RAK Ceramics sees ‘gradual turnaround’ in India

RAK Ceramics posted a decline in net profit for the second quarter, citing rising energy costs and the expense of building up its brand in India. (RAK Ceramics PR)

LONDON: RAK Ceramics posted a decline in net profit for the second quarter, citing rising energy costs and the expense of building up its brand in India.
The Abu Dhabi-listed company said net profit stood at 55.1 million dirhams ($15 million) compared to 113.2 million dirhams in the same quarter last year.
Last year’s 2Q results were bolstered also by a one-off net gain of 34.8 million dirhams from the sale of RAK Warehouse, the company said in a filing on the Abu Dhabi exchange on Tuesday.
The Ras Al Khaimah-based company said that total revenues marginally decreased by 0.3 percent year-on-year. Core revenue rose by 2.6 percent year-on-year thanks to strong sales in the UAE and India, the company said.
“Our performance this quarter was stable and in line with expectations,” said Abdallah Massaad, group CEO of RAK Ceramics.
The company said its India business has seen a “gradual turnaround” in the quarter.
Last year, it completed an acquisition of a 51 percent stake in a joint venture of a ceramics manufacturing facility in Morbi, Gujarat.
Analysts said while challenges persist in the Gulf market, the company’s prospects in India looked promising.
“We expect the company’s operations, especially the core business (tile and sanitary ware), to remain under pressure in the medium-term, till we see a pick-up in the construction activity across the GCC,” said Michel Said, construction and materials analyst, at Ci Capital, in an email to Arab News.
“Nonetheless, we anticipate a turnaround in India — which represents 14 percent of the company’s sales — thanks to the company’s recent acquisitions in Morbi, bringing tile capacity to 18 million square meters by 2019, versus 8 million square meters currently,” he said.