RAK Ceramics' earnings drop 32pc on costlier energy, raw materials

RAK Ceramics' profit plunged 32 per cent year-on-year to nearly Tk 129 million in April-June, owing to energy price hikes and increased production costs due to a staggering rise in raw material prices in the global market.
The country's largest and renowned tiles and sanitary ware maker's earnings per share (EPS) dropped to Tk 0.30 in the second quarter ended in June from Tk 0.44 in the same quarter a year before.
Sales revenue saw a fractional rise of 0.55 per cent to Tk 1.80 billion in the quarter, but the cost of sales rose 7 per cent to Tk 1.36 billion, according to its un-audited financial statements published on Tuesday.
The company's profit dropped 34 per cent year-on-year to Tk 285 million in the first half through June this year although sales revenue remained the same at Tk 3.81 billion.
Company secretary Muhammad Shahidul Islam could not be reached for comments.
However, an official of the company said production costs had gone up due to electricity and gas price hikes and the stronger dollar against the taka, while a significant jump in raw material prices in the global market affected the profit growth.
Production costs in the ceramics industry have jumped up to 20 per cent on an average due to energy price hikes, adding to the list of crises threatening the sector's overall growth, industry insiders say.
On top of that, RAK's administrative expenses surged 26 per cent year-on-year to Tk 113 million in the latest quarter due to raging inflation, said the official.
Last year, the company's annual profit fell nearly 26 per cent to Tk 672 million. It disbursed 10 per cent cash dividend.
The stock has remained stuck at the floor price -- Tk 42.90 -- since October last year.
The domestic ceramic industry has been severely affected by the Russia-Ukraine war that caused a disruption in the global supply chain and energy crisis, according to EBL Securities.
Despite challenges, the publicly-traded company announced two big investment decisions last year in a bid to expand its business and 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. It has also planned 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 per cent and 30 per cent respectively.

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