RAK Ceramics, the world's biggest producer of ceramics, posted a 48 per cent drop in first-quarter profit as revenues declined and because of a gain on sale of contracting assets in the prior-year period.
Net profit attributable to shareholders in the first three months to March 31 reached Dh29 million from the year earlier period, the company said in a statement to the Abu Dhabi stock exchange. First quarter revenue fell 6.3 per cent to Dh620.3m year-on-year.
"We had a slow start to 2019 which we expect to make up over the coming quarters," chief executive Abdallah Massaad said. "Looking ahead to the remainder of 2019, we will develop a strategy to further counteract increases in energy costs and improve profitability in Europe and Saudi Arabia. Our business in India is on the right track, we hope to establish it as a hub moving forward."
Excluding a gain of Dh18.9m from the sale of contracting assets last year, first quarter net profit in 2019 "decreased by 20.7 per cent year on year primarily due to lower tiles revenue from UAE, Saudi Arabia, India and Bangladesh," the company said. "However, the sanitary-ware and tableware businesses performed well, with revenues increasing by 6.3 per cent and 15.1 per cent respectively year on year."
The company's first quarter Ebitda reached 97.9m compared to Dh107.5m in the same period last year.
RAK Ceramics, which is planning to invest in a production facility in Saudi Arabia, said discussions on land and gas allocation are underway for its expansion in the kingdom. The first phase would add approximately 10 million square meters per year to the company’s tile production capacity.
"RAK Ceramics remains focused on opportunistic acquisitions, as we optimize production and protect our growth in India, Bangladesh and the UAE," the company said.