RAK Ceramics Q3 2016 revenues decline 8.3% YoY
Weak business sentiment impacts RAK Ceramic’s sales volume in the third quarter of 2016 as principal revenues drop by 5.1% YoY
RAK Ceramics witnesses a decline in sales volume in the third quarter of 2016.
Announcing results for the third quarter of the year, the Ras Al Khaimah-based ceramic firm stated that Q3 was characterised by a significant drop in volumes in the GCC due to seasonal effects as well as weaker business sentiment, particularly in Saudi Arabia.
Volumes for Europe were also lower as the company undertook the centralisation of its European logistics, causing some shipping delays, though these should be made up to some extent in the fourth quarter.
Performance of the Indian operation stayed flat QoQ, but was lower than in 2015, on lower volumes, and average selling prices.
For the nine months ending 30 September 2016, overall group revenue reached $582mn (AED2.14bn); decreasing by 8.3% YoY.
Principal revenue from the three core business activities: tiles, sanitary ware and tableware decreased by 5.1% YoY reflecting market conditions.
The group’s consolidated gross margin increased by 90 basis points (bps) to 29.7% YTD driven by an 840 bps improvement in non-core gross margins whereas the core gross margin fell slightly.
Despite a challenging environment, there is strong momentum underpinned by the foundations of the business.
The prevailing situation in Saudi Arabia and other GCC markets is likely to stay challenging for the foreseeable future and the company is adjusting its production capacity to better reflect changing tastes, in line with market demand.
At the same time, the company continues to look beyond the current environment to long term drivers of growth.
Abdallah Massaad, RAK Ceramics’ group chief executive officer said: “From 2014, we invested heavily in strategic activities to drive RAK Ceramics’ profitability and unlock value for shareholders.
“We are optimistic about our long term growth opportunities as a result of our ongoing investments in our people, our brand and in world class manufacturing technologies.
Our Q3 results are reflective of the challenging construction environment in the GCC and did not come as a surprise," he added.