RAK Ceramics plans to sell its stake in a pharmaceutical business in Bangladesh as part of its plans to divest non-core assets.
RAK Ceramics Bangladesh will sell its 55 per cent stake in RAK Pharma, the Ras Al Khaimah-based firm said. It did not reveal the identity of the buyers. The firm is offloading all its shares in RAK Pharma, it added.
“Firstly, our strategy is to focus on our core activities – tiles, sanitaryware, taps and faucets and tableware. In addition, RAK Pharma is a loss-making division so it makes good business sense to sell it at this time,” the chief executive Abdallah Massaad said. “The RAK Ceramics Bangladesh board had previously approved the increase in capacity of tiles and sanitaryware production in Bangladesh and this expansion is already under way and will be completed in 2015.”
In Bangladesh, work is under way to increase sanitaryware production to 4,350 pieces a day from 3,350 pieces a day.
The Abu Dhabi-listed company will also expand its tile production by 10,000 pieces a day in the third quarter of next year in Bangladesh.
RAK Ceramics said last week that it planned to sell its business in Sudan and use the proceeds from the sale to increase its production capacity in the UAE.
The transaction will also help the company avoid operational issues regarding the import of raw materials and spares.
It will also prevent further financial losses stemming from hyperinflation and foreign-exchange losses.
The company’s losses in Sudan reached Dh16.48 million at the end of September this year. The sale of the Sudan business was expected to be concluded by the end of March next year, said RAK Ceramics.
The company said it plans to increase its sanitaryware production in the UAE by 500,000 pieces a year, but did not elaborate.
At present, it produces 8,000 pieces of sanitaryware a day in the UAE and 12,000 pieces a day globally, according to its website.
RAK Ceramics’s net profit in the third quarter fell 15 per cent because of hyperinflation accounting in Sudan and Iran, where it took a Dh46.8m hit because of currency devaluation. RAK Ceramics shares closed flat at Dh3 yesterday.