RAK Ceramics, a UAE-based ceramics and sanitaryware manufacturing company, reported a decrease in its Q3 2023 revenue by 7.7% year-on-year to AED 837.0 million ($227.9 million). The decline was attributed to increased competition in Saudi Arabia, high imports from India, market challenges, and currency depreciation. Despite these factors, the company's net profit rose by 13.3% to AED 83.9 million ($22.8 million), driven by a strategic shift in product mix which improved the gross profit margin by +270bps year-on-year to 37.6%.
The company's EBITDA also saw an increase of 16.0% year-on-year, reaching AED 169.0 million ($46 million). This improvement was accompanied by a margin expansion of +410bps reaching 20.2%. RAK Ceramics managed to decrease its net debt by AED 49.8 million ($13.5 million) in Q3 2023, mainly due to the payment of AED 109.9 million ($29.9 million) interim dividend, which improved the Net Debt to EBITDA ratio from 2.44x to 2.43x.
On the downside, tiles revenue declined by -9.8% year on year due to increased competition and higher imports from India. Sanitaryware revenue decreased by -3.0% year on year due to market challenges and recession fears in Europe, while tableware revenue increased by +2.5% year on year.
Group CEO Abdallah Massaad credited the company's resilience amidst market volatility and geopolitical challenges to strategic shifts in product mix and a pivot towards project channel sales.
The company is currently undertaking expansion projects including capacity expansion of tableware manufacturing in the UAE and upgrading production facilities in UAE and India for improved efficiency and increased production capacity. Greenfield projects such as a new production facility in KSA and a Bangladesh Faucets plant are also underway. RAK Ceramics remains committed to implementing cost optimization measures and product mix improvements to sustain profitability, along with waste utilization and energy consumption initiatives for long-term sustainability.
In the first nine months of 2023, the company's net profits in Abu Dhabi fell to AED 220 million ($59.9 million), down from AED 223.86 million year-on-year. Revenues dropped to AED 2.59 billion ($705 million). Earnings per share (EPS) declined to AED 0.22, and total assets were valued at AED 5.35 billion ($1.46 billion), a decrease from year-end 2022's assets of AED 5.41 billion ($1.47 billion). Q3-23 saw a net profit drop to AED 76.99 million ($20.96 million) from Q3-22's AED 85.09 million ($23.17 million), and EPS fell to AED 0.08 from Q3-22's EPS of AED 0.09.
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