Anti-dumping duties on tiles from China and India improve outlook for RAK Ceramics

New tariffs that came into force last week ranging from 17.6%-106% 'will help us to increase our market share', says CEO

RAK Ceramics is well positioned to boost sales in GCC markets, its chief executive says. Courtesy: RAK Ceramics.

RAK Ceramics, one of the world’s biggest producers of ceramics, is optimistic about growth in Saudi Arabia and other GCC markets following the introduction of anti-dumping measures to protect local ceramics producers.

"We are well positioned to boost our sales in Saudi Arabia and across GCC region," Abdallah Massaad, group chief executive of RAK Ceramics told The National in an interview.

“Anti-dumping duties being introduced by the governments on import of ceramics from India and China will help us to increase our market share. We are also exempted from customs duties as a GCC company that will help in our growth.”

In April, the GCC Industrial Cooperation Committee approved the imposition of anti-dumping duties on ceramic tiles imported from India and China. Imports from India face duties ranging from 17.6 per cent to 106 per cent, while duties on Chinese imports will range from 23.5 per cent to 76 per cent. The measures came into force on June 10.

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Founded in 1989, RAK Ceramics exports its products, which includes sanitaryware and tiles, to more than 150 countries through a network of distributors in Europe, the Middle East and North Africa, Asia, North and South America and Australia. The company also has production plants in India and Bangladesh.

Mr Massaad is particularly optimistic about growth in Saudi Arabia, the Arab world’s biggest economy.

“We have a good market share, good reputation and already did many projects and therefore our sales in the first quarter have gone up in a big way,” he said.

Mr Massaad did not reveal the total sales in the first quarter in the kingdom. An earlier statement from the company said revenue in Saudi Arabia increased significantly when compared to the same period in 2019, driven by an 80.8 per cent increase in sales.

“We opened two showrooms in Riyadh and are opening two more showrooms in Jeddah. We are well set to grow in Saudi Arabia.”

The company is also implementing measures to mitigate the impact of Covid-19 on its business in different markets. It shut down production in India and Bangladesh and reduced its production in the UAE. It also took measures to manage its liquidity, including cutting discretionary expenses and placing non-essential capital expenditure on hold.

“We did what we all have to do to protect our company. We are very well in control and the company is in a good cash flow position. Every capex which is not needed now, we delayed it till after Covid.”

Capital expenditure is set to drop to Dh100-Dh125m this year, from Dh225m anticipated earlier, the company told analysts on an earnings call last week.

The company has also restarted operations in Bangladesh and at a plant in India in Andhra Pradesh. Its other India plant in the state of Gujarat remains shut.

RAK Ceramics, listed on Abu Dhabi Securities Exchange, reported an 18 per cent drop in its first-quarter net profit earlier this month as impairment losses climbed and revenue decreased amid the coronavirus pandemic.

Net profit for the three months ending March 31 fell to Dh30.2 million. Impairment losses on trade receivables and dues from related parties rose almost five-fold to Dh6m while revenue dropped 3 per cent to Dh593m.

“We are cautiously optimistic about growth in 2020,” Mr Massaad said. “We had a fairly good quarter and second quarter will be difficult for everyone. Starting from June, we can see [a] better market outlook and better demand as countries reopen their borders.”