Rak Ceramics to sell Sudan business

RAK Ceramics is planning to increase its sanitary-ware production in the UAE by 500,000 pieces a year. Jaime Puebla / The National

RAK Ceramics plans to sell its business in Sudan and use the proceeds from the sale to increase its production capacity in the UAE.

The Abu Dhabi-listed company, one of the world’s biggest makers of ceramic tiles and sanitary ware, did not reveal the identity of the buyers or the value of the sale in its announcement yesterday.

The sale, which is subject to regulatory approval, is part of the company’s strategy to divest its non-core businesses.

The transaction will also help the company to 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 deal was expected to be concluded by the end of March next year, said RAK Ceramics.

“The company has received an initial non-refundable cash deposit from the prospective buyers,” it said.

“Upon completion RAK Ceramics would have exited its business in Sudan in entirety, and this investment would have realised cash for further expansion in high-margin sanitary-ware business in the UAE.”

The company said it was planning to increase its sanitary-ware production in the UAE by 500,000 pieces a year, but did not elaborate.

It presently produces 8,000 pieces of sanitary ware a day in the UAE and 12,000 pieces a day globally, according to its website.

RAK Ceramics is ranked 12th globally in sanitary ware production, according to Ceramic World Review.

Besides its 10 plants in the UAE, the company has plants in China, Bangladesh, India and Iran. Its global production of tiles exceed 360,000 square metres.

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.

The company opened a factory in Iran in 2004 with funding from the International Finance Corporation, a World Bank subsidiary that funds private-sector ventures.

Third- quarter revenue fell 10.7 per cent to Dh823.3m as the company scaled down its non-core activities. Revenue from non-core businesses declined 38.2 per cent.

In India, RAK Ceramics plans to expand its production to 3,500 pieces a day from 2,100 pieces a day in the first quarter of next year.

In Bangladesh, work is under way to increase sanitary ware production to 4,350 pieces a day from 3,350 pieces a day.

RAK Ceramics will also expand its tile production by 10,000 pieces a day in the third quarter of next year in Bangladesh.

The UAE remains the company’s major growth market, with revenue growth of about 20 per cent a year.

The company’s net debt stood at Dh1.5 billion last month.

RAK Ceramics shares closed flat yesterday.

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