RAK Ceramics (RAKCEC) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 4.1% YoY to AED 802.5 million; 9M 2024 revenue fell 8.9% to AED 2.36 billion, mainly due to geopolitical tensions, inflation, and supply chain disruptions, with Bangladesh particularly impacted.

• UAE market remained resilient, with 13.6% YoY revenue growth in Q3 2024, supported by real estate and construction, while Europe, India, and Saudi Arabia faced headwinds from competition, oversupply, and logistics costs.

• Gross profit margin improved by 250bps YoY to 41.2% in Q3 2024, driven by favorable product mix, lower natural gas prices, and higher UAE sales.

• Net profit after tax for Q3 2024 was AED 55.9 million (down 33.3% YoY), with 9M 2024 net profit at AED 169.9 million (down 29.0% YoY), impacted by lower revenue and the new UAE Corporate Tax.

• Strategic focus on quality, innovation, and sustainability, with investments in production upgrades, retail expansion, and partnerships with major developers.

Financial highlights

• Q3 2024 revenue: AED 802.5 million (-4.1% YoY); 9M 2024 revenue: AED 2.36 billion (-8.9% YoY).

• Q3 2024 gross margin: 41.2% (+250bps YoY); 9M 2024 gross margin: 40.0% (+140bps YoY).

• Q3 2024 EBITDA: AED 146.2 million (-13.5% YoY); 9M 2024 EBITDA: AED 434.2 million (-9.8% YoY).

• Q3 2024 net profit after tax: AED 55.9 million (-33.3% YoY); 9M 2024 net profit after tax: AED 169.9 million (-29.0% YoY).

• Net debt increased to AED 1.57 billion in Q3 2024; net debt/EBITDA at 2.61x.

Outlook and guidance

• CapEx guidance for 2024 revised to AED 200–225 million.

• Focus on protecting market share, optimizing operations, and expanding into new markets and digital channels.

• Margin improvement expected in Faucets segment post-restructuring, with full benefits by 2026.

• Anticipates improved liquidity and credit conditions from interest rate cuts, potentially supporting real estate and business growth.

• Continued investment in brand, retail expansion, and production upgrades, especially in the UAE and Saudi Arabia.