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RAK Ceramics revenues climb 21.8% despite significant increase in logistics costs

The board recommended to the shareholders the approval of a dividend distribution, for the year 2021, of 20 fils per share, out of which 10 fils per share were paid in October 2021 as an interim dividend

RAK Ceramics on Monday announced that its annual revenues surged 21.8 per cent to Dh2.86 billion last year while net profit stood firm at Dh283.9 million despite the significant increase in logistics costs due to the global shortage of containers.

In a statement, the Abu Dhabi-listed company said its earnings before interest, taxes, depreciation, and amortization (EBITDA) also climbed 32.7 per cent to Dh501.3 million during the financial year 2021. RAK Ceramics said it delivered a robust financial performance in Q4 and 2021 with revenue and profitability surpassing pre-pandemic levels as total gross profit margin for 2021 reached an all-time high of 36.2 per cent.

The board of directors of RAK Ceramics has approved an amendment to the company’s dividend policy. The new policy stipulates a minimum dividend payout of 20 fils annually for financial year 2022 to be paid on a semi-annual basis and also provides for a commitment to pay a minimum dividend of 60 fils over the next three years such as 2022-2024.

The revised dividend policy will be subject to factors such as business outlook, capital requirement for growth opportunities, expansion plans, optimal leverage levels and healthy cash reserves in addition to regulatory approvals. The revised dividend policy will be presented to shareholders for approval in the next annual general meeting.

The board recommended to the shareholders the approval of a dividend distribution, for the year 2021, of 20 fils per share, out of which 10 fils per share were paid in October 2021 as an interim dividend.

“Despite the challenges, our business saw positive momentum and a gradual return towards normality with economic activities and trade resumption. We reported a significant revenue increase in the first quarter of the year, marking a five-year high in terms of profitability. In addition to this, we reported three consecutive quarters of positive revenue growth, which resulted in a healthy net profit,” Abdallah Massaad, Group CEO, RAK Ceramics said.

“Our priority in 2022 is to protect our market share and further strengthen brand perception in our core markets with a sustained investment in brand initiates such as new showrooms, retail outlet stores and e-commerce platforms.

“Despite rising input costs and supply chain disruptions we aim to sustain our current operating costs by enhancing our plants in UAE, India and Bangladesh, initiating the greenfield project in Saudi Arabia, and increasing selling prices to offset the increased freight costs in Europe.

Operational review

In the UAE, the company said its revenue decreased by 3.1 per cent year-on-year basis due to a slowdown in the project segment while in Saudi Arabia the company holds a strong position as a premium products provider and the strong demand in the Kingdom resulted in a revenue increase of 26.7 per cent for 2021.

In Europe, revenue increased by 17 per cent year-on-year basis but decreased quarter-on-quarter basis by 16.4 per cent, mainly due to higher shipping freight rates caused by the global shortage in shipping containers. RAK Ceramics’ relentless focus on providing world class product management resulted in increased customer base which saw an overall increase of revenue in 2021.

In the Middle East (excluding UAE and KSA), revenue increased by 48 per cent in 2021 considering that last year’s revenue was substantially impacted due to the pandemic.

In India, RAK Ceramics reported a strong revenue growth of 60.9 per cent for 2021 underpinned by positive business sentiments, which reflected in improved profitability, despite significantly higher fuel costs.

Government lockdowns in Bangladesh resulted in temporary suspension of production lines. However, the company demonstrated resilience and reported strong revenue growth of 30 per cent supported by differentiated products.

The company’s net debt level decreased to Dh971.2 million in December 2021 from Dh978.7 million in September 2021 after payment of interim dividend of Dh99.4 million. At the end of December 2021, the company’s net Debt to EBITDA stood at 1.94x compared to 3.25x in December 2020.

— muzaffarrizvi@khaleejtimes.com