Dubai: One of the biggest names in sanitaryware, RAK Ceramics recorded a 100 per cent plus gain in net profits for 2021 to Dh298.1 million, while revenues were up 21.8 per cent to Dh2.86 billion. The gains were led by increased demand from its home market UAE as well as in Saudi Arabia and India.
For 2021, the Board of Directors has recommended a 20 fils per share dividend, of which 10 fils was paid in October last on interim basis. They are also proposing a change in dividend policy - setting a minimum dividend payout of 20 fils annually for 2022 and to be paid on a semi-annual basis. It has also provided a commitment to pay a minimum dividend of 60 fils over the next three years.
The revised dividend policy will be "subject to factors such as business outlook, capital requirement for growth opportunities, expansion plans, optimal leverage levels and healthy cash reserves in addition to regulatory approvals". The share price breached Dh3 on Monday (February 7).
Closer to full Saudi expansion
With Saudi Arabia now being the biggest revenue generator, RAK Ceramics will take the next logical step, that of investing in a full-scale manufacturing base there. The plan is to acquire land for a project of its own. Acquiring existing ceramics companies in the Kingdom was also considered.
“We are supplying the market with the full quota needed from our UAE base, and this explains the 25 per cent increase in our Saudi sales. We do, however, need a plant there to keep adding to the growth,” said Massad.
“There were some supply delays during Covid times, when the borders were closed. Thereafter, our Saudi supplies never stopped completely.”
The company will also raise more production capacity at its UAE, Indi and Bangladesh factories. Bringing down the debt levels will also free up more capital for expansion needs.
UAE dip, Saudi gain
Slower project activity translated into a dip in RAK Ceramics’ UAE revenues, by 3.1 per cent year-on –year. But this was more than compensated by the 26.7 per cent increase in sales from Saudi Arabia. The UAE manufacturer will be hoping to keep the Saudi momentum going at these rates this year too.
In its other big market, India, the UAE company reported a revenue growth of 60.9 per cent, "underpinned by positive business sentiments, which reflected in improved profitability, despite significantly higher fuel costs".
September after payment of an interim dividend of Dh99.4m. At the end of 21, the company’s net debt to EBITDA stood at 1.94x compared to 3.25x in December 2020.
