The company, one of the UAE’s iconic manufacturers, is poised to lift its core products and its global markets where Asia Pacific and the GCC show special promise
Most exports of RAK Ceramics products from its UAE facilities go to Saudi Arabia and Europe, says the company, one of the world’s largest high-tech manufacturers of lifestyle ceramics solutions.
The UAE is RAK Ceramics’ headquarters and largest market with 12 state-of-the-art plants including 10 for tiles and two for sanitaryware. Of the company’s total revenues of Dh3.28 billion ($890 million) in 2014, including Dh2.8 billion from the core businesses of tiles, sanitaryware and tableware, the UAE’s share was 75 per cent with its India facilities generating 17 per cent and Bangladesh units 8 per cent.
“RAK Ceramics witnessed a significant increase in its exports from 2009 to 2014, primarily driven by an aggressive sales and distribution strategy in its core markets of the UAE and GCC, India and Bangladesh. The biggest increase in its exports was in 2014 following the company’s initiation of the Value Creation Plan, which aims at investing in core businesses and exiting from non-core businesses,” said chief executive Abdallah Massaad.
RAK Ceramics exports its products to 160 countries out of its 12 production facilities in the UAE, one in India, one in Bangladesh and one in Iran. It has a global annual production capacity of 117 million sq m of tiles, 4.6 million pieces of sanitaryware and 24 million pieces of tableware.
The UAE is considered a main export hub to the GCC (especially Saudi Arabia), Mena and the European Union. The UAE facilities account for 73 per cent of the total tiles sale volume in 2014 and around 60 per cent of the sanitaryware sales volume.
From the UAE facilities, 30 per cent of the output is sold domestically and the remaining 70 per cent is exported mainly to Saudi Arabia and Europe.
The company seeks to further penetrate the Asia Pacific region and has opened a Singapore office led by Carmen Herrada, vice president Asia.
The opening of RAK Ceramics’ Singapore office is part of the company’s Value Creation Plan, a re-focused strategy to streamline global businesses and pursue the most profitable operations.
“The launch of our new regional office in Singapore is a step towards fully leveraging the significant growth potential of the Asia Pacific region. As the ceramics market continues to benefit from higher per capita income and increased spending in the region, RAK Ceramics will be well positioned to understand and satisfy the local demands of our customers,” said Massaad.
“We look forward to solidifying our partnerships and distribution channels in high-growth and high-demand markets around the world, and we view Asia Pacific as a critical market to help achieve this.”
Singapore and Hong Kong are design hubs for architects and designers; therefore, a regional presence will position RAK Ceramics closer to its target audience and enable improved service levels. Asia Pacific is served by the company’s Indian Subcontinent plants.
The company’s major share in the Asia Pacific region comes from the sale of ceramic tiles. Although standard tile sizes such as 20 x 20 cm up to 50 x 50 cm are popular there, RAK Ceramics is now looking at promoting bigger sizes due to a shift in trends.
In Europe and North America, consumers prefer the company’s gres porcelain tiles. In the EU region, pastel or neutral colours and warm shades of grey with matt finish are the most popular tiles. With its latest state-of-the-art technologies, RAK Ceramics is able to produce GP tiles with a wide range of effects like satin, lappato, polished, or rustic. The designs are mainly inspired from stones, cement, wood and metals.
The company also recently launched an extra-large sized porcelain+ surface, which has gained a lot of interest in Europe. Maximus Mega Slab, a gigantic 135 x 305 cm surface is manufactured using Continua+ technology by Sacmi and can be used on walls, floors and façades or to create surfaces such as kitchen or bathroom counters.
The GCC region is one of the company’s biggest markets and demand for ceramics continues to grow there with the tiles market predicted to expand 12 per cent over the next five years.
Demand there is for both indoor and outdoor floor tiles as well as external cladding. The GCC region prefers glossy finish tiles for walls and floors rather than matt finish. Natural marble inspired designs are most popular such as Bianco Vena, Onyx and Emprador.
“Saudi Arabia is a very important market for RAK Ceramics and is the biggest and fastest growing in the region. The consumption of tiles in Saudi Arabia has grown 15 per cent compound annual growth rate (CAGR) from 2006 to 2012 to 230 million sq m and the potential for growth is huge,” said Massaad. In 2014 RAK Ceramics announced as part of its Value Creation Plan that it will be expanding and restructuring its distribution capabilities in the kingdom, especially in Riyadh, and has recently rented a 93,000 sq m warehouse, as it aims to broaden its footprint in the country.
RAK Ceramics aspires to be amongst the top five ceramics exporters to value markets of Europe and Mena, said Massaad. The company has showed positive results in Q2 2015 for both tiles and sanitaryware, and Saudi Arabia showed a 5 per cent increase in tiles sales.
“Global sanitaryware expansions have been planned to meet the rise in demand. An increase in production of 22 per cent in the UAE, 52 per cent in India and 25 per cent in Bangladesh has been agreed to support revenue growth by expanding high margin core businesses,” Massaad revealed.
The Maximus Mega Slab which has dimensions measuring 135 x 305 cm with thickness ranging from 6 mm to 14.5 mm is the latest innovation allowing RAK Ceramics to compete in new markets.
RAK Ceramics continues to strengthen existing collections such as the Wood Art Collection, Cement Collection, Stone Art Collection and Metallic Collection that have proved to be very popular, along with the Elegance Ceramics range of boutique tiles.
In tableware, a number of innovative new products were developed during the year to meet future market demand. These include the ‘Anna’ range – a timeless and elegant shape that has been well-received by its niche market – and the ‘Peppery’ collection which meets the growing market requirement for rustic designs.
In sanitaryware, the latest innovation saw the launch of RAK Ceramics’ waterless urinal sanitation system, Eco Fresh, which, with a particular focus on water saving, requires absolutely no water to flush.
In terms of other collections, the Harmony Bathroom collection offers customers a luxurious, Italian-designed range of sanitaryware and basins, complemented with sleek simplistic furniture. Harmony sanitaryware options include full back-to-wall, close coupled and wall hung designs. Matching basins are offered in half moon designs and counter top formats. The range also features three over-counter washbasins, in oval, rectangle and circular designs, and a new collection of Harmony taps. Reflecting this year’s trends of nature-inspired designs, the matching white furniture has high gloss painted drawer fronts with wood finish side panels. Built-in ambient strip lighting engages users and creates subtle night-time illumination.
“RAK Ceramics anticipates that the GCC has been experiencing, and will continue to experience, a significant increase in construction activity, encouraged by factors such as an increase in tourism, positive macroeconomics, and the growing youth demographic. Saudi Arabia, the UAE, and Qatar are the leading consumers of ceramic tiles in the region, which will continue to increase as these countries have secured the rights to host international events, such as the Dubai Expo in 2020 and the FIFA World Cup 2022 in Qatar,” said Massaad.
“Furthermore, following the announcements of mega projects at this year’s Arabian Travel Market 2015, it is evident that construction growth will continue to accelerate as work commences on these new projects.
“The growth of the construction industry regionally and the predicted growth in the ceramics industry globally is extremely positive for RAK Ceramics.”