RAK Ceramics chief reveals what’s really driving interiors demand now

Dubai: Homeowners upgrading kitchens, bathrooms and living spaces are becoming a key driver in the UAE construction supply chain, shifting demand away from a purely developer-led cycle toward consumer-driven spending that is changing how building materials companies plan growth.

RAK Ceramics' Group Chief Executive Abdallah Massaad said the shift became more visible after the pandemic. “We saw the last two years, especially after Covid, lot of movement and renovation,” he said, noting that buildings developed in the early 2000s are now reaching upgrade cycles. New construction remains active but refurbishment is becoming a second pillar of demand.

Renovation buyers are increasingly selecting premium surfaces and design driven materials, a trend Massaad linked to changing consumer behaviour. “Product is becoming a lifestyle,” he said, explaining that customers renovating homes tend to focus on design value instead of minimal cost savings. Price differences between standard and premium finishes remain relatively small, encouraging upgrades.

RAK Ceramics has expanded its offering to match that shift, adding larger slab surfaces, marble and stone effect finishes and full bathroom solutions combining ceramics, faucets and cabinets. Acquisitions such as the Cookplay tableware brand and integration of German fittings company Kludi are part of a broader strategy to position the group as a lifestyle solutions provider rather than a traditional materials supplier.

That consumer shift coincides with steady earnings growth helping RAK Ceramics deliver higher profits and stable revenue despite mixed global conditions. Full year revenue rose 1.6% to Dh3.28 billion while profit before tax climbed 19.9% to Dh331.8 million, supported by strong local sales and higher margin project work.

UAE revenue increased 13.4% to Dh955.8 million, making it the company’s strongest performing market. Larger format tiles and premium finishes helped lift margins, with gross margin improving to 40% for the year and 39.1% in the fourth quarter.

International markets still account for most of the company’s sales, helping balance regional cycles. Massaad said global diversification has long been a core part of the business model. “Our business model built on resiliency, means we are selling more than 165 countries around the world,” he said. Performance varied by region, with gains in the UAE and Bangladesh offsetting weaker demand in Europe and India.

Logistics disruptions earlier in the year also tested operations, with shipping times to Europe stretching from one month to three during peak congestion. Production continued without interruption because of supply planning and sourcing flexibility. “We did not stop the production for one hour, because we don't have enough raw material,” he said.

Input costs increased during the year but the company relied on technology and process improvements instead of broad price rises. Investments in automation, AI tools and manufacturing efficiency helped control expenses and protect margins. Massaad said increases for customers were minimal and in the UAE no price increases were implemented.

Operating performance reflected those efficiency gains. EBITDA rose 5.3% to Dh623.6 million and margins improved to 19%. Net profit reached Dh248.5 million, up 6.2%. Net debt stood at Dh1.49 billion following capital expenditure on plant upgrades and new production lines, lifting the net debt to EBITDA ratio slightly to 2.40 times.

Saudi Arabia remained a large but more competitive market, with revenue declining 17.7% due to oversupply from local producers. The company is adjusting its approach by focusing on higher margin projects and retail segments while building a new tiles facility in Yanbu scheduled for completion in 2027. Europe and India also saw declines because of weaker demand and cyclical slowdowns, while Bangladesh returned to growth.

Massaad said market cycles are inevitable and diversification helps manage volatility. “You will not expect that the whole markets will do well. You have areas which does well areas with challenges. So it is our role how to manage it.”

The board proposed a cash dividend of 10 fils per share for the second half, bringing total distribution to Dh99.4 million. The company continues to balance investment with shareholder payouts, a strategy Massaad says remains unchanged.

Renovation demand, premium product uptake and steady project activity in the UAE are expected to remain key supports for earnings momentum, positioning the company to benefit from both real estate upgrades and ongoing construction across the region.