RAK Ceramics' profit plunges 35pc in Jan-March

RAK Ceramics' profit plunged 35 per cent year-on-year to Tk 156.49 million in January-March, owing to the energy price hike and volatile foreign exchange market raising inputs costs.

The country's largest and renowned tiles and sanitary ware maker's earnings per share (EPS) dropped to Tk 0.37 in the first quarter ended in March from Tk 0.57 in the same quarter a year ago.

The company's sales revenue saw a fractional rise of 0.14 per cent to Tk 2,009 million in the quarter, but the cost of sales rose 6.33 per cent.

The company managed to increase sales growth through a responsive business strategy, said company secretary Muhammad Shahidul Islam.

Production costs went up due to the gas shortage, electricity and gas price hikes and the stronger dollar while a staggering rise in raw material prices in the global market affected the profit growth, he said.

The company's net operating cash flow per share rose 2.20 per cent year-on-year to Tk 17.21 while net asset value per share jumped 74 per cent to Tk 1.93 in the Jan-March quarter.

The company's annual profit had fallen nearly 26 per cent to Tk 672 million in 2022.

Listed in 2010, the stock has remained stuck at the floor price -- Tk 42.90 -- since October last year.

Production costs in the ceramics industry have jumped up to 20 per cent due to a recent energy price hike, which adds to the list of crises threatening the sector's overall growth, industry insiders say.

The domestic ceramic industry has been severely affected by the Russia-Ukraine war, which led to a disruption in the global supply chain and energy crisis, according to an analysis by EBL Securities.

Despite challenges, the publicly-traded company announced two big investment decisions last year in a bid to expand its business and raise production capacity to meet the future demand.

In June 2022, the company decided to invest Tk 9.02 billion to build a new tiles factory in Gazipur. The company has also decided to invest in the faucets business by establishing a new factory with a manufacturing capacity of 1,500 pieces per day at a cost of Tk 950 million.

RAK Ceramics is the market leader in the tiles and sanitary ware segment with a market share of 16 percent and 30 per cent, respectively.

There are five ceramics makers listed in the stock market. Of them, four companies reported lower profits year-on-year in the first six months of FY23 due to the increase in energy prices as well as input costs.

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