May 2023
- Total revenue increased by 12.7% to AED 882.4 million and total EBITDA increased by 21% to AED 157.1 million during Q1 2023 compared to Q1 2022.
- Total gross profit margin for Q1 2023 increased to 37.9%, an increase of 90bps year-on-year driven by improved efficiencies.
- Reported net profit increased by 14.9% year on year to AED 80.1 million for Q1 2023 due to higher revenue and gross profit margins.
- RAK Ceramics net debt to EBITDA increased to 2.42x in March 2023 compared to 2.26x in December 2022 mainly driven by increase in net debt due to dividend payment and increase in working capital.
Ras Al Khaimah, United Arab Emirates, 12th May 2023: RAK Ceramics PJSC (Ticker: RAKCEC: Abu Dhabi), one of the largest ceramics’ brands in the world, announced today its financial results for the quarter ended 31 March 2023. RAK Ceramics reported a total revenue of AED 882.4 million, an increase of 12.7% and a total EBITDA of AED 157.1 million, an increase of 21% during Q1 2023 compared to Q1 2022.
Commenting on the results, Abdallah Massaad, Group CEO, RAK Ceramics said:
“RAK Ceramics announced its results for Q1 2023 which continues to be resilient despite the ongoing economic challenges weighing in namely due to higher interest rates, currency devaluation, recessionary fears in major markets and increased competition.
Our performance in UAE market remains solid, allowing us to maintain a strong position as we encounter challenges in other major markets in the form of local competition, recessionary fears and currency devaluation. Despite these obstacles, our unwavering commitment lies in positioning ourselves as a trusted premium supplier and we will continue to actively expand our retail presence in the region.”
Strategic Highlights
RAK Ceramics continues to make progress on its expansion plans across its’ various markets.
UAE Expansion projects: Commercial production of smart tiles factory has commenced. This factory features smart tiles automation and IoT technologies to revolutionize tile manufacturing. The tableware capacity expansion is still underway, with commercial production estimated for Q3 2023 for additional 10 million pieces.
Greenfield projects: Regarding our greenfield projects in Bangladesh and Saudi Arabia, we are actively pursuing the neseccary licenses and clearances..
Operational Review
Tiles revenue witnesses steady growth of 0.9% year on year at AED 520.9 million driven by increase in selling price due to change in product mix. We continue to face challenges due to rising natural gas prices, competition from regional players and increasing imports. However we have been successful in maintaining our margin by differentiated product strategy, which has allowed us to strengthen our position in the retail and projects segment.
Sanitaryware revenue witnesses a year on year decline of 16.6% at AED 129.2 million due to lower off-take in European markets given on-going economic challenges and disruption in Bangladesh business due to intermittent lower pressure in gas supply. However, we remain confident about our growth prospects in Europe and Bangladesh, given the declining inflation and reduction in freight rates.
Tableware business registered robust performance on the back of successful launch of new series of products and benefiting from the growing demand with revenue increase of 28.9% year on year at AED 97.6 million.
Faucets revenue continues to grow at AED 111.6 million in Q1 2023, out of which contribution from KLUDI Group consolidation is AED 105.1 million.
Financial Highlights
RAK Ceramics delivered a strong set of results during Q1 2023 despite continued economic challenges.
Total revenue for Q1 2023 increased by 12.7% compared to same period last year to AED 882.4 million. The tiles and sanitaryware continues to contribute over 74% of the total revenue mix followed by the Kludi Group consolidation which added AED 105.1m in Q1 2023.
Total gross profit margin for Q1 2023 increased to 37.9% compared to 37% in Q1 2022 driven by increase in tiles and tableware margin.
Reported net profit increased to AED 80.1 million during Q1 2023 compared to AED 69.7 million in Q1 2022 due to higher revenue & gross profit margins
Net Debt Position
Net debt increased by AED 157.7 million to AED 1.46 billion compared to Dec 2022 mainly due to payment of dividend of AED 112 million and increase in working capital.
Net debt to EBITDA increased to 2.42x in March 2023 compared to 2.26x in December 2022
Sustainability
Further, RAK Ceramics is deeply committed towards sustainability and reducing overall environmental footprint. Recent investments include efficient online mosaic production, environment-friendly processes for recovering and recycling tiles and an advanced scanning solution. The long-term investment includes waste utilization and energy consumption.
