The UAE-based multinational company RAK Ceramics (Bangladesh) Ltd is planning to export ceramic tiles to the Middle East and to neighboring countries.
"We are currently surveying the markets. The brand is focusing on increasing manufacturing capacity and improving product quality through gradual modernisation in phases," said RAK Ceramics Company Secretary Muhammad Shahidul Islam.
Though Bangladesh exports tableware and sanitary ware, it has not started exporting ceramic tiles yet.
Apart from RAK, two other brands – Sheltech Ceramics and Great Wall Ceramics Ltd – are also aiming for ceramic tiles export.
Global ceramic tiles market
Market research by RAK Ceramics revealed that the size of the global market for ceramic tiles was $72 billion in 2019, and this has been expanding by 9 percent annually since 2011.
According to the research projection, the size of the global ceramics market will be $107.2 billion by 2024, with 7.2 percent growth from 2019 onward.
Asia has the highest demand for ceramic tiles, while Europe and Africa also show growing demand. Basically, the demand is rising in developing countries because of infrastructure development.
Asia alone consumes 67.70 percent of the global demand for ceramic tiles, while South America consumes 8.70 percent, the European Union 7.70 percent and Africa 6.90 percent.
Asia is also the highest tiles manufacturer — producing 69.60 percent of the total global annual production. Europe is the second-highest manufacturer with 7.90 percent while Africa produces 5.10 percent of the ceramic tiles.
According to the Ceramics World Review, China accounts for 54 percent of the total tiles production, and also has 58 percent of the tiles export market.
Bangladesh has an annual ceramics tiles market worth Tk4,500 crore. Local and multinational companies fulfill 76.67 percent while import meets the remaining demand.
The country has 26 ceramic tiles brands, with Great Wall Ceramics, RAK Ceramics, DBL and Sheltech being the major market players.
RAK's business growing
RAK manufactures tiles and sanitary ware only. It does not produce ceramic tableware items.
Setting out in the Bangladeshi market in 2001, RAK's sales reached Tk887 crore at the end of 2019. The company posted a 130 percent business growth over the last ten years. But RAK's net profit is not growing in proportion to its business growth.
In the meantime, the company has managed to wipe-out its bank loan dependency. The company had Tk60 crore bank loans even in 2016, but it repaid them fully in 2019.
"We have to import all our raw material. The import cost of raw material spiked because the dollar became strong," Company Secretary Shahidul Islam says.
The competitive market is another reason for the low profit margin even with handsome sales, said Shahidul.
The country's tiles market was totally import-dependent even 15 years ago. But now there are numerous local brands manufacturing tiles, making the market more competitive, he explained.
The company gave 15 percent cash dividend to its shareholders in 2019, the lowest since RAK got listed at the bourse in 2010.
The closing price of the RAK share was Tk33.90 at the Dhaka Stock Exchange on Sunday. In the last one year, the RAK share rose to the highest price of Tk43.10 and slipped to the lowest price of Tk25.70.
RAK Ceramics PJSC, UAE holds 68.13 percent of the company's total shares.