Ras Al Khaimah, United Arab Emirates: RAK Ceramics PJSC (Ticker: RAKCEC: Abu Dhabi), one of the largest ceramics lifestyle soluƟons providers in the world, announced today its financial results for the quarter ended 30 September 2023. As a result of unfavourable market cycle, currency depreciaton and rising interest cost, RAK Ceramics reported revenue of AED 837.0 million, a decrease of 7.7% year-on-year. Net profit for the period increased by 13.3% to AED 83.9 million compared to last year’s before one-offs.

  • Group Revenue in Q3 2023 experienced a decline of -7.7% year-on-year to AED 837 million, the revenue for the 9month period remained relaƟvely stable, showing a marginal decrease of just -1% year-on-year to AED 2.59 billion.
  • Gross Profit Margin improved by +270bps year-on-year surge to 37.6% driven by favourable product mix shiŌ  EBITDA increased by +16.0% year-on-year, reaching AED 169.0 million, with a notable margin expansion of +410bps reaching 20.2%.
  • Net Profit increased substanƟal by a 13.3% year-on-year increase compared with last year’s net profit before oneoffs, reaching AED 83.9 million, and the net profit margin expanded by a healthy +190bps, reaching 10.0% in Q3 2023.
  • Net debt decreased by AED 49.8 million in Q3 2023, and the Net Debt to EBITDA raƟo improved slightly from 2.44x to 2.43x quarter-on-quarter.

9M & Q3 Financial Highlights

Q3 2023 group revenues declined 7.7% to AED 837.0 million while 9M revenue marginally decreased by 1.0% year on year to AED 2.59 billion primarily aƩributable to conƟnued macro-economic challenges and the increased compeƟƟon in Saudi Arabia.

Gross margin for Q3 2023 increased by +270bps year on year to 37.6% while 9M 2023 margin improved by 80bps year on year at 37.6% driven by shiŌ in product mix and bolstered by the enhancement of brand equity.

EBITDA increased by 16.0% year on year to AED 169.0 million and EBITDA margin improved by +410bps year on year to 20.2%. On a 9M 2023 basis the EBIDTA increased to AED 481.4 million compared to 439.7m in last year. Margin increased to 18.6% compared to 16.8% in last year.

In Q3 2023, reported net profit dropped to AED 83.9 million from AED 90.1 million in Q3 2022, with a profit margin of 10.0% compared to last year's 9.9%. For 9M period, reported net profit is AED 239.1 million compared to AED 262.1million in last year and profit Margin is 9.2% compared to last year’s 10.0%.

Net debt decreased by AED 49.8 million in September 2023 at AED 1.5 billion compared to AED 1.45 billion in June 2023 mainly due to payment of AED 109.9 million interim dividend in UAE and minority in other units. Net debt to EBITDA decreased from 2.44x in Q2 2023 to 2.43x in Q3 2023.

Income Statement Highlights

  • Tiles revenue declined by -9.8% year on year at AED 475.4 million which was largely impacted from Saudi Arabia, Middle East, Bangladesh and African markets due to increased competition from the regional players and higher imports from India.
  • Sanitaryware revenue is lower by -3.0% year on year at AED 123.1 million due to challenges in all markets except UAE.
  • Tableware revenue increased by +2.5% year on year at AED 92.5 million driven by introduction of differentiated products.
  • Faucets revenue decreased by -2.5% year on year at AED 114.8 million in Q3 2023 due to lower sales in European markets.

CommenƟng on the results, Abdallah Massaad, Group CEO, RAK Ceramics said: “In light of the ongoing market volaƟlity and the challenging geopoliƟcal environment, RAK Ceramics has weathered these headwinds with resilience. While our revenue experienced a 7.7% decline in Q3 2023, our strategic shiŌ in product mix has been instrumental in sustaining our gross margin, a testament to our adaptability and forward-thinking approach

In the face of competition and pricing pressures in UAE, we achieved an impressive 23.4% year-on-year revenue growth in Q3 2023 This remarkable performance was driven by our strategic pivot towards project channel sales, highlighƟng our ability to idenƟfy and seize opportuniƟes in dynamic markets.

The formidable competition posed by local players did affect our revenue in certain regions, but our commitment to offering differentiated products allowed us to safeguard our gross margins. In KSA, revenue dipped due to local compeƟƟon, but higher gross margins were achieved through increased interest in unique products.

In Europe, especially in the UK, recession fears, currency devaluaƟon, and higher interest costs contributed to a downturn, impacƟng Sanitaryware and KLUDI's performance. However, raƟonalizaƟon of freight cost compared to last year has allowed us to relaƟvely improve the overall margins in Europe. In India, despite lower demand and currency devaluaƟon, we achieved a 5% year-on-year revenue growth in Q3 2023. In Bangladesh, currency devaluaƟon and local compeƟƟon affected revenue, but anƟcipated future expansion is on the horizon, parƟcularly in light of the foreseen poliƟcal stability following the upcoming elecƟons.

On a positve note, our Tableware business displayed robust growth, with increase in revenue by 2.5% year on year and gross profit margins by 110bps year on year.

As we move forward, we remain commiƩed to implemenƟng cost opƟmizaƟon measures and product mix improvements to sustain our profitability. Our ongoing efforts to make long term investment towards sustainable iniƟaƟves such as waste uƟlizaƟon and energy consumpƟon, strengthen our brand presence, enhance customer value, and improve producƟon efficiency will enable us to navigate these challenges effecƟvely and conƟnue our growth trajectory."

Strategic Highlights

Expansion projects

  • The capacity expansion of tableware manufacturing by 10 million pieces in the UAE has been successfully finalized, and the trial testing phase for commercial production has begun. The subsequent production increases will be implemented gradually, in accordance with market demand.
  • We are also evaluaƟng upgrading the UAE and India producƟon faciliƟes, with the goal of bringing in producƟon efficiencies driven by innovaƟon and improve the current production capacity.
  • In Bangladesh, upgradation work to enhance the existing tiles line is under implementation.

Commercial production is set to commence in Q1 2024 Greenfield projects

  • We have obtained all the required approvals and permissions for the Bangladesh Faucets plant, including the land mutation certificate. Our next steps involve completing the design of the factory layout and commencing construction in Q4 2023.
  • We continue to work on having a production facility in KSA.

About RAK Ceramics

RAK Ceramics is one of the largest ceramics’ brands in the world. Specialising in ceramic and gres porcelain wall and floor Ɵles, tableware, sanitaryware and faucets, the Company has the capacity to produce 118 million square metres of Ɵles, 5.0million pieces of sanitaryware, 26 million pieces of porcelain tableware and 2.6 million pieces of faucets per year at its 24 state-of-the-art plants across the United Arab Emirates, India, Bangladesh and Europe.

Founded in 1989 and headquartered in the United Arab Emirates, RAK Ceramics serves clients in more than 150 countries through its network of operaƟonal hubs in Europe, Middle East and North Africa, Asia, North and South America and Australia.

RAK Ceramics is a publicly listed company on the Abu Dhabi SecuriƟes Exchange in the United Arab Emirates and as a group has an annual turnover of approximately USD 1 billion.

Contact Us
If you have any questions or require further information, please do not hesitate to contact our investor relations department.
Investor Relations: RAK Ceramics PJSC
Bhoutik Vyas
E. ir@rakceramics.com
Further informaƟon is available online at www.rakceramics.com