Stock Abdallah Massaad Rak Ceramics
Abdallah Massaad, CEO of RAK Ceramics, says the Saudi strategy is paying off well for the company, delivering one of the biggest sales gains in recent quarters. But the situation in India, another key market for the UAE company, is a worry. Image Credit: Supplied

Dubai: RAK Ceramics, one of the biggest names in the global sanitary ware business, will keep close watch on the COVID-19 second wave situation before taking any decision on reducing production at its three plants in the country.

The company operates three factories in India, two in the western Indian state of Gujarat and another in Kakkinada, down in the south. “Right now, we are only hoping and praying that all of our employees in India remain safe,” said Abdallah Massaad, Group CEO, RAK Ceramics.

“Production continues – and India was one of the biggest contributors to sales in the first quarter. At the moment, there are no plans to cut output down – but given what’s happening with the COVID-19 second wave, there will likely be an impact on second quarter orders and delivery. We will take a call on production cuts at the time.

"Our first quarter India numbers are in line with Q4-2020; we have learned from last year how to control the business situation from anything that's happening on the COVID side."

Stock RAK Ceramics
RAK Ceramics' UAE operations are ticking along nicely, with retail sales providing the support. Image Credit: Supplied

India’s crucial

RAK Ceramics pulled out upbeat numbers in the first three months, with Saudi Arabia and India providing much of the solidity to the growth. India sales were up 67 per cent from a year ago, while in Saudi Arabia, they gained 78.5 per cent. Sales to Europe also helped out, up 22.7 per cent.

The company’s Q1-2021 revenues thus gained 21.9 per cent year-on-year to Dh722.8 million – its best tally since 2016. Net profit put on a substantial 107.2 per cent year-on-year to Dh62.7 million, which is well above the pre-pandemic levels of Dh36.9 million in Q1-2019.

The Saudi “strategy continues to yield results,” RAK Ceramics said in a statement. “The imposition of anti-dumping duties on tiles from India and China in the Kingdom initially led to an increase in demand for RAK Ceramics’ products.

“Capitalising on this, the company invested in differentiated tiles and new showrooms, developing significant brand equity in the market. RAK Ceramics is now the go-to provider of premium ceramic products in the Kingdom.”

Renovation shift

In its home market, sales are driven by “renovation needs” and not solely by new project work, according to the CEO. “It’s a blend of sales that we are getting now in the UAE,” said Massaad. “The disruption on the projects’ side was absorbed in our 2020 results – this year, we are gaining both through our showrooms and the wholesale business. That’s mostly renovation-created sales we are getting.”

In the medium term, RAK Ceramics will continue to invest in "branding initiatives", including collaborations with premium designers, franchising of retail concepts and the launch of outlet stores in the UAE and Saudi Arabia. "Our production levels are at the highest they have been since 2016, on the back of increased demand across our key markets," said Massaad. "We will capitalise on this demand by continuing to build our brand equity and positioning RAK Ceramics as a global provider of premium ceramic lifestyle solutions."