RAK Ceramics achieves 11 per cent growth in net profit

Muscat: RAK Ceramics on Sunday said that the company has achieved a 10.8 per cent growth in net profit at Dh65.9 million for the first quarter of 2016. This is despite heightened levels of uncertainty in global markets, and a relativelyunchanged overall revenue of Dh735.7 million for the quarter.
The UAE-based company’s growth was led by a 3.3 per cent increase in the sale of tiles to Dh496 million and a 0.5 per cent increase in sanitaryware sales to Dh111.5 million supported by restructuring efforts in ‘core markets’’and the continued improvement of ‘non crore businesses.’Overall core revenue increased by 2.9 per cent to Dh644.7 million, while non-core revenue reduced to Dh91 million in the first quarter of 2016 partly due to the sale of RAK Logistics.
Consolidated earnings before interest, taxes, and deprecation and amortisation (Ebitda) rose by 6.7 per cent to Dh138.3 million and Ebitda margin increasedto18.8 per cent as a result of higher gross margins and reduced general, selling and administrative expenses.
Core market focus
Revenue in core markets remained strong with a 5.9 per centincrease in sales to Dh161.7 million in the UAE driven by market demand for tiles. In Bangladesh, sales increased by6.8 per cent to Dh61 million on the back of investments to expand capacity in sanitaryware by 25 per cent in 2015.
In India, restructuring effortsand depreciation of rupees by 8.4 per cent year-on-year placed downward pressure on the first quarterperformance. While revenues declined by 18.4 per cent to Dh81.1 million, the foundations have been laid to revamp operations and drive future growthfor the business following the full acquisition ofits Indian subsidiary in late2015 and the recent appointment of a new chief executive officer.
Despite a slower growing economy across Europe, RAK Ceramics’ sales to European countries rose by 7.5 per cent year on year.
Margins
The first quarter of 2016 represented a continued momentum in gross margin improvement. Consolidated margin rose for the fourth consecutive period by 170 basis points to 30.2 per cent.
Gross margin from ‘core businesses’ increased to 30.2 per cent, driven by strong sales of tiles and supported by turnaround efforts in core businesses within key growth markets, a trend that originated in previous quarters.
“RAK Ceramics has maintained its prudent approach of focusing on key growth markets during the first quarter of this year with capacity expansions, senior appointments and further consolidation of key assets in core markets. While global financial conditions have presented the business with a challenging economic environment, we are confident that we will see a solid performance in the next three quarters, thanks to our ongoing efforts to strengthen the business, reduce losses and increase margins,” said Abdallah Massaad, RAK Ceramics’ Group Chief Executive Officer.
“As we continue delivering on our Value Creation Plan, we intend to retain our position in key markets, keep an eye on opportunities for further expansions and retain the highest calibre of manufacturing talent available in the market.” he added.