RAK Ceramics sales, profits rebound

With the economy and construction gaining pace in 2021, RAK Ceramics (Bangladesh) Ltd has come back on the track of selling its market-leading construction tiles and sanitary ware.

The publicly-listed company posted Tk685 crore in consolidated annual sales for 2021, the highest since 2017, and 30% higher from the dented base of 2020.

With an improved factory level profitability, the company's net profit after all taxes also rebounded to the highest since 2017.

"The revised and responsive business strategy helped the company improve the total sales, alongside better control of costs," the company said in a statement.

Sadhan Kumar Dey, chief operating officer (COO) and chief financial officer (CFO) of RAK Ceramics Bangladesh, told The Business Standard, "The construction sector rebounded well in 2021 while our sales grew even better."

In the pandemic situation, the company had accomplished many of its factory maintenance and modernisation tasks that enabled it for a record high production in 2021.

As soon as the market demand increased, it aggressively went for selling more.

The company, which went into a slowdown after 2018, has been more generous to credit sales to its dealers in the pandemic situation, it said while explaining the reason behind less growth in its net operating cash flow compared to the growth in sales.

"We provided our dealers with much more facilities and business convenience in 2021 than that by our competitors," Sadhan Kumar Dey said.

Since the first wave of Covid-19, the company's costs increased, but it decided to offset the increased costs through more production and sales instead of raising prices of its ceramic products used in building construction, according to the COO.

The company's gross profit margin – the ratio of sales revenue and cost of production – improved to near 30% which was in decline since the end of 2018 and dropped to below 23% in 2020 as the 66-day nationwide shutdown had dragged the company down to a quarterly loss in the April-June period and a 59% drop in annual profit.

A reduction in corporate tax by 250 basis points also helped the company book a higher net profit in 2021.

Securing a 200% growth in the 2015-20 period, Bangladesh's ceramics market grew to over Tk6,000 crore at the end of 2020, while the tiles and sanitary ware accounts for 75% of the annual market.

Local factories are catering to 77% of the tiles market, 96% of the tableware market and 90% of the sanitary ware market, according to RAK's 2020 annual report.

RAK Ceramics Bangladesh posted Tk2.87 in earnings per share for 2021 against Tk1.36 in the previous year.

Its shareholders are set to get Tk1.25 in cash dividends for the year against each share having a face value of Tk10 and a market value of Tk55.1 till Thursday at the Dhaka Stock Exchange.