RAK Ceramics announces second quarter 2016 financial results

RAK Ceramics, one of the world's largest hi-tech manufacturers of lifestyle ceramics solutions, yesterday announced its results for the second quarter ended 30th June 2016. 

Despite a slowdown in construction activity in the GCC and the impact of geopolitical uncertainty in some of the regional export markets, RAK Ceramics continued to successfully deliver on its long term Value Creation Plan in the first half of 2016. Integrating European distribution alongside continued expansions in Bangladesh and the UAE were some of the main initiatives in the quarter, confirming efforts from the group to continue strengthening its core businesses in strategic markets. 

Results in Q2 reflect current market conditions. Overall, the group's consolidated net revenue reached AED 757 million in Q2 2016, decreasing by 5.9% YoY, mainly due to a decline in non-core revenues (3.6% decrease in H1 2016 to AED 1.49 billion). Consolidated gross margin for the period rose to 29.5%, increasing by 220 bps YoY, driven by improved non-core margins according to plan (H1 2016 at 29.8%, increasing by 190 bps YoY). 

EBITDA for Q2 2016 decreased by 7.6% YoY at AED 144.3 million (held strong with a slight decrease of 0.8% in H1 2016 to AED 282.6 million). EBITDA margin in Q2 2016 remained stable at 19.1% (in H1 2016, it increased by 50 bps at 18.9%). 

During the period, RAK Ceramics performed a series of restructuring activities across Asia and Europe. In India, a new CEO was appointed and over the coming months will be building a team to strengthen Indian operations. Europe achieved a significant milestone with the integration of the British and German teams under the RAK Ceramics Group, following the acquisition of both subsidiaries in February 2016; cost synergies are thus expected in 2017. Additionally, consolidation of the Italian subsidiary is underway and is expected to be complete in Q3 2016. 

Despite a slower growing economy across Europe, overall sales increased by 11.1% QoQ, showing positive impact of control on improving operations. Tiles sales increased by 11.7% and sanitaryware sales increased by 9.4% QoQ in Q2 2016. 

Abdallah Massaad, RAK Ceramics' Group Chief Executive Officer, said, "We are focused as a group to strengthen the company's global presence by carrying out strategic global initiatives despite the on-going challenges in our region. There are a number of encouraging signs that will support RAK Ceramics' growth and we have an ambitious plan for the group's future development. In Q2, we maintained our approach of focusing on increasing efficiencies by strengthening our core businesses, consolidating our operations in core markets and streamlining costs. With 25 years of ceramics expertise, the company is in a very strong position to capitalise on its global network, wide product range and revitalised brand proposition to deliver long-term growth. RAK Ceramics is a real global competitor with solid foundations." 

Source: WAM