RAK Ceramics reports a 10% drop in 2019 profit on weak revenue
Company says challenging regional market conditions and increased competition in export markets dented annual revenue
RAK Ceramics, one of the world's biggest producer of tiles, posted a 10 per cent decline in full year net profit as tougher market conditions dragged revenue lower.
Net income attributable to shareholders for the period ending December 31, dropped to Dh164.37 million, the company said in a filing to the Abu Dhabi Stock Exchange, where its shares trade. Revenue for the reporting period fell an annual 5.6 per cent to Dh2.57 billion due to "challenging" regional market conditions and increased competition in export markets.
"In 2019, we witnessed stable performance, as we saw an increase in our total gross profit margin and our total Ebitda [earning before interest taxes, depreciation and amortisation]," Abdallah Massaad, group chief executive of RAK Ceramics, said. "Saudi Arabia has been a strong market for us predominantly in tiles, where we witnessed a substantial growth in Q4 which reflected positively on the year-on-year growth."
The company's business in Saudi Arabia recorded a 9.1 per cent increase in revenue to Dh271.9m, driven by growth in its wholesale business in the kingdom. The projects segment in the country was "stable", while revenue from the tiles business grew 6.9 per cent to Dh248.7m and sanitaryware revenue increased 41.6 per cent to Dh23.2m.
Overall, RAK Ceramics' tableware and sanitaryware businesses continued to grow, with revenues increasing by 2.2 per cent and 4 per cent year-on-year, respectively. Growth in the US, UAE and Asian markets, drove revenues in the tableware segment. The sanitaryware business expanded in all markets, except the UAE and Bangladesh, the company said.
The firm's board of directors recommended a 15 per cent cash and 5 per cent dividend in bonus shares.
RAK Ceramics is streamlining its operations in India by ramping up the production of slabs, increasing exports and reducing production costs. It will continue to invest in Asia's third-biggest economy as it plans to open showrooms in key Indian cities.
The company's priorities in 2020 are to maintain its market share in the UAE, Bangladesh and India; grow its market in Saudi Arabia and strengthen the overall performance of distribution entities in Europe, Mr Massaad said.
It also plans to increase its retail footprint by opening new showrooms in core markets.
Updated: February 12, 2020 12:11 PM