RAK Ceramics’ net profit for Q4 2020 up 39%

RAK Ceramics has announced its financial results for the quarter and year ended December 31, 2020, with total revenue standing at Dh2.35 billion for 2020, impacted by lower revenue in Q2 due to the Covid-19 lockdowns.

Excluding Q2 2020, revenue increased by one per cent. Covid-19 has had a significant impact on real estate and tourism, with lockdowns and restrictions resulting in reduced demand for RAK Ceramics’ products in the first half of 2020.

Additionally, due to the slump in real estate, and in line with the company’s accounting policy to assess impairment to the carrying values of investment properties annually, RAK Ceramics revalued its land assets which resulted in an impairment loss of Dh213.2 million. The company also recorded a provision of Dh23.1 million in relation to one of its hotel assets.

Operations across global markets in the UAE, Saudi Arabia, India, Bangladesh and Europe continued to rebound in Q4 2020, leading to a 15 per cent quarter on quarter increase in Q4 revenue to Dh719.7 million. The company reported a strong like for like net profit in Q4 which increased by 39.3 per cent year on year to Dh77.5 million.

Total gross profit margin increased by 80bps year on year to 34.4 per cent in Q4 2020 and tiles gross profit margin is at an all-time high of 34.8 per cent - increased by 350bps year on year. The increases in gross profit margins reflect improved efficiencies and streamlined operations, placing the company in a strong position to continue to recover from the impact of Covid-19.

The company reported total revenues of Dh2.35 billion, a decline of 8.7 per cent due to a decrease in Q2 2020 revenue. Markets recovered to pre-Covid-19 levels in Q3 2020 in both tiles and sanitaryware segments; however, tableware performance continued to suffer due to the second wave of Covid-19 lockdowns and hotel closures.

Total gross profit margin decreased by 120bps to 32 per cent year on year due to lower revenue and losses from plant shutdowns during lockdowns in Q2 2020. Reported net loss was Dh126.2 million due to decrease in revenues and impairment and provisioning costs in relation to the impact of Covid-19.

Abdallah Massaad, group CEO, RAK Ceramics, said: “2020 was a challenging year across the board. RAK Ceramics was particularly impacted due to our exposure to the hospitality and real estate industries. However, given our ability to act decisively during times of crisis, we were able to implement measures to manage the impact of Covid-19 which allowed us to achieve an accelerated recovery starting from Q3 2020 where we reached pre-Covid-19 levels of operation and performance, ending the year with strong results in Q4 2020 while delivering healthy revenue for the year.”

He added: “We were able to capitalise on the opportunity in Saudi Arabia and enhance our business in that market, while managing costs and delivering stable revenue in other markets. Our operations in Europe and India have improved, reflected in our gross profit margins. Looking ahead to 2021, our priority will be to enhance our global operations, while diversifying and improving profitability in export markets. We will also continue to invest in branding by opening new showrooms in core markets, while implementing measures to continue to manage the impact of Covid-19.”

business@khaleejtimes.com