THE MOST RE­SILIENT NAME IN CERAM­ICS

ABDALLAH MASSAAD HAS SEEN HIS COM­PANY THROUGH TWO ECO­NOMIC DOWN­TURNS, AND RAK CERAM­ICS IS STILL GO­ING STRONG

CEO Middle East - - BUSINESS - BY SHAYAN SHAKEEL

EACH DAY, RAK CERAM­ICS CEO ABDALLAH Massaad be­gins his day with a swim. For the 46-year old, swim­ming helps put the world of busi­ness in per­spec­tive. “It’s a big re­lease for me,” he says. “I al­ways be­gin and end my day with a swim.”

It’s a nat­u­ral sport for a man who has had to ride two waves of global eco­nomic tur­moil while lead­ing a giant among giants in the ceram­ics in­dus­try and keep it afloat. After all, ceram­ics is a dif­fer­ent world to­day than when RAK Ceram­ics be­gan op­er­a­tions in 1991, he says.

For a decade after the com­pany’s in­cep­tion, the red clay laden moun­tains of Ras Al Khaimah helped pro­pel the com­pany to a po­si­tion on the world stage in the mar­ket for wall and floor tiles. To­day, the com­pany also im­ports white clay from all over the world in a move help­ing it grow be­yond its ini­tial ceram­ics of­fer­ing into the UAE’s largest non-oil ex­porter, and one of the world’s big­gest ceram­ics tile man­u­fac­tur­ers that also pro­duces prod­ucts as var­ied as table­ware porce­lain to san­i­tary ware. The com­pany has strate­gic in­vest­ments across the world where it man­u­fac­tures prod­ucts in In­dia, Iran, and Bangladesh and at one point even China and Su­dan.

In the be­gin­ning, he key to suc­cess was all about get­ting off the board faster. “The first ten years were of speedy growth. The next 14 years saw us in­vest in fac­to­ries and dis­tri­bu­tion com­pa­nies around the world,” he says.

Over 70 per­cent of RAK Ceram­ics’ to­tal pro­duc­tion con­tin­ues to come from its fa­cil­i­ties in Ras Al Khaimah, 65 per­cent of which ac­count for prod­ucts marked for ex­ports and to be sold abroad in over 150 coun­tries. Since the turn of the mil­len­nium, the com­pany’s quest for growth saw it in­vest in tech­nol­ogy, fa­cil­i­ties and ex­per­tise be­yond its core busi­nesses. That in­vest­ment helped the com­pany grow in stature to a nearly $1 bil­lion busi­ness and the most im­por­tant com­pany in the North­ern Emi­rates of the UAE.

How­ever, de­spite its lead­ing mar­ket po­si­tion, the global down­turn in the early part of the decade meant the com­pany had to deal with its fair share of choppy wa­ters. The lat­est re­gional eco­nomic soft­en­ing, be­tween 2014 and 2016 was “a re­ally tough pe­riod for the com­pany,” says Massaad. “A lot of projects in the re­gion were placed on hold, com­pe­ti­tion in­creased while de­mand shrank, and of course the oil-prices fall­ing meant ex­pen­di­ture on in­fra­struc­ture also de­clined.”

The turn­ing of global eco­nomic for­tunes in the cur­rent decade pre­cip­i­tated the need for new think­ing re-gal­vanise the busi­ness, says Massaad. CEO at the com­pany since 2008, Massaad had been in­volved in the ceram­ics in­dus­try for well over two decades. That ex­pe­ri­ence proved in­valu­able in pro­ject­ing where the in­dus­try was headed, and fore­see­ing that a tur­bid global econ­omy was about to re­sult. He also knew what needed to be done keep its bal­ance dur­ing the storm.

Months of plan­ning fol­low­ing a 31 per­cent cap­i­tal in­jec­tion by Sa­mena Cap­i­tal in June 2014 turned RAK Ceram­ics into a com­pany worth nearly $1 bil­lion and jump­started a 2014 “value cre­ation plan” that aimed to fo­cus on the com­pany’s core busi­ness while of­fload­ing non­per­form­ing non-core units and ini­ti­ate a re-in­vest­ment in the vis­i­bil­ity of the brand, says Massaad. “The plan in­volved build­ing the prod­uct port­fo­lio through tech­nol­ogy that would boost brand vis­i­bil­ity,” says Massaad, adding that it meant long hours be­cause “ev­ery­one had to work harder.”

“The key was build­ing a good man­age­ment team for whom time was re­leased by en­cash­ing the non-core units to fo­cus on the core busi­ness and in­vest­ing in tech­nol­ogy to re­duce our ex­penses by im­prov­ing our pro­duc­tiv­ity across the board,” he says.

By the end of 2016, RAK Ceram­ics had ex­ited nearly all of its non-per­form­ing busi­nesses in­clud­ing its fa­cil­i­ties in China and Su­dan. In 2017, core-busi­ness net prof­its jumped 73 per­cent and con­trib­uted to a full year profit of AED 315 mil­lion. None of that would have been pos­si­ble if Massaad hadn’t adapted to a chang­ing tide and crafted a plan that while at­tempt­ing to slim the busi­ness down, still pur­sued an ac­tive cap­i­tal in­vest­ment in tech­nol­ogy to re­duce pro­duc­tion costs and im­prove ef­fi­ciency.

This al­lowed it to over­come pre­vail­ing macroe­co­nomic con­di­tions us­ing in­no­va­tive new prod­ucts in mar­kets where it op­er­ates, al­low­ing it to main­tain prices while also boost­ing sales. Ad­di­tion­ally, it re­ceived a boost from the UAE it­self.

“We ben­e­fit from Jebel Ali, from Dubai Air­ports, Ras al Khaimah Air­ports – each part of the coun­try’s in­fra­struc­ture helps us, and that is why we are a proud UAE com­pany.”

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