Ras Al Khaimah, United Arab Emirates, 6th November 2017
RAK Ceramics PJSC (Ticker: RAKCEC: Abu Dhabi), one of the largest ceramics’ brands in the world, today announced its results for the third quarter ended 30th September 2017.
Core revenues increased by 14.1% year on year (“YoY”) to AED 643.6 million driven by strong growth in the UAE, Saudi Arabia, India and Bangladesh.
Total revenue grew to AED 705.2mn, an increase of 9.2% compared to Q3 2016. Core revenue contribution represented an all-time high of 92% of total revenues as a result of the continued implementation on its Value Creation Plan. Non-core revenue declined by 24% YoY which is in-line with the company’s strategy to divest non-core operations.
Reported net profit grew to AED 84.7mn, which represents a strong increase of 365% YoY and a net profit margin of 12.0%. For the first 9 months in 2017 reported net profit reached AED 262.3mn an increase of 76% compared to the same period last year.
Like for like net profit (excluding extraordinary net gain and provisions) grew to AED 87.0 million, an increase of 117% YoY and 2.2% QoQ.
Solid performance in regional markets; robust growth in the UAE and recovery in Saudi Arabia
Despite a challenging macro and political landscape in the MENA region, revenues in the UAE continued to grow by 17.7% YoY, led by strong demand and robust project sales across the company’s largest market.
Saudi Arabia continued its recovery trend with a strong performance in Q3 2017. Tiles and sanitaryware revenues increased by 50% YoY at AED 65.0 million and QoQ revenues remained stable.
Steady growth in core markets of Bangladesh and India
Bangladesh delivered strong revenue growth and maintained high margins following last year’s capacity expansions. Tiles and sanitaryware revenues increased by 35.2% YoY to AED 80 million.
India continues to recover with a steady performance in Q3 2017. Revenues grew by 17.8% to AED 86.2 million YoY. Supporting this growth, the company completed the acquisition of a 51% stake in a Joint Venture of a ceramic tiles manufacturing facility in Morbi, Gujarat and is now evaluating capacity expansions. The company is also evaluating a further stake acquisition in a vitrified tiles manufacturing facility.
Production efficiencies drive profitability and record tile margin improvements
RAK Ceramics continued to show positive momentum in core gross margins which increased by 300 bps YoY, to 32.7%. Tile gross margin increased to 28.4%, the highest Q3 result in 3 years. Improvements were driven by production efficiencies and cost savings in raw materials across its tile plants in the UAE and Bangladesh.
Overall EBITDA increased to AED 149 million with an EBITDA margin of 21.1%, which is the highest in 5 years. The increase in profits and the continued exits in non-core assets resulted in a return on equity of 12.3% for shareholders.
Abdallah Massaad, Group CEO, RAK Ceramics commented:
“RAK Ceramics has made steady progress in 2017 and we continue to deliver on our Value Creation Plan initiatives by investing in core business growth, maintaining cost efficiencies, growing our market share in the UAE, restructuring our Indian operations and implementing our strategy to drive further profitability in Saudi Arabia.
As a result of our strategy to exit non-core and non performing businesses operations we have lighten the balance sheet, increased margins and enhanced returns for our shareholders.”