RAK Ceramics Q3 net profit up 43% on core businesses
The performance was largely driven by an increased level of activity across RAK Ceramics' core businesses in core markets and margin improvements in tiles and non-core businesses.
RAK Ceramics, a global hi-tech manufacturer of lifestyle ceramics solutions, announced its third quarter results ended September 30, 2015 on Tuesday by posting 43 per cent increase at Dh82.1 million against Dh57.4 million.
The performance was largely driven by an increased level of activity across RAK Ceramics' core businesses in core markets and margin improvements in tiles and non-core businesses. Adjusted net profit, excluding the impact of hyperinflation from Sudan and Iran increased by 10.2 per cent, reaching Dh90.7 million in Q3 2014 (Q3 2014: Dh82.3 million). Overall net profit increase was supported by controlled operating costs and procurement savings, which reached Dh15.2 million in Q3 2015, allowing the company therefore, to increase blended gross margins to 30.7 per cent from 26.9 per cent in Q3 2014.
Abdallah Massaad, chief executive officer of RAK Ceramics, said: "RAK Ceramics has delivered a strong performance in Q3 2015, demonstrating the core strength of our business. Over the past year, we focused on core business and growth opportunities in core markets and succeeded in delivering results. We invested, we grew, and we are on track to satisfy all elements of our value creation strategy. Additionally, RAK Ceramics made significant efforts this year to expand in new global markets." The company opened a representative office in Singapore during the year to expand its presence in Asian markets, which has already borne fruit, and is looking to expand its presence in the Americas towards the end of 2016 as the company leverages its international capabilities."
Results exceeded analysts' estimates and came in line with management expectations despite an ongoing dampening economic environment, a weaker Euro, higher natural gas prices and falling oil prices. This reflects the success of RAK Ceramics' refocused strategy and the continued execution of the 'Value Creation Plan' to invest in and expand core businesses and divest non-core businesses.
Tiles sales witnessed strong growth with a 3.5 per cent increase in the UAE at Dh122.3 million and a whopping 32.1 per cent increase in Saudi at Dh114.7 million. Changes in India's management put downward pressure on Q3 2015 performance but plans are in place to quickly revamp business activity and deliver on strategy.
Strong margin growth
Non-core performance was very solid in Q3 2015, underscoring management's commitment to unlock hidden value by turning around non-core businesses and substantially profiting from them ahead of exiting.In Q3 2015, non-core revenues decreased by 18.6 per cent, reflecting our scale down of these operations with a focus on improving their profitability towards an eventual exit.
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