RAK Ceramics to make India acquisition in H2 – CEO

RAK Ceramics to make India acquisition in H2 – CEO
RAK Ceramics CEO Abdullah Massaad
RAK Ceramics RAKCEC 0.00% 2.57 0.00

By: Amr Adel

Abu Dhabi – Mubasher: It is expected that Ras Al Khaimah Ceramic Company (RAK Ceramics) will make an acquisition in India sometime in the second half of 2017, CEO Abdullah Massaad revealed on Thursday.

Earlier in the day, RAK Ceramics, one of the largest ceramics companies in the world, said in a statement that its subsidiary in India was considering a 51% acquisition as part of a joint venture (JV) in an outsourced manufacturing facility in Morbi, Gujarat.

Acquisition talks are still underway, Massaad told Mubasher via a phone interview, adding that the deal was likely to be completed sometime in the third or fourth quarter of 2017.

RAK Ceramics CEO declined to comment on the value of the acquisition.

The Abu Dhabi-listed ceramics firm began developing its business in India in 2006 to benefit from the rising demand and construction projects. RAK Ceramics has three production lines in India, representing a little over 6% of its total production.

Revenues from the UAE market, RAK Ceramics’ largest sales market, have continued to rise in Q2-17, backed by strong demand and project sales, Massaad told Mubasher.

RAK Ceramics on Thursday reported a 73.3% rise in profits to AED 113.19 million ($30.81 million) in Q2-17 from AED 65.31 million ($17.77 million) in Q2-16, while profits for the first six months grew 35.4% year-on-year to AED 177.65 million.

RAK Ceramics will continue to expand in the UAE, the top official revealed, noting that the company plans to open a showroom in Dubai on the Sheikh Zayed Road sometime in late 2017.

The company currently has ten plants across the UAE, which continues to act as its main platform for the GCC, the Middle East, and Europe.

Commenting on the revenue decline from the Saudi market, the CEO attributed the drop to a slowdown in the market.

Quarter-on-quarter, revenues from tiles and sanitary ware in Saudi Arabia increased 27% to AED 64.6 million; however, figures were disappointing on a year-on-year basis.

As for RAK Ceramics’ projects in Bangladesh, Massaad revealed that the recent production capacities and expansions in recent years in the country have resulted in strong revenue growth in Q2-17.

It is likely that we will continue to develop our business in Bangladesh, he stated, adding that revenues for tiles and sanitary ware in the country rose 21% year-on-year to AED 76 million in Q2-17.

Investments

RAK Ceramics has already allocated AED 200 million for investments in 2017 in order to finance development operations, expansions, and acquisitions, Massaad told Mubasher.

In 2016, the CEO had told Mubasher that his company had invested AED 215 million in its expansion projects.

Divestiture

Responding to a question on RAK Ceramics’ non-core divestitures, the top official stated that these businesses are seeing a notable slowdown at the present time, indicating that returns from these investments have fallen to represent only 8% of the company’s total revenues by the end of H1-17, compared to 15% in 2014.

Earlier this year, RAK Ceramics announced exiting its stake in Electro RAK Group for AED 45 million.

Profit guidance

The CEO told Mubasher that he expects RAK Ceramics to see higher and improved results for the full-year 2017 compared to the previous year, as the company continues to apply cost-efficient strategies and maintain its profit margins.

Translated by: Nada Adel Sobhi

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Source: Mubasher Exclusive

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