Dubai: With its home market providing a substantial growth platform, RAK Ceramics posted a 9 per cent year-on-year increase in net profit margins. Profits for the first six months totaled 149.9 million.
But revenues took a dip, by 4.4 per cent, to Dh1.66 billion during the same period, which a top official said was a consequence of the company’s strategy to focus exclusively on core business lines and reduce exposure on non-core ones such as its real estate interests.
Revenue growth in the UAE was up 22 per cent in the period and more than compensated for lower offtake in Saudi Arabia, where it felt the impact from the changes in the kingdom’s labour market late last year. (Putting up a new capacity in Saudi Arabia could be an option to meet internal demands in the future, Abdullah Massaad, CEO of RAK Ceramics said.) The company’s scrip closed at Dh3.35, up by a fil, on Sunday at the Abu Dhabi bourse. It had been one of the most actively traded stocks in the first-half of the year, buoyed by constant talk of a major stake sell. It finally culminated in Samena Capital acquiring 30.6 per cent in June last.
The CEO said no discussions were held on a rights issue or dividend “as of now”.
“The core business used to represent 78 per cent of our revenues and which has now been scaled up to 85 per cent in the latest financials,” said Massaad. “The increase is in keeping with the revised strategy, which has accelerated since Samena Capital came on board and the subsequent creation of an Executive Committee.”
Growth momentum
The refocus resulted in earnings before interest, tax, depreciation and amortisation (Ebitda) to Dh310.3 million from Dh29.1 million last year. Margins too took to firmer ground, at 18.7 per cent for the first half of this year against 16.8 per cent previously. (During the second quarter, the company also reached a settlement for related party receivables — worth Dh840 million — via a 270,000 square metre beachfront property in Al Jazeera Al Hamra, Ras Al Khaimah.) “Even during the crisis years in the local market, RAK Ceramics managed to retain a growth momentum,” said Massaad. “Now, with the UAE’s real estate market showing strong sustaining power, our growth numbers from the home market have seen appreciable gains.
“With this as the backbone of our revenues, we can simultaneously seek better returns from our overseas interests.”
Apart from those in Ras Al Khaimah, the company maintains substantial manufacturing interests in India and Bangladesh as well as in Sudan. Africa is a market where more can be achieved in the coming years, the CEO said.
Retail availability of its product lines, which includes tiles and ceramics as well as taps and faucets, will continue to receive a major thrust. The company operates 10 showrooms owned by it in the UAE.
