RAK Ceramics net profit surges to Dhs169.7m

The annual general assembly of the company held at Hotel Al Hamra Fort here today also approved a 20% bonus share issue to the shareholders.

Dr Khater Massaad, CEO of RAK Ceramics, said that the the company was able to deliver a solid performance and achieve an impressive 35% revenue growth in 2007, despite the high energy prices and increase in freight and raw material costs.

Dr Massaad said that the annual revenue of the company touched Dhs2.27bn, posting a 35% increase from Dhs1.68bn in 2006. He said that the company achieved global production of 98 million square metres of tiles and 3.3 m pieces of sanitary ware in 2007.

"The company will strive to maintain its leadership position by sustaining the growth momentum through superior performance, identifying and entering new markets and offering unmatched product quality and service. The company is looking forward to having good results from the current investments and improving the sales and marketing efforts," he added.

According to the annual report the total assets of the company surged to Dhs4.26bn in 2007 from Dhs3.82bn in 2006. The total cost of sales has jumped from Dhs1.27bn in 2006 to Dhs1.83bn in 2007.

The financial summary presented at the meeting noted that the company has maintained its growth momentum even in the face of abnormally rising LPG prices, which rose from $531 per tonne to $912 per tonne, which resulted in an additional expense of Dhs75m. The company is looking forward to obtaining natural gas for a minimum of nine months in 2008 to offset expensive LPG consumption.

Another factor which has contributed to increase in cost of sales was the volatility in USD- Euro rates which contributed to 15% to 35% increase in commodity and raw material prices and the rise in international freight costs.

According to the report, RAK Ceramics has made considerable investments in new joint ventures, with the company involved in a total of 32 joint ventures and projects, including 12 operating joint ventures, 11 ceramic distribution companies and other nine new joint ventures. The investment of RAK Ceramics in distribution companies and other joint ventures stood at Dhs133.1m as on December 2007. RAK Ceramics total share of profit from these joint ventures stood at Dhs90.4m in 2007.

The new joint venture projects which would be set up in 2008- 09 include RAK Paints LLC, RAK Warehouse Leasing LLC, and 70% stake in Acacia Hotels LLC which would set up four- star hotels.

On the growth front, the financial summary presented a favorable picture with the company looking forward to leveraging the opportunities presented by the huge demand for building materials in the GCC, which has over $1.6 trillion worth of announced projects. The company has orders in hand of 18 m square metres of tiles and 1.4 m pieces of sanitary ware.

Sheikh Ahmed bin Humaid Al Qasimi, Member of the board of Directors and Hamad Mutawaa, Managing Director of the company were present at the meeting.