Ras Al Khaimah, United Arab Emirates, 11th November 2021
RAK Ceramics PJSC (Ticker: RAKCEC: Abu Dhabi), one of the largest ceramics brands in the world, announced its financial results for the quarter ended 30 September 2021.
Robust growth across core business, surpassing pre-pandemic levels
RAK Ceramics delivered a strong financial performance in Q3 2021. Revenue and profitability surpassed pre-pandemic levels, despite challenging market conditions such as the imposition of customs duty in the Kingdom of Saudi Arabia and significant increases in logistics costs due to global container shortages.
Total revenue increased 9.4% year on year to AED 684.8 million driven by strong growth trajectory in core business.
Reported net profit increased by 86.5% year on year to AED 63.4 million, with a net profit margin of 9.3%, up from 5.4% in Q3 2020. The higher net profits and net profit margin are attributed to improved revenues and higher GP margins.
Total EBITDA reported in Q3 2021 stands at AED 123.2 million, an increase of 18.0% when compared to AED104.4 million reported in Q3 2020.
Total gross profit margin for Q3 2021 increased by 7.1% to 38.2%, driven by production line optimisation and increases in Tiles, Sanitaryware, and Tableware margins.
Net Debt as at the end of Q3 2021 decreased by AED 38 million to AED 978.7 million with the Net Debt to EBITDA ratio reaching an all-time low of 1.89x, indicating a strong balance sheet.
Strong financial and operational performance in key markets
Q3 2021 key market revenue was AED 127.5 million in Saudi Arabia, AED 131.6 million in the UAE, AED 104.5 million in India, AED 68.1 million in Bangladesh, and AED 98.1 million in Europe.
In Saudi Arabia, despite the imposition of a 12% customs duty, RAK Ceramics was able to strengthen its position as a premium provider with the announcement of three new showrooms, two in Riyadh, and one in Madinah, which are expected to open later this year.
In the UAE, RAK Ceramics continued to demonstrate strong operational efficiencies and improved gross profit margins. The anti-dumping duty, which came into effect in the UAE from 6th July 2021, ranged from 23.5% to 106% on imported tiles from India and China. The duty positively reflects the global demand for the Company’s products.
India operations marked a strong turnaround with business surpassing pre-pandemic levels. This was underpinned by positive business sentiments, as reflected in improved profitability, despite significantly higher fuel costs.
In Bangladesh, the government imposed intermittent lockdowns from April to August 2021, resulted in temporary suspension of production lines. However, the Company demonstrated resilience and reported strong year on year growth.
In Europe, performance was impacted by higher shipping freight rates, owing to global container shortages. However, the Company expanded its customer base underpinned by differentiated capabilities and superior product management.
Tableware business steady recovery
Tableware performance across core markets improved and the Company has increased production to meet demand. However, performance was impacted due to higher shipping freight costs on account of a global shortage of containers.
Abdallah Massaad, Group CEO, RAK Ceramics, commented: “I am pleased to report strong financial and operational results in Q3 2021 despite the impact of global supply chain disruptions, resulting in significantly increased freight costs.
Our ability to navigate these challenges has helped us to deliver sustained growth, further validating our commitment to delivering shareholder value.
Looking ahead for the remainder of 2021, we will continue to focus on improving operations efficiencies across our markets, protecting our market share, and increasing export profitability.”