RAK Ceramics shares fell by 8.7 per cent after it revealed plans to adjust production as its third-quarter net profit dropped by 85 per cent on lower sales.
The company’s shares closed at Dh2.42.
“The prevailing situation in Saudi Arabia and other GCC markets is likely to stay challenging for the foreseeable future and the company is adjusting its production capacity to better reflect changing tastes, in line with market demand,” the company said in a statement to the Abu Dhabi bourse yesterday.
“At the same time, the company continues to look beyond the current environment to long-term drivers of growth.”
The Ras Al Khaimah-based company plans, from next year, to restructure its India operations to slash costs and increase revenues. The integration of the Germany, UK and Italy businesses this year will help the group attain long-term growth with cost synergies starting next year, the company said.
Net profit attributable to equity holders in the three months to September 30 fell to Dh11.37 million from Dh75.5m a year earlier. Third-quarter revenue fell by 17.5 per cent to Dh645.7m from Dh782.7m a year earlier.
“The third quarter of 2016 was characterised by a significant decline in volumes in the GCC due to seasonal effects as well as weaker business sentiment, in particular in Saudi Arabia,” said RAK Ceramics. “Volumes to Europe were also lower as the company undertook the centralisation of its European logistics causing some shipping delays, however these should be made up to some extent in the fourth quarter.”
RAK Ceramics’ Indian operations were weaker than last year because of lower volumes and selling prices.
The Bangladesh operation offset the lower levels in the Gulf, Europe and India, thanks to increased sales from expanded capacity and sales growth from a new product mix.
“Our Q3 results are reflective of the challenging construction environment in the GCC and did not come as a surprise,” said Abdallah Massaad, the chief executive of RAK Ceramics. “With a strong balance sheet, managerial depth and global distribution capabilities, we are better positioned than most to navigate the current environment.”
dalsaadi@thenational.ae
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