RAK Ceramics (Bangladesh) Ltd, the country’s largest tiles and sanitaryware maker, reported a 70.5 per cent year-on-year fall in profits in the first three months (January-March) of 2024 as products sold at a very competitive price to customers, forcing it to survive amid a very unhealthy market competition.
The publicly traded company’s net profit after tax decreased to Tk 4.62 crore in the first quarter of the ongoing calendar year, from Tk 15.64 crore in the same period of last year, according to the company’s unaudited financial statements.
The UAE-Bangladesh joint venture firm said that its net profit decreased because products were selling at a very competitive price to the customers, surviving in a very unhealthy price and market competition.
Another reason for decreasing the net profit is the increase in finance expenses due to the rise in borrowings from banks as well as the increase in the rate of interest, the company said.
RAK's consolidated earnings per share (EPS) reached Tk 0.11 in Q1 of 2024, compared to Tk 0.37 in the same period of 2023, according to a filing on the Dhaka Stock Exchange (DSE).
The company's net operating cash flow per share (NOCFPS) was Tk 0.83 in Q1 of 2024, down from Tk 1.93 in January-March of 2023.
The NOCFPS has decreased mainly due to the longer credit period allowed customers to increase sales. As a result, the collection has not increased accordingly, the company said.
Its net asset value per share increased marginally to Tk 17.4 in this period from Tk 17.21 in the same period of 2023.
On the other hand, vendor payments for imported raw materials were more for the devaluation of taka against foreign currency and also increased the material rate compared to the selling rate of products, the company said.
The company’s Board of Directors decided that the corporate guarantee shall be issued by RAK Ceramics (Bangladesh) in favour of Al-Arafah Islami Bank Limited on account of its subsidiary, RAK Power Pvt Ltd against a credit facility of Tk 39 crore from the said bank subject to approval of the shareholders.
In August 2023, RAK Ceramics informed, the company will keep one of its four tiles production lines shut for three months due to a maintenance and modification move. The three other production lines will continue their production as usual.
The country's leading tiles manufacturer declared a 10 per cent cash dividend to its shareholders for the year 2023 which ended on December 31.
The company's net profit for 2023 stood at Tk 62 crore with EPS at Tk 1.44, which was Tk 67 crore and Tk 1.57, respectively, in 2022.
Listed in 2010, the company’s shares closed at Tk 29 per share on the trading floor of DSE on Thursday.
The company is headquartered in the UAE and operates in over 150 countries with operational hubs in Europe, the Middle East, North Africa, Asia, North and South America, and Australia.
RAK Ceramics' products include tiles, sanitary ware, and porcelain tableware, among others.
