Hello everyone, and welcome to the RAK Ceramics Q1 2026 earnings call and webcast. My name is Carla, and I will be coordinating the call today. During the call, slides will be presented to you. To view the slides, please follow the link provided on your invitation. During the presentation, you can raise or ask questions by pressing star followed by one on your telephone keypad. If you change your mind, press star followed by two. If you would like to submit a written question, please use the Q&A box that is available on your screen. I will now hand things over to your host, Mohamad Haidar. Mohamad, after you begin, please go ahead when you're ready.
Hello, everyone, and welcome to RAK Ceramics's first quarter 2026 earnings call and webcast. I hope you are all well and safe. This is Mohamad Haidar from Arqaam Capital Research, and we are joined today by Mr. Abdallah Massaad, the CEO from RAK Ceramics, and Mr. P. K. Chand, the CFO from RAK Ceramics. Over to you, Mr. Massaad.
Thank you, Mohamad. Good afternoon, everyone, and thank you for joining us for RAK Ceramics first quarter 2026 earnings conference call and webcast. We appreciate you taking the time to be with us today. Across industries, the operating environment during the quarter was shaped by continued macroeconomic uncertainty, heightened geopolitical tensions, supply chain disruption, and constricted logistics hubs, creating a more complex business environment across our markets. Despite these conditions, RAK Ceramics offered a resilient first quarter performance, supported by our diversified footprint, strong operational execution, and proactive management action that maintained continuity across all markets. As a leading manufacturer, RAK Ceramics benefits from operational agility and the ability to adapt quickly to changing market conditions. The company maintained uninterrupted supply for clients and partners across its network while mitigating supply chain disruption and absorbing the market shocks.
Strong demand in the U.A.E. and Bangladesh, together with the sustained execution across the group, supported the quarter's results. Looking at the combined financial performance, our Q4 revenue declined by 17.1% year-on-year to AED 33 million. Profits after tax increased by 21.8% year-on-year to AED 38.2 million. Our revenue in the first quarter of 2026 was AED 760.7 million, down 2% compared to AED 770.5 million in the first quarter of 2025. Mainly because of the ongoing regional conflict, our gross profit margin remained resilient at 39.4% compared to 39.7% in the first quarter of 2025. Now let me give you an overview of revenue by market and segment. The U.A.E. remains our largest market, constituting 58% of the group revenue and continued to demonstrate resilience, delivering growth despite the challenging regional environment.
Supported by healthy construction activities and strong project demand, Europe contributed 25% of our total revenue, with performance supported by stronger booking currencies. Saudi Arabia, India, and Bangladesh each represented key growth strategic markets for RAK, where we continue to execute targeted growth and value creation initiatives. By segment, Tiles remained the primary revenue contributor at AED 531.2 million, followed by Porcelain at AED 160.1 million, Sanitaryware at AED 107.4 million, and Tableware at AED 78.7 million in the first quarter of 2026. I would like to address the impact of the ongoing regional conflict on our business and the proactive action we have taken in response to mitigate disruption. As regional disruption escalated in March, RAK Ceramics moved quickly and effectively. As we communicated publicly at the time, our commitment was clear. Uninterrupted service and full continuity across all our retail and project channels. We delivered on that commitment.
As a local manufacturer with a strong production and distribution capability in the region, we were well-positioned to respond with agility. Disruption around the Suez Canal placed pressure on regional trade routes, increasing freight, insurance, and shipping costs across business. Also, temporary gas disruption in Morbi impacted our India operation in March. In response, we activated alternative shipping routes through Jeddah and Oman, strengthened shipping inventory buffer across Europe and India, established a centralized crisis management structure with clear cost control across operations and select categories. These measures ensured our customers experienced uninterrupted service. Production was optimized in response to disruption of natural gas supply, where multiple options allowed. Incremental logistic costs were partially passed on as a freight surcharge. Virtually, we redirected all sales focus on the U.A.E. and the GCC.
Looking ahead, we remain vigilant, well prepared, and well-positioned to capture incremental market share opportunities in the U.A.E., Saudi Arabia, and broader GCC. We are fully aligned with the U.A.E. broader emphasis on continuity, stability, and reliable market access. Now let me take you through our key markets and business segments in more detail. The U.A.E. delivered revenue growth of 0.5% year-on-year in the first quarter 2026, reaching AED 211.5 million, driven by robust real estate and construction activity, and the higher share of project-based business. Import disruptions from regional tensions are expected to support additional market share gains. Some markets, including Saudi Arabia, India, and Europe, faced headwinds from regional conflict and competitive pressures.
In Saudi Arabia, revenue declined by 8.7% year-on-year in the first quarter 2026, primarily reflecting a strategic shift from volume-led ceramic tiles to higher-value grassroots plan, which contributed to improved gross profit margin and project disciplines. In Europe, revenue increased by 1.3% year-on-year in the first quarter 2026, supported by stronger local currency, although underlying market demand remains soft. The company leveraged inventory buffer to maintain service levels amid supply disruptions from regional tensions. In India, revenue declined by 8.5% year-on-year in the first quarter, mainly due to a temporary production. Looking ahead, our priorities for 2026 are centered on disciplined execution and strengthening the group's positioning across our key markets and business segments. Our priorities include maintaining market leadership in KSA and GCC, while capturing incremental demand where imports remain constrained.
We will continue to focus on project-led growth, premium positioning, portfolio expansion growth in large format tiles, and the modernization of our factory wear in line with our strategic objectives. We remain aligned with national industrial initiatives such as Vision 2030. We will continue to monitor the ongoing regional conflict supported by our centralized crisis management team, while focusing on strict cost control, improved agility, and operational efficiency across the group. We remain focused on improving operational efficiency, strengthening working capital management, and driving targeted margin expansion and the growth initiatives to improve bottom-line performance. Cookplay transformation remains a key priority, including the introduction of Cookplay glassware to complement the RAK Ceramics Tableware offering, extend the group's premium portfolio, and our operational efficiency. We will continue advancing our retail expansion with an omnichannel approach to digital acceleration, manufacturing optimization, and supporting a growth agenda.
Includes completion of the Greenfield tile production plant in Yanbu for the first quarter of 2027. We will maintain disciplined focus on cost management, ESG-led sustainability, and operational excellence. Across all our geographic business, in India and Bangladesh, we are expanding market reach through retail, dealer network growth, stronger distribution partnership, and targeted pricing initiatives to improve our strategic market position. Our 2026 first quarter performance reflects the resilience of our business, the quality of our team, and the strength of our operational platform, positioning us well to navigate near-term headwinds while executing on a clear long-term strategy. We remain focused on delivering sustainable, profitable growth, and long-term value for our shareholders. Thank you, and I will now hand over to our Group CFO.
Thank you. Good afternoon, everyone. I appreciate you being with us. Abdallah has already covered the strategies and execution highlights of the 2026 first quarter. I will now present the financial results for the 2026 first quarter, focusing on revenue, gross profit margin, and key valuation highlights. We will begin with slide 11. We are pleased to share our 2026 first quarter results, delivered with resilient performance supported by strong demand across the U.A.E. and Bangladesh. The company met regional market demand despite ongoing geopolitical tensions, supply chain disruptions, and elevated logistics costs. Total revenue marginally decreased by 2% year-on-year to AED 760.7 million in the 2026 first quarter on account of disruptions caused by ongoing regional conflicts.
For Tiles and Sanitaryware segments, revenue increased by 2.9% year-on-year to AED 558.6 million due to ongoing regional conflicts, trade barriers, and supply chain disruptions. Additionally, we delayed long-strategic imports since January, generated in the last week of March 2026 because availability to the specific month. Tiles revenue increased by 3.8% year-on-year to AED 451.2 million, primarily driven by lower sales to all markets except Bangladesh. Sanitaryware revenue by 1.8% year-on-year to AED 107.4 million, driven by higher sales in the U.A.E. market. However, other markets were impacted due to ongoing regional conflicts. Tableware segment revenue decreased by 8.6% year-on-year to AED 78.7 million. Profit margin decreased by 200 basis points year-on-year to 20% in the first quarter of the last utilization.
Profit before tax for the first quarter of 2026 amounted to AED 53 million, a decrease of 17.9% from AED 65.4 million in the same quarter of 2025. The decrease was primarily driven by lower revenue and lesser gross profit margin. Other operating income was also lower by AED 6.1 million due to lower provision for tax and AED 1.9 million due to lower gain on the sale of investment property. The margin decreased to 7% compared with 8.3% in the last year. Net profit for the first quarter of 2026 decreased by 31.8% year-on-year to AED 58.2 million. Net profit margin is 5% compared to 6.3% in the last year. EBITDA for the first quarter of 2026 decreased by 6.1% year-on-year to AED 177.3 million. EBITDA margin decreased to 16.7% compared to 17.5% last year.
Overall working capital remained stable with a slight decrease of AED 4 million at AED 1.40 billion in the first quarter of 2026 compared to the fourth quarter of 2025. Trade receivable days increased marginally from 85 days in the fourth quarter of 2025 to 86 days in the first quarter of 2026, primarily reflecting lower LCM sales. We continue to closely monitor receivables and maintain strict credit control measures. Inventory days increased from 257 days to 261 days quarter-on-quarter, reflecting the utilization of inventory buffers to maintain service levels and capture incremental market demand. Trade payables decreased from 65 days in the fourth quarter of 2025 to 62 days in the first quarter of 2026. Other payable days increased from 134 days to 137 days due to increase in provisions.
Net debt increased by AED 62.6 million at AED 1.56 billion compared to December 2025, reflecting of dividend of AED 99.4 million. Net debt coverage also increased from 2.20x in December 2025 to 2.53x in March 2026. CapEx in the first quarter of 2026 is AED 52.8 million, which includes AED 8.6 million towards new greenfield facility in Yanbu, KSA, which remains on track for commission during first quarter of 2027. Our 2026 CapEx guidance is AED 400 million, which includes AED 150 million related to the Saudi Greenfield project. The company estimated CapEx for the Greenfield project in Saudi, excluding working capital, is AED 250 million. We continue to maintain comfortable liquidity and remain well-positioned to meet our funding obligations. When we move to slide 18, relating to the share price performance. Over the last 12 months, the company share price has remained stable.
Based on. At a P/E multiple of 10.85x , reflecting investors' confidence and value on value. This concludes with the financial overview for this quarter. I will now hand over call back to Mr. Abdallah.
As outlined, RAK Ceramics delivered a resilient first quarter performance in 2026 despite ongoing regional geopolitical tensions, supply chain disruptions, and elevated logistic costs. As a local manufacturer, RAK Ceramics benefited from its operational agility and its ability to adapt quickly to changing market conditions. The company was able to secure and maintain supply for its clients and partners across its networks while effectively mitigating supply chain disruptions and absorbing market shocks. On a strong foundation, clear set of priorities, and continued investment in capacity and innovation, we are well-positioned to drive sustainable, profitable growth and generate long-term value to our stakeholders. Thank you for your continued support. I will now hand over the call back to the operator for the Q&A session.
Thank you. We will now begin the question and answer session. If you want to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. Before you ask your question, make sure that your device is unmuted locally. If you would like to submit your written question, please use the Q&A chat box that is available on the slide page. We will now take calls here for the questions that are registered. Our first question is, what is the capacity utilization for this quarter for Tiles, Sanitaryware, and others?
For Tiles, we are at almost 30% capacity. Sanitaryware, slightly above 50%. Tableware, more than 65%.
Thank you. A quick reminder to all of our attendees, that is star one on your telephone keypad to ask the audio question, or you can also submit your written question by using the Q&A chat box which is available on the slide page. We will now take a written question from Mohamad Haidar.
Thank you, Abdallah and P. K.. Qu estion on the logistics supply chain for RAK Ceramics. How easy is it to really move out from Hormuz through land transportation, either through Oman or through Saudi? Do you have to deal with truck dealers or trucks? How much time does it really take for delivery compared to the Strait of Hormuz?
Mohamad, thank you for your question. Honestly, this is a million-dollar question, what you say. It is not easy at all. For us, first thing, as a factory, we must ensure our raw materials, parts, spare parts, and to run our production and that is the most important part. Fortunately, we were not forced to shut down or to stop supply because we must deliver raw materials, spares, and all materials. In term of supplying by road in Saudi, in Jeddah or Dammam or if you go to Oman or even from Fujairah. It is tough. Money demand. Sometimes we have to go through trucks. We are secure from Jeddah. We deliver to our clients and compared with export, sometimes we go through Dubai ports or Abu Dhabi ports where they handle it. Sometimes with the shipping line directly. So it is much more expensive.
At some times prices are a lot different. Sometimes in Jeddah a bit. It is a tricky one. As we mentioned, we are supplying our level best, whatever we can in order to maintain a smooth operation and supply to our clients. Here where we feel, Mohamad, that we are doing whatever we can, and we are able to supply and actually, in a way, from our record, did not slow down. Initially, it was, but honestly, we are seeing more demand, and we are trying to capture more market share. As we are enhancing our capacities at Excon, we are finding all the schedules or projects with imported material. They were facing issues from Jeddah. We are a big market player, but our market share is almost 30%, and we are still looking to increase our market share.
Thank you, Abdallah. Very clear. Is it easy to pass on the costs to end users and maintain circulation? Because your margins were more or less very resilient in Q1.
Yeah. First quarter, it is still too early, Mohamad, because for us during March, we had one big rain incident in the U.A.E. The impact of that conflict was on the last week of March. It is too early to assess. But what I can tell you is that we are working page by page. We are trying for developers, whoever is in the U.A.E., is trying to increase our prices, but mainly to increase our market share. While for some exports, yeah, we are trying to pass because the margins are higher and whatever we will do, it will be very difficult to export and very difficult to be competitive and to sustain the supply. So our focus is regional and in the region, historically, we have better margins. So despite all the cost increase what we are incurring, and we are trying to absorb it by selling more in this region.
That is very clear, Abdallah. And interestingly, given that imports were also disrupted in the U.A.E. and you benefited a bit when it comes to market share and margins, is it the same applicable to you in other markets? If you are late on shipments, let us say to Europe, will other competitors there, the local ones, take market share from you? That is what I believe happens.
No doubt about that. We acknowledge this. We know that today, we are having a throwback where we are trying to, say, in Europe, where we operate by ourselves, where we are trying to source material someplace where we can at least supply and not lose our market share in Europe. We know it is very difficult, and sometimes we even sell by truck. Yeah, it was very costly, but in order to maintain to supply our clients on time, we were forced to do it. As I mentioned, something where we are able to load from here, we continue to load. We increase our prices in Europe to at least cover part of the transport, the freight increase. And somewhere we are trying to also source, as I mentioned. So we know that in some markets we will have some disruption. We will have ways to lose some market share here and there.
We are trying to absorb by gaining more market share in the U.A.E. and the region.
Thank you. My last question is on Yanbu, the new plant. Will that be used predominantly for the Saudi market? Or can you also use it as an export hub to other countries now that it is on the other side?
I wish it was ready earlier. Yeah, because it is easier for us, no doubt. Even in our studies, Mohamad, majority sell it only in KSA, but we have also to export. Even we have 30% in our studies to be exported, 17% in Saudi. And for sure, once it was ready and when it will be ready, that will be a balancing scenario for ourselves, at least to export.
Very helpful, Abdallah. Thank you.
Thank you, Mohamad.
Thank you. This is a reminder to all of the attendees on the line that if you'd like to ask a question, press one on your telephone keypad. You can also submit a brief question by using the Q&A chat box. We have one question. How do you see the local market and international market demand during April and May, mainly India, U.A.E., and Bangladesh? Do you see any pressure on margin due to increased costs and import-export disturbances? What margin do you expect during FY 2026?
Yeah. Honestly, it is too early to go and assess. I can tell you that at least in the U.A.E., for us, I saw more demand for our products. What I can say is that for us, April should be better. As I mentioned, going forward, we acknowledge where we will lose and where we will be gaining. As far as our work towards the best interest of our stakeholders, company, short term and long term, where to focus on the affinity or at least where we are strong and where we are able to supply. I am sure that we will be gaining more market share, hopefully, in the U.A.E. and the region also. India and Bangladesh demand, I can say it is stable and can be better.
Obviously, Bangladesh, after the election, the new government is more stable, and we can see momentum in the market. In India, it was shut down earlier in the week in availability of gas. In April, we just signed gas with ENMAX who after see it will be on the top 10 in India of margins because increased energy cost will give us a return in the margin on the end in India. I do not think we can discuss margin this year. It is too early. Let us see how it moves.
Thank you. Just as a kind of reminder, please feel free to ask a question with our one-time pull-up feature, or you can still put a written question by using the Q&A chat box at the bottom of the page. As we have no further questions in the queue, I will hand it over to the CEO, Mr. Massaad, for any final comments.
Thank you very much.
Thank you. This does conclude today's call. You may now disconnect. Have a great day.