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RAK Ceramics to exit non-core businesses

rak ceramicsRas Al Khaimah Ceramics, the world’s largest maker of ceramic tiles, plans to focus on core products and exit such businesses as construction, Chief Executive Officer Abdallah Massaad said.

“We will continue to reduce our non-core businesses,” Massaad said in a phone interview. “Some we will shut down and others we will sell to concentrate on core businesses, which grew 22 percent in the U.A.E. in the first half.”

The company reported first-half profit of 149.9 million dirhams ($40.8 million). according to an e-mailed statement yesterday, without providing quarterly figures. Second-quarter net income fell to 91 million dirhams, Massaad said yesterday. That compares with 97.3 million dirhams, according to data compiled by Bloomberg.

The company, based in Ras Al Khaimah, one of seven members of the United Arab Emirates, decided to shift away from construction, development and other businesses it considers non-essential to focus on increasing productivity in its factories for ceramics such as tiles, toilet fitting, faucets and tableware.

The shift in focus helped the company generate 84.9 percent of its revenue from core products compared with 78.1 percent last year. Revenue for core ceramics products climbed 3.9 percent to 1.41 billion dirhams in the first half, according to the statement.

Profit margins also increased to 9 percent in the first-half compared with 8.6 percent a year earlier, the company said. Total revenue in the first six months of 2014 fell 4.4 percent to 1.66 billion dirhams.

In the second quarter, the company known as RAK Ceramics took ownership of a 270,000 square-meter beachfront land in Al Jazeera Al Hamra as settlement for related party receivables worth 840 million dirhams, Massaad said. The company doesn’t plan to develop the land and may sell it, he said.

EBITDA increased over the period to 310.3 million dirhams from 291.1 million last year with EBIDTA margins significantly enhanced to 18.7 percent for the first half as compared with 16.8 percent in the year earlier period, the company said.

RAK Ceramics doesn’t plan or need to raise funding this year, Massaad said.-Bloomberg