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RAK Ceramics, one of the largest ceramics brands in the world, has posted a revenue of AED719.7 million ($196 million) for the fourth quarter (Q4) of 2020, marking a 15% quarter on quarter increase.
The company also recorded a provision of AED23.1 million in relation to one of its hotel assets.
The company reported a strong like for like net profit in Q4 which increased by 39.3% year on year to AED77.5 million.
Total gross profit margin increased by 80bps year on year to 34.4% in Q4 2020 and tiles gross profit margin is at an all-time high of 34.8% - increased by 350bps year on year.
The increases in gross profit margins reflect improved efficiencies and streamlined operations, placing the company in a strong position to continue to recover from the impact of Covid-19.
The company reported total revenues of AED2.35 billion, a decline of 8.7% due to a decrease in Q2 2020 revenue caused by Covid-19 lockdowns.
Performance started well in Q1 2020 but was negatively impacted in Q2 2020 due to Covid-19 pandemic lockdowns across all of the Company’s core markets. Markets recovered to pre-Covid-19 levels in Q3 2020 in both tiles and sanitaryware segments; however, tableware performance continued to suffer due to the second wave of Covid-19 lockdowns and hotel closures.
In Saudi Arabia, revenue increased by 57.9% year on year, due to the introduction of differentiated tile sizes and a focus on retail and wholesale sales and also backed by the imposition of anti-dumping duties. There is strong demand in Saudi Arabia for RAK Ceramics’ premium products.
In Europe, revenue increased by 2.7% year on year, driven by growth in the sanitaryware and tiles market. In the Middle East (excluding UAE and KSA), revenue increased by 12% year on year.
Total gross profit margin decreased by 120bps to 32% year on year due to lower revenue and losses from plant shutdowns during lockdowns in Q2 2020.
Reported net loss was AED126.2 million due to decrease in revenues and impairment and provisioning costs in relation to the impact of Covid-19.
Like for like net profit was AED147.3 million demonstrating RAK Ceramics’ healthy performance, when excluding the one-offs.
Healthy cash position
Despite the pandemic, RAK Ceramics was able to increase their cash flow from operating activities from AED466 million in December 2019 to AED523 million in December 2020.
Additionally, the company’s Net Debt level decreased by 10.6% year on year to AED1.23 billion, reflecting the strength of the business.
Abdallah Massaad, Group CEO, RAK Ceramics commented: “2020 was a challenging year across the board. RAK Ceramics was particularly impacted due to our exposure to the hospitality and real estate industries.”
“However, given our ability to act decisively during times of crisis, we were able to implement measures to manage the impact of Covid-19 which allowed us to achieve an accelerated recovery starting from Q3 2020 where we reached pre-Covid-19 levels of operation and performance, ending the year with strong results in Q4 2020 while delivering healthy revenue for the year.
“We were able to capitalise on the opportunity in Saudi Arabia and enhance our business in that market, while managing costs and delivering stable revenue in other markets. Our operations in Europe and India have improved, reflected in our gross profit margins.
“Looking ahead to 2021, our priority will be to enhance our global operations, while diversifying and improving profitability in export markets. We will also continue to invest in branding by opening new showrooms in core markets, while implementing measures to continue to manage the impact of Covid-19,” he added. – TradeArabia News Service
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