Weaker demand pushes profit down at RAK Ceramics

RAK Ceramics

• Profits down 29% in Q3
• Revenue up 4% overall
• Supply chain challenges

RAK Ceramics, one of the world’s largest producers of ceramic products from tableware to sanitation, has reported a 29 percent drop in third-quarter net profit, caused by weaker demand and supply chain disruptions. 

Net profit attributable to the owners of the company, based in Ras al Khaimah in the UAE, for the three months to the end of October were AED54.5 million ($14.8 million), down from AED77 million in the same period last year. 

Revenue for the quarter rose by 4 percent annually to AED802.5 million.

“We continued to see significant headwinds across our operations in Q3, with ongoing geopolitical tensions and political instability, as well as inflationary and recessionary pressures in key markets leading to reduced consumer spending and overall weaker demand,” said Abdallah Massaad, group CEO of RAK Ceramics. 

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Massaad said supply chain challenges, foreign exchange pressures caused by currency depreciation, local competition across some markets and a rise in transportation costs also hurt the company’s margins and revenue.

He said the company remains committed to investing in the brand, offering new products and expanding its retail presence. 

In the UAE revenue was up 13.6 percent in the third quarter, primarily because of growth in the real estate sector. 

There was a 6.5 percent drop in revenue in Saudi Arabia “due to the continued price war situation and local competition” and a rise in transportation costs in the kingdom, the company said. 

Revenue fell 6.5 percent in Europe because of “demand being impacted by inflation and recessionary pressures and the ongoing geopolitical crisis”. 

In India revenue was down 7.2 percent year-on-year as inflation, higher interest costs and reduced consumer spending led to overall weakened demand. 

RAK Ceramics’ biggest drop in revenue was in Bangladesh where turnover tumbled 32 percent, a fall that was “mainly triggered by political instability in the country, which had a significant impact on the overall market and economic conditions. 

“Further, the continued gas crisis impacted our production, leading to losses in Bangladesh,” the company said. 

Massaad said RAK Ceramics’ priorities will be “protecting our market share, optimising our operations, further diversifying our offering, accelerating our digitalisation and growing our production capabilities.”

The company’s shares fell 1.5 percent in trading on Wednesday.