August 2022
- Remarkably strong quarterly top-line results hitting all-time high
- Total revenue in Q2 2022 increased by 32.3% year on year to AED 927.0 million
- Q2 2022 reported net profit stands at AED 102.2 million, up by 7.7% year on year
- Total gross profit margin reached an all-time high in Q2 2022 up by 0.3% year on year to 38.4%
- Q2 2022 total EBITDA increased by 26.5% year on year to AED 164.3 million
- Acquisition of 100% stake in KLUDI Group & 37% minority stake in RAK Porcelain
- The Board of Directors approved an interim dividend of 10 fils per share for H1 2022
Ras Al Khaimah, United Arab Emirates, 3rd August 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 June 2022. RAK Ceramics reported a total revenue of AED 927.0 million, an increase of 32.3% year on year and a reported net profit of AED 102.2 million, an increase of 7.7% during Q2 2022 compared to Q2 2021.
Commenting on the results, Abdallah Massaad, Group CEO, RAK Ceramics said:
“Despite the unprecedented economic environment and increased global volatility, RAK Ceramics achieved a remarkably strong performance in Q2 2022, supported by key strategic and operational initiatives realized during Q2 2022.
We remain focused on our goals to achieve a sustainable and continued growth in scale and profitability. In Q2 2022, we reinforced brand perception and customer experience, strengthened retail footprint and visibility, further increased production efficiencies and enhanced capacity utilization. We remained diligent on optimizing logistics operations with better supply chain management and inventory control, to mitigate rising challenges. We were also successful in maintaining an adequate liquidity position for Q2 2022, despite consolidation activity and challenging environment, enabling us to comfortably meet pay-out commitments.
We are also proud to announce that we have concluded the acquisition of KLUDI Group, launched the process of buying out RAK Porcelain’s minority positions, and approved RAK Ceramics Bangladesh expansionary project.
We remain committed to solidifying our positioning as a global provider of premium ceramic lifestyle solutions and to continuously adding value to our shareholders by focusing on market share preservation, brand positioning, product differentiation, sustainable investments and digital transformation.”
Strategic Highlights
On 31 May 2022, RAK Ceramics completed the transaction of acquiring 100% stake in the Germany based KLUDI Group, including 49% stake in our existing joint venture KLUDI RAK in UAE. This strategic acquisition represents an opportunity for RAK Ceramics to spearhead expansion and strengthen its core businesses across European markets, in addition to strengthening its position internationally as a ceramic lifestyle solution provider.
The company, to-date, has completed 40% acquisition of RAK Porcelain following an all-cash proposal shared to all minority shareholders, of which 37% were acquired as of 30 June 2022 and an additional 3% stake was added in July 2022, bringing RAK Ceramics ownership position up to 90% with further stake acquisitions currently under negotiations.
In support of expansionary plans, the company approved RAK Ceramics Bangladesh greenfield expansion project which is estimated to add a capacity of 4.8m sqm in Tiles annually starting Q1 2025 and 400k pcs in Faucets annually starting Q2 2024.
Financial Performance
RAK Ceramics delivered a strong performance during Q2 2022 despite the unprecedented environment and increased global uncertainties.
Total revenue for Q2 2022 increased 32.3% to AED 927.0 million and H1 2022 increased by 20.1% to AED 1.71 billion compared to same period last year, driven by a strong growth across all core businesses. KLUDI Group consolidation, effective 1st of June 2022, added AED 50.4 million in Q2 2022 revenue.
Reported net profit increased to AED 102.2 million for Q2 2022 and AED 171.9 million for H1 2022 due to higher revenue and gross profit margins.
Total gross profit margin increased by 0.3% year on year to reach 38.4% for Q2 2022 and by 1.2% year on year to reach 37.8% for H1 2022 despite increase in production costs and the imposition of 12% custom duty by Saudi Arabia, effective 1st July 2021.
Tiles revenue increased by 25.9% year on year to reach AED 595.1 million in Q2 2022 and by 11.9% year on year to reach AED 1.1 billion in H1 2022. Growth was driven by increase in volumes and in selling price across all markets – except for a stabilization felt in H1 2022 figures for the Saudi Arabian market given introduction of custom duty and supply disruption in Q1 2022.
Sanitaryware revenue grew by 7.5% in Q2 2022 and by 10.3% in H1 2022 at AED 146.3 million and AED 301.2 million, respectively, driven by growth in all markets except the Saudi Arabian market.
Tableware revenue increased by 60.0% year on year to AED 89.3 million in Q2 2022 and 70.3% year on year to AED 164.9 million in H1 2022 following market rebound post-pandemic.
Segmental Review – Tiles and Sanitaryware
In the UAE, revenue grew by 24.5% compared to same period last year, driven by growing construction demand and favorable real estate market conditions, increase in selling prices and an uplift in the brand’s retail presence.
RAK Ceramics’ position in Saudi Arabia increased by 25.6% compared to same period last year. Company continues to focus on growing its presence in KSA by securing highly profitable projects and expanding its retail footprint.
In Europe, RAK Ceramics witnessed rigid growth in top-line following a strengthened brand positioning despite market slowdown; revenue increased by 1.8% year on year while higher shipping costs weighing in on bottom-line performance.
In the Middle East (excluding UAE and KSA), RAK Ceramics continued its solid growth with revenue up by 27.0% for the reported period compared to Q2 2021 underpinned by an increased brand exposure and expanding the distribution network.
In India, revenue up by 55.4% year on year, driven mostly by increased tiles sales, on the back of increase in dealers network footprint and expansion in retail presence.
In Bangladesh, revenue increased by 11.3% year on year supported by better brand visibility and price adjustments following increase in input costs and import freight. Despite the registered growth in revenues, higher energy costs and currency devaluation weighed in on Q2 2022 bottom-line.
Stable liquidity position
Net debt increased by AED 351m Quarter-on-Quarter to reach AED 1.32bn as of June 2022, following the acquisition of KLUDI Group and RAK Porcelain during Q2 2022. The net debt to EBITDA increased from 1.93x to 2.37x Quarter-on-Quarter.
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 meters 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.
