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Despite putting significant investments over the two last years to increase the production capacity, the profits of RAK Ceramics, a leading maker of tiles, sanitaryware, and porcelain tableware, shrank in the year 2022 due mainly to a staggering rise in production cost.
The company’s net profit fell by over 25.5 per cent year on year in 2022, after it grappled with multiple crises in the year which include the production cut by the gas shortage, a hike in raw materials prices, and volatile currency transactions.
The listed firm’s net profit dropped to Tk 67 crore in 2022 from Tk 90 crore in the previous year.
The ceramic maker could not achieve its sales target last year due mainly to its less-than-expected factory production caused by the gas shortage, while a staggering rise in raw materials prices and the strong dollar drained its earnings.
Meanwhile, the surging freight costs owing to the global economic volatility added an extra burden to its misery.
But, the publicly traded multinational in 2022 announced two big investment decisions in a bid to expand its business and raise production capacity.
The country’s leading ceramic maker on 21 July last year, announced its board of directors had decided to invest in the faucets business by establishing a new plant with a production capacity of 1,500 pcs per day at an estimated investment of Tk 95 crore, according to a Dhaka Stock Exchange (DSE) filing.
Earlier on 14 June 2022, the company informed that it had decided to increase its tiles production capacity by 15,000 square meters per day through a greenfield project at an investment of over Tk 902 crore, another DSE filing showed.
The tiles maker’s consolidated earnings per share (EPS) stood at Tk 1.57 in 2022 from Tk 2.12 in 2021.
The company’s hardship could prolong in the current year also because the government recently hiked gas prices for industries on a massive scale.
The government last month hiked the retail price of gas by 14.5 per cent to 179 per cent for industries, power plants, and commercial establishments, who together account for 78 percent of gas usage in the country.
The ceramics industry is heavily reliant on gas as ceramics production requires a high flow of gas supply to get the products finished, according to industry insiders.
The Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA) has been vocal about the adversity gas price hike, saying this staggering gas price hike could hamper the industry on an ominous scale.
The Board of Directors of RAK Ceramics offered a 10 per cent cash dividend to its shareholders for the year ending in December 2022.
It would hold the next annual general meeting (AGM) on 30 March where it is expected the shareholders would approve the declared dividend.
Apart from last year’s investment decisions, the multinational ceramic maker also announced big investment decisions in 2021.
The company, according to a DSE filing, announced on October 27, 2021, to upgrade the machinery of some of its existing tile plants – Plant 1, Plant 2, and Plant 4 – to enhance production capacity at a cost of Tk 52.5 crore.
The company’s consolidated net asset value (NAV) per share stood at Tk 17.85 for 2022 against Tk 17.53 for the previous year.
It reported a net operating cash flow per share (NOCFPS) of Tk 1.45 for the year ending December 2022 against Tk 1.36 for the previous year.
