RAK Ceramics reports stellar growth in Q2

RAK Ceramics (Bangladesh), country's leading interior products manufacturer, reported a stellar business growth in the second quarter this year riding on what the company says "a new marketing strategy".

In the April-June quarter this year, the United Arab Emirates (UAE) based multinational company posted a 205% year-on-year quarterly growth in revenue to Tk153.49 crore.

In the corresponding April-June quarter last year, the company earned only Tk50 crore in revenue thanks to the 66-day countrywide shutdown from March to curb the coronavirus spread.

The company's net profit in the second quarter this year stood at Tk22.05 crore and earnings per share Tk0.52.

RAK Ceramics manufactures tiles and sanitary ware under several brand names, and has four tile plants in Bangladesh with an annual production capacity of 12.30 crore square metres.

At the end of the first half this year, its net revenue stood at Tk326.87 crore, net profit at Tk43.55 crore, and earnings per share at Tk1.02.

"We could not use the full production capacity for 75 days due to factory maintenance and modernisation. Otherwise, our sales could have been more," said Muhammad Shahidul Islam, company secretary of the ceramic manufacturer.

"We have adopted a new marketing strategy to recover from the virus shock and to boost the business. There have been changes to the management as well," he told The Business Standard on their business expansion even amid the pandemic.

Shahidul said the growing competition in the ceramic market had already shrunk the profit, while the pandemic wreaked havoc on sales.    

"Following these two factors, we took the new strategy," he said without elaborating the approach.

Despite plenty of manufacturers in the local market, Bangladesh still has to import more than 10% of tile items.  

Being in the market for nearly 20 years, Shahidul said RAK Ceramics has built a strong base and brand image, which would shield their business from the growing competition.    

Rather, the company now highlights its product features designed to save the environment. RAK in its 2020 annual report mentions its technologically-advanced flush systems save as much as 33% water.

The annual report underscores resource recycling to ease pressure on landfills, and a clean development mechanism to reduce carbon footprints in the manufacturing process.

"Our industry has faced many periods of market volatility and shifting consumer preferences, and we have always navigated through them to emerge stronger with a more competitive position," Abdallah Massad, chairman of the company, said in the report.

RAK Ceramics (Bangladesh) started the journey in 2001 and got listed in the stock exchanges in 2010. The company has paid a 10% cash dividend to the shareholders for the last year despite a 59% profit fall due to the pandemic.

At the end of Thursday's trading session, RAK share prices closed at Tk40.80 each in the Dhaka Stock Exchange.

Ceramic industry booms on surging local, int'l demand

Bangladesh's ceramic industry market started gaining momentum in the last two decades though the sector commenced its journey in the 1960s.

The industry has witnessed substantive investments in the last decade or so as ceramic imports have now been replaced by exports.

According to the RAK Ceramics annual report, the domestic ceramic market size is pegged at about Tk6,000 crore annually.

The country's ceramics industry is estimated to double in size by 2023, aided by the growing domestic real estate industry, emergence of the affordable housing industry, attractive mortgage finance rates, rising demand for products in the EU markets and trade tensions between the US and China that is expected to benefit cost effective manufacturing destinations, said the report.

Total investments amounting to Tk8,616 crore have been made in the sector, which provides employment to more than half a million people.

Currently, there are more than 60 ceramic manufacturers in the country, with 20 more in the pipeline, including those who make tableware, tiles and sanitary-ware.

Major market players in this sector are Great Wall Ceramics, X Ceramics, DBL Ceramics, Akij Ceramics, and Sheltech Ceramics.

Local production can cater to 96% of tableware, 77% of tile and 89% of sanitary-ware demand.

Ceramic-making is rapidly progressing to become the third-largest sector in next five years as the Bangladeshi manufacturers supply the products to the international market.  

In the last fiscal year, ceramics export rose by 11% to $31.10 million compared to the previous year.