RAK Ceramics reports 2% jump in third quarter profit
Excess supply of ceramics globally has put pressure on prices, its chief executive says
RAK Ceramics, one of the world's biggest producer of ceramics, reported a 2 per cent increase in its third-quarter net profit due to higher operating profit.
Net profit attributable to owners of the company in the three months to the end of September rose to Dh39.1 million, the company said in a statement to the Abu Dhabi stock exchange, where its shares trade. Operating profit climbed 3.4 per cent to Dh66.8m from the prior year period, while revenues fell 5 per cent year-on-year to Dh636m.
“Our performance has been in line with expectations amid challenging market conditions. Excess supply of ceramics globally has put pressure on prices and has created a competitive environment,” Abdallah Massaad, group chief executive of RAK Ceramics said.
“We are also focused on optimising production and increasing operational efficiencies by leveraging automation and process enhancements thereby improving margins.”
Looking ahead, the company will focus on sustaining its revenue in India, Bangladesh and the UAE, and improving its revenue in tableware and faucets and taps business, he said.
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During the nine-month period, the company’s profit dropped 7.18 per cent to Dh129.2m and operating profit reduced 6.34 per cent to Dh216.9m.
RAK Ceramics is strengthening its position in India by opening orientation centres and dealer outlets and its two production facilities in Morbi, Gujarat, operate at a 65 per cent and 100 per cent production utilisation, respectively, it said.
On Saudi Arabia, the company said it has completed the rationalisation of its work force and warehouses and “is starting to see the benefits".
The company is still in the process of studying and finalising the plans for the development of a new tiles manufacturing facility in the kingdom.
"The company was able to deliver stable operational metrics despite tough market conditions across its operating markets," EFG Hermes said in a note on Wednesday. "We believe new policy changes in the GCC region and Indian markets are more favourable in the medium term for organised sector players like RAK Ceramics, although short-term challenges would continue for some time."
Updated: November 6, 2019 01:07 PM