RAK Ceramics reports second-quarter loss of Dh11.6m as pandemic dampens demand

RAK Ceramics, one of the world’s biggest producers of ceramics, swung to a second-quarter loss as revenue fell due to the coronavirus-induced economic slowdown.

The company reported a loss of Dh11.6 million for the three months ending June 30, compared with a Dh61.2m profit in the same period last year, according to a statement to the Abu Dhabi Securities Exchange, where its shares trade. The results for the quarter missed a Dh6m net profit estimate by EFG Hermes.

“The miss was mainly driven by weaker-than-expected operations, which [were] hit by pandemic-related lockdown[s] in its major markets,” EFG analysts said yesterday.

Revenue for the period fell by 37 per cent to Dh411.3m.

“RAK Ceramics’ revenue in all markets except Saudi Arabia was negatively [affected] due to Covid-19 in the second quarter of 2020,” the company said. “There was a decrease in revenue in April and May as the business began to feel the impact of lockdowns and reduced demand in the construction, hospitality and airline industries.”

In the first half, profit fell by 84 per cent to Dh14.1m as revenue decreased by 21 per cent to Dh1 billion, the company said.

Founded in 1989, RAK Ceramics exports its products, which include sanitaryware and tiles, to more than 150 countries through a network of distributors around the world. The company also has factories in India and Bangladesh.

RAK Ceramics said operational measures it introduced to mitigate the impact of the pandemic resulted in early signs of recovery across the business from June.

The company has gradually restarted production in Bangladesh and India but said its tableware business was severely affected by the slowdown in the hospitality and airline industries. That segment of the

business is currently operating at 65 per cent capacity.

Production lines in the UAE were optimised during the downturn and began running faster last month to meet rising demand from Saudi Arabia.

“Going forward, I am cautiously optimistic on revenues. We saw a recovery in June and July, and August is going well. If nothing happens, we are going to recover,” group chief executive Abdallah Massaad told The National.

He said the company is now “going into the way of normality” in its core markets including the UAE, Saudi Arabia, Europe and Bangladesh.

“India will take [a] little time, while we are growing in Saudi Arabia, with sales rising 30 per cent in the first half of this year.”

The imposition of anti-dumping duties on tiles imported from India and China and the reopening of Saudi Arabia’s borders in June supported an increase in demand for RAK Ceramics’ products, the company said.