RAK Ceramics, one of the largest ceramics’ brands in the world, said its total revenue for the first three months remained stable at Dh592.8 million ($161.3 million), decreasing by 2.7 per cent when compared to the same period in 2019, primarily due to lower sanitaryware and tableware revenue.
 
Announcing its financial results for the quarter ended March 31, RAK Ceramics said its net profit fell by 18.1% year on year to Dh30.2 million, with a margin of 5.1% decrease in revenue and investments in upgraded branding and showrooms, as well as higher freight costs.
 
Total gross profit margin increased by 110 bps due to improvements and efficiencies in operations of the tiles business. This was largely driven by efficiencies in the UAE, where production lines were optimised to match demand.
 
The Emirati company pointed out that the working capital and working capital days remained stable, reflecting the strength of the business.
 
A specialist in ceramic and gres porcelain wall and floor tiles, tableware, sanitaryware and faucets, RAK Ceramics has the capacity to produce 123 million sq m of tiles, 5 million pieces of sanitaryware, 24 million pieces of porcelain tableware and 1 million pieces of faucets per year at its 22 state-of-the-art plants across the UAE, India and Bangladesh.
 
RAK Ceramics was proactive in implementing a raft of measures designed to mitigate the impact of Covid-19 pandemic and the corresponding lockdowns across all its markets.
 
It was one of the first UAE companies to adopt social distancing, and apply working from home model to most of its administrative employees.
 
The company also completely shut down production in India and Bangladesh in line with the government’s guidelines as of the end of March 2020 and reduced production in the UAE, said the company in a statement.
Alternative sales channels have been opened in markets where retail operations are closed, and the Company’s website now includes a virtual reality showroom experience.
 
RAK Ceramics has taken measures to manage its liquidity, reducing discretionary expenses and placing non-essential capex plans on hold.
 
Saudi growth
 
Total revenue in Saudi Arabia increased significantly when compared to the same period last year, driven by an 80.8% increase in tiles revenue.
 
RAK Ceramics’ operations in Saudi Arabia followed the UAE business model, which has proved effective. The company is optimistic for long-term growth in Saudi Arabia post-Covid-19 economic recovery.
 
On the Q1 performance, Group CEO Abdallah Massaad said: "RAK Ceramics delivered satisfactory results in Q1 2020 considering the Covid-19 pandemic began to impact our business from the end of January."
 
"The nature of our business is closely linked to the construction and hospitality sector, which were heavily affected by the pandemic. We expect this situation to impact our performance in the next few months but we are confident given our stable results in Q1, our strong foundations and a sound business model, we will be able to face this unprecedented challenge and move forward," stated Massaad.
 
"To manage the impact of Covid-19, RAK Ceramics has implemented cost efficiency measures across all its operations, while prioritising the health and safety of our workforce," he explained.
 
"We have also taken measures to ensure our liquidity is managed and to mitigate the closure of retail channels by launching alternative options, including a virtual reality showroom experience on our website," said the top official.
 
Massaad pointed out that contingency plans were in place and being constantly updated to reflect the evolving situation.
 
"I believe that the strong foundation we have built up to date will help us navigate the current challenging environment and enable us to deliver value to our shareholders in the long term," he added.-TradeArabia News Service

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