RAK Ceramics profit fell during the first half of the year to nearly Dh150 million, while revenue fell after the company refocused on its core products.
The Abu Dhabi-listed company reported a net profit of Dh149.9 million, down from Dh151 million during the first half of last year. Net profit margins increased to 9 per cent in the first six months, compared to 8.6 per cent for the corresponding period last year.
The decrease [in revenue] came because “we are exiting the non-core activities and focusing on core businesses, which from now will be tiles, sanitaryware, tableware, faucets and adhesives,” said Abdallah Massaad, the chief executive of RAK Ceramics.
He predicted that revenue would continue to fall until output capacity for core products was sufficiently increased.
Revenue from non-core businesses, which included construction and property activities, decreased by 34 per cent.
Revenue from ceramic products increased by 3.9 per cent to Dh1.41bn, accounting for 84.9 per cent of the total revenue. The new focus follows the private equity firm Samena Capital’s acquisition of a 30.5 per cent of the company from Ras Al Khaimah’s ruling family.
In April, Samena Limestone, a subsidiary of Samena Capital, acquired the stake for an estimated Dh957m.
The emirate’s Ruler, Sheikh Saud bin Saqr Al Qasimi, who is also the RAK Ceramics chairman, continues to hold 20 per cent of the company.
“We are working closely [with Samena], and as private equity players they have the mentality of growing the business and creating value, which tallies with what we want,” Mr Massaad said.
The company exports 75 per cent of its products. Its largest market is the Arabian Gulf, with Saudi Arabia as number one, followed by the United Kingdom and Germany in Europe.
“Europe is a stable market but not growing, while the Gulf is a fast-growing market, so it balances out,” Mr Massaad said.
In the second quarter, the UK market saw no growth in construction output compared with the first quarter, according to the UK’s Office for National Statistics. In Germany, construction output decreased 2.5 per cent in May over the same period in the previous year.
In Saudi Arabia, the value of projects planned or under way is worth US$1 trillion, according to Meed.
RAK Ceramics also said that it would invest $100m in increased capacity in Bangladesh and India. It is adding a bigger kiln to increase production in Bangladesh by 35 per cent in a year’s time.
In India it is weighing an IPO to fund its expansion there, Mr Massaad said last week.
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