RAK Ceramics posts solid Q1 sales growth

UAE-based RAK Ceramics, one of the largest ceramics brands in the world, has registered solid growth in the first quarter of 2017 with its total revenues surging by four per cent to Dh681.1 million ($185 million). Announcing its results for the three-month period ended March 31, RAK Ceramics said the growth of its core businesses was mainly driven by 13 per cent jump in tile revenues besides a stable growth in sanitaryware revenues of 2.9 per cent and 12.9 per cent increase in tableware revenues. The tiles and sanitary ware revenues were driven predominantly by the UAE market and increased sales to Saudi Arabia. Tableware sales were 40 per cent higher year-on-year (YoY) on account of the consolidation of Restofair, which took effect from January 1. Like for like tableware revenues increased 4.3 per cent compared to Q1 2016, said the statement from RAK Ceramics.. The company reported strong quarter-on-quarter (QoQ) performance with its total revenues surging to Dh681.1 million and core revenues hitting Dh620.6 million. However, compared to the same period in 2016, total and core revenues declined by 7.4 per cent and 3.7 per cent respectively, while the non-core revenues fell 33.5 per cent YoY, in-line with the company’s strategy to divest non-core operations, it stated. Revenues in the UAE, the company’s largest market, rose by 10.2 per cent QoQ and 5.4 per cent YoY. This growth was driven by a revenue increase of 17.9 per cent YoY in sanitaryware and 2.2 per cent YoY in tiles. The sales in Saudi Arabia, its other core market, surged by 85 per cent to Dh51 million compared to Dh27.6 million in the previous quarter. While still below Q1 2016 levels, the quarterly rebound appears to signal the beginning of a market recovery, it added. On the Q1 results, Group CEO Abdallah Massaad said: "Our first quarter performance came as expected. We successfully identified the UAE as a source of growth and we are pleased to see Saudi Arabia having turned a corner." "Our second half results should also benefit from a turnaround in sales in India and greater production from Iran. We continue to remain focused on cost efficiencies and anticipate better gross margins and lower overheads going forward, which we believe will increase profitability and shareholder value," explained Massaad. Driven predominantly by strong demand in the UAE and Europe, sanitaryware revenues grew by 9.6 per cent to Dh122.2 million compared to Dh111.5 million in Q1 2016, said the statement from RAK Ceramics. This increase is also demonstrative of the group’s ongoing investment in sanitaryware capacity expansions, it added. Massaad stressed that RAK Ceramics had shown positive momentum in gross margin improvements for the first quarter reporting core gross margins of 32.1 per cent, up 190bps YoY. Tile gross margins surged by 160bps YoY to 27 per cent, the highest quarterly result for RAk Ceramics since 2014, driven by improved production efficiencies across UAE tile plants,