RAK Ceramics shares fell yesterday after posting a 6 per cent decline in second-quarter earnings from a year earlier to Dh85.9 million as revenue dropped 10 per cent to Dh803.8m.
For the first half, net profit slid 2.4 per cent even though turnover was largely flat at Dh1.55 billion.
However, its profit margin edged up 1.1 per cent to 30.4 per cent amid a 3.4 per cent decline in core revenue to Dh1.29bn.
The company said its performance was hit by economic challenges such as the euro’s weakening against the dirham and higher gas prices.
And although RAK Ceramics made respective one-off gains of Dh37.6m and Dh900,000 from selling its shares in RAK Laticrete and the Bangladeshi subsidiary RAK Mosfly, the company has written off Dh48.4m of its investment in a subsidiary in Sudan and Dh4.4m from its equity in Al Hamra Aluminium and Glass.
The sales of its equity in both companies are set to be concluded by the end of next month.
The company’s consolidated figures appeared to be weaker because of the impact of disposals and foreign exchange losses, but its plan to boost the company’s value was working, said Abdallah Massaad, the RAK Ceramics chief executive.
He said the company was now focusing on its home market in the UAE, the GCC countries, India and Bangladesh.
RAK Ceramics has been strengthening its Saudi Arabia operations, where three existing deals with distributors in the eastern, western and central areas have been supplemented with a representative office.
The office was opened to secure government projects, while a new 20,000 square metre warehouse in Riyadh was opened to “serve the mega projects” in the kingdom.
RAK Ceramics is also keeping an eye on Iran’s market, where it bought an 80 per cent stake in a factory in 2003.
It was closed following the imposition of international sanctions, but last week RAK Ceramics bought the remaining 20 per cent of the factory it did not own with a view to potentially reopening and upgrading the plant when the sanctions are lifted.
“It’s [Iran] a good location. From there, we can enter Russia, central Asia and the central Europe markets,” said Mr Massaad.
Sanyalaksna Manibhandu, the NBAD Securities head of equities research, said RAK Ceramics should be achieving better results given its position as the third-biggest producer of sanitary ware in the world and the biggest in Asia.
“The stock can go a lot higher if it removed some of the drags on its top line and its bottom line, but it is a nice story for this part of the world,” he said.
RAK Ceramics shares closed down 1.1 per cent at Dh3.45 yesterday but they are still up more than 18 per cent for the year.
mfahy@thenational.ae
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