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Production line at an RAK Ceramics production facility

Production line at an RAK Ceramics production facility



Ceramics firm gears up for greater role

With the strategies it has put in place in recent months, the company bids fair to boost exports and revenues in coming years and become a more influential player

March 2016

Having attained full ownership of its operations in the UK, Germany, India and Iran,  RAK Ceramics is focused on expanding its exporting capabilities as well as consolidating its global position by continuing with restructuring efforts to streamline business, improve cash flow and enhance growth.

Last year the company implemented strategic and operational initiatives aimed at improving the efficiency and profitability of the business around the world.  It attained full ownership of RAK Ceramics UK, RAK Ceramics Germany, RAK Ceramics India and RAK Ceramics Iran. These 100 per cent acquisitions will allow RAK Ceramics to expand its export capacity in the near term and also support the company’s drive towards tighter integration of its business globally as well as the opportunity to consolidate its brand image and gain control over its brand and products, according to Abdallah Massaad, group chief executive officer of RAK Ceramics, UAE.

“The year 2016 will mark a year of further expansion and investment into its core businesses. Sanitaryware capacity will increase in the UAE by 22 per cent, in India by 52 per cent and in Bangladesh by 25 per cent, which should support growth in the near future and allow the business to maintain market share,” he said.

“RAK Ceramics set the scene for this year in 2015, when it began following a stringent Value Creation Plan set by the board in 2014,” said Massaad. 

The company divested its non-profitable, non-core businesses such as RAK Ceramics Sudan, RAK Logistics and a number of other businesses that were not related to tiles, sanitaryware, tableware and faucets.

“In line with the Value Creation Plan, revenue growth is a priority for RAK Ceramics,” said Massaad. “To support this growth and in line with the plan, the company made several key appointments designed to strengthen its leadership team and is now poised to capitalise on this investment and make opportunistic acquisitions to further strengthen our position.”

 

INITIATIVES

In 2014, RAK Ceramics’ board of directors approved the Value Creation Plan designed to unlock hidden value for its shareholders. The plan was implemented throughout 2015 with RAK Ceramics investing more in its core businesses, increasing capacities in core markets, and consolidating the interests of its global operations with full acquisitions. The company also restructured its management team, corporate governance structure and risk management activities—streamlining from the inside-out. It was a challenging year; however RAK Ceramics remained focused and successfully completed many Value Creation Plan initiatives.

Massaad: poised for growth in 2016

Massaad: poised for growth in 2016

RAK Ceramics ended 2015 satisfied with its performance; the board-approved plan is unlocking value across the business and the company is also increasing margins and enhancing operations in India, Bangladesh and Europe. RAK Ceramics has also been developing its B2B business and streamlining its global distribution networks.

 

REVENUE

Sales revenue was stable in 2015 despite continued global economic pressures such as the drop in oil price, according to Massaad.

“RAK Ceramics’ commitment to its Value Creation Plan has enabled the company to continue focusing on its initiatives to reinvigorate core activities and reduce non-core and non-profitable aspects of the business,” he said.   

“Net profits were healthy and exports led much of this growth. By the end of 2015, the value of exports from the UAE reached 70 per cent, with Europe being the largest importer of RAK Ceramics’ products. This year RAK Ceramics will expand its exporting capabilities, drawing on its strength in distribution and scalability,” he said.

 

MARKETS

RAK Ceramics is a global ceramics manufacturer that maintains a broad distribution and sales network around the world. Its primary focus markets are the Gulf region, India and Bangladesh, where it ranks among the top-four ceramics manufacturers, and it aims to expand its reach in the high-value markets of Europe and the broader Mena region.

In the GCC, RAK Ceramics most frequently exports both indoor and outdoor floor tiles, as well as external cladding. Living rooms, bathrooms and kitchens are the most popular application areas.

In Asia Pacific, ceramic tiles are applied in multiple application areas, both indoors and outdoors such as bathrooms, living rooms, kitchens, wall cladding, terraces and swimming pools. Although standard tile sizes such as 20 by 20 cm up-to 50 by 50 cm are still popular, larger tiles have also gained popularity over the last few years.

In Europe and North America, RAK Ceramics’ grès porcelain tiles are very popular. To suit the needs of these customers, RAK Ceramics uses the latest state-of-the-art technology to produce GP tiles with a wide range of effects. A great example is the Maximus Mega Slab, which RAK Ceramics launched in 2015 as an extra-large sized porcelain+ slab.

In 2014, RAK Ceramics’ top three export countries for tiles were Saudi, Germany and Oman.

“In sanitaryware, our top three export countries were Saudi, the UK and Italy. Saudi is a growing market for RAK Ceramics, close geographically and a net importer of both tiles and sanitaryware. Growth for the company in Europe has been as a result of market appreciation for its products and strong distribution network,” commented Massaad.

“As a whole our export sales (tiles) from the UAE have declined over the last two years as the company has concentrated on supplying demand in the UAE markets and achieving growth of 13.5 per cent in terms of volume and where margins are more favourable.”

 

NEW MARKETS

As RAK Ceramics continues to strengthen its global position, it also has plans to expand into new markets. Asia Pacific, for example, is a market with incredible growth potential for the ceramics industry.

RAK Ceramics will continue to advance its presence there by further activating its relatively new regional office in Singapore. 

Recent acquisitions in UK and Germany also provide a platform to strengthen RAK Ceramics’ position in other European markets.

RAK Ceramics was established in Ras Al Khaimah in 1989. The company has 10 state-of-the-art tile plants, two bathware plants and one each (faucets and tableware) at its headquarters in RAK, as well as overseas plants in India, Bangladeshand Iran.

RAK Ceramics also has a joint venture with German Kludi, a leading manufacturer of designer kitchen and bathroom fittings. Kludi RAK manufactures a range of designer faucets with advanced water saving technology.

With a turnover of $1 billion, the company employs 8,000 people in the UAE and 15,000 people worldwide.




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