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RAK Ceramics profit dips as costly energy pushes up costs

Staff Correspondent
19 Jul 2023 21:45:08 | Update: 19 Jul 2023 21:45:08
RAK Ceramics profit dips as costly energy pushes up costs

RAK Ceramics (Bangladesh) Ltd, the country’s largest tiles and sanitaryware maker, reported a 34 per cent year-on-year profit fall in the first six months of the calendar year 2023.

The ceramic maker has braced for this misfortune as an unprecedented hike in gas and electricity prices as well as a staggering surge in raw materials prices in the global market drained its earnings to a massive extent.

The UAE-Bangladesh-based joint venture firm’s net profit fell to Tk 28.5 crore in the January-June period this year from Tk 43 crore in the same period last year.

The publicly traded company said its sales rose marginally in the first half of the current year to Tk 381.39 crore from Tk 380.30 crore in the same period a year ago.

The company’s earnings per share (EPS) fell to Tk 0.67 in January-June this year, down from Tk 1.01 reported for the corresponding period last year.

The publicly traded firm said in an official disclosure through the Dhaka Stock Exchange (DSE) on Wednesday that its earnings fell due mainly to the non-availability of adequate gas, an increase in gas prices and electricity prices, the volatility of the foreign currency market, and disruptions in the global supply chain.

The ceramic maker’s profit dropped by 32 per cent year-on-year to nearly Tk 12.9 crore in April-June quarter of the ongoing year. The renowned tiles and sanitaryware maker’s earnings per share declined to Tk 0.30 in the current year’s second quarter from Tk 0.44 reported for the same quarter last year.

The company’s sales revenue saw a fractional rise of 0.55 per cent to Tk 180 crore in the quarter, but the cost of sales rose 7 per cent to Tk 136 crore in the same quarter.

As per its unaudited financial report, the company’s consolidated net operating cash flow per share (NOCFPS) was Tk 0.08 negative for January-June 2023 against Tk 0.03 for the same period of 2022.

Its consolidated net asset value (NAV) per share was Tk 17.51 as on June 30, 2023, which was Tk 17.28 as on June 30 last year.

RAK Ceramics is a UAE-Bangladesh joint venture company engaged in the manufacturing and marketing of ceramic tiles, bathroom sets, and all types of sanitaryware. It is the country’s largest and most renowned tiles and sanitary ware brand.

It operates through the following segments— ceramics and sanitaryware, power and security services and others. The ceramics and sanitaryware segment manufactures and markets ceramic tiles, bathroom sets, and all types of sanitary ware.

The company’s net profit fell by over 25.5 per cent in 2022 over the previous year, after it grappled with multiple crises in the year, which included the production cut by the gas shortage, a hike in raw material 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 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.

On July 21 last year, the country’s leading ceramic maker announced its board of directors had decided to invest in the faucet 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.

On June 14, 2022, the company informed DSE 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 crord.

RAK Ceramics stocks remained stuck at the floor price of Tk 42.90 each since October last year on the Dhaka bourse.