.4 | -3.8% | 3.5% | 3,517.2 | 3,456.9 | -1.7% | |
| Gross margin (%) | 34.9% | 37.6% | 35.5% | 0.7% | -3.3% | 37.6% | 37.9% | 0.3% | |
| EBITDA | 137.5 | 169.0 | 166.0 | 20.7% | -1.8% | 577.2 | 647.4 | 12.2% | |
| Reported net profit/(loss) | 78.0 | 83.9 | 81.8 | 4.8% | -2.5% | 340.1 | 320.9 | -5.7% | |
| Net One-off gains/(loss) | -12.7 | – | 0.0 | -nm | -nm | -30.8 | 0.0 | NA | |
| Net Profit/(loss) before one off | 65.3 | 83.9 | 81.8 | 25.3% | -2.5% | 309.4 | 320.9 | 3.7% | |
| Capital expenditure | 61.2 | 89.0 | 90.9 | 48.5% | 2.0% | 205.0 | 273.4 | 33.4% | |
| Net debt | 1,301.1 | 1,499.0 | 1421.5 | 9.2% | -5.2% | 1,301.1 | 1,421.5 | 9.2% | |
| Net debt/EBITDA | 2.26x | 2.43x | 2.2x | -3.0% | -9.7% | 2.26x | 2.20x | -3.0% |
Commenting on the results, Abdallah Massaad, Group CEO, RAK Ceramics said:
“Despite global macro-economic and geopolitical challenges, our commitment to product differentiation and leveraging brand recognition has allowed us to focus on maintaining margins. In the UAE, growth in real estate sector backed by rising tourism allowed us to achieve a notable 17.8% YoY revenue growth in 2023 overcoming challenges and competition from imports. This was mainly owing to our strategic emphasis on adaptability, customer-centric solutions, and an unwavering commitment to quality.
We have also strategically expanded into new market distributions to ensure the recovery of market share following a revenue dip in KSA due to significant price variations from local manufacturers backed by Chinese investors.
High interest rates have continued to make trading conditions difficult in some geographies, notably Europe and India whereas in Bangladesh, impact to real estate sector and currency devaluation resulted in decline in our revenue.
However, our continuous efforts to invest in upgrading our production facilities, strengthening our brand presence, enhancing customer value, and improving production efficiency will empower us to navigate these challenges and maintain our strong growth trajectory.”
Strategic Highlights
Expansion projects
- We are upgrading tile production facilities in the UAE and India, with the goal of bringing in production efficiencies driven by innovation and allowing a shift in our production capabilities from Ceramics to Porcelain Tiles. In parallel, we continue to work towards setting up production presence in KSA.
- For Sanitaryware, the upgrade efforts are underway in UAE to enhance the overall product offering.
- The approvals are underway for the Faucets Greenfield plant in Bangladesh with construction expected to commence in Q2 2024.
- The expansion project in Tableware for additional capacity of 10 million pieces in UAE is completed with plans to increase scale of production in phases.
