Abdallah Massaad

TBY talks to Abdallah Massaad, CEO of RAK Ceramics PJSC, about the company’s global presence, product portfolio, and competition in Saudi Arabia.

Could you provide an overview of RAK Ceramics? What are the key milestones that have defined RAK Ceramics as one of the largest ceramics brands in the world?

RAK Ceramics PJSC stands as a global powerhouse in the ceramic and porcelain tile industry, pushing the boundaries of innovation and setting new benchmarks in quality. With a storied legacy spanning more than three decades, we have become synonymous with cutting-edge technology, sustainable practices, and an unwavering commitment to excellence. At RAK Ceramics, we continue to transform the world of ceramics through innovation and excellence. With 23 state-of-the-art facilities across the United Arab Emirates, India, Bangladesh, and Europe, we have a remarkable annual manufacturing capacity of 118 million square meters of tiles, 5.7 million pieces of sanitaryware, 36 million pieces of porcelain tableware, and 2.6 million pieces of faucets. With our continued investment in technology and innovation, we achieved significant milestones in expansionary projects within the UAE in 2023. Our workforce comprises around 12,000 talented individuals from over 40 nationalities, contributing to our global success. As a publicly listed company on the Abu Dhabi Securities Exchange and the Dhaka Stock Exchange, our annual turnover exceeds US$1 billion. We operate in over 150 countries through our extensive network of operational hubs spanning Europe, the Middle East and North Africa, Asia, North and South America, and Australia. RAK Ceramics has a vast international footprint, serving diverse markets and meeting the demands of a dynamic global economy.

Can you elaborate on the range of products offered by RAK Ceramics, including ceramic tiles, porcelain stoneware, sanitary ware, mixers, and tableware? How do you ensure quality and innovation across such a diverse product portfolio?

We offer one of the largest collections of high-quality ceramic wall and floor tiles, gres porcelain, and super-sized slabs in the industry. Offering more than 6,000 models, tiles are manufactured in a variety of sizes, providing the widest range in the ceramics field. Within sanitaryware, we provide complete solutions designed to suit all budgets and tastes, with accessories and bathroom furniture. In faucets, we have eco-friendly faucets and bathroom fittings with a strong focus on water-saving technology, offering up to 60% savings on water consumption. For tableware, our products are supplied to over 40,000 hotels in more than 165 countries, with clients including JW Marriott, Hilton, Hyatt, and Sheraton, among others. RAK Ceramics constantly strives to emphasize and encourage innovation, creativity, and design excellence, integrating these values with the company’s core ideology. Our commitment to innovation and our pioneering role in adopting cutting-edge technologies have enabled us to set new industry standards, strengthening our position as a global leader in manufacturing ceramic and porcelain tiles for residential, retail, and industrial use. The wide-ranging technologies employed at our state-of-the-art manufacturing facilities include big slabs technology, advanced digital printing technology for industrial decoration and effects, translucent, double and triple charged feeding systems, digital soluble salts, thermal resistant glaze, slim, anti-microbial, and glow-in-the-dark properties. Re-use Quartz, the world’s first tile with 100% recycled material, is one of our latest innovations from RAK Ceramics’ R&D laboratories, reflecting our continuous efforts to improve sustainability through reducing, reusing, and recycling waste materials.

RAK Ceramics operates in over 150 countries. What strategic importance does Saudi Arabia hold for RAK Ceramics? How does the Saudi Arabian market compare to other international markets in terms of demand and growth potential?

Saudi Arabia is a key strategic market for RAK Ceramics due to its significant investments in infrastructure and real estate projects, aligned with Saudi Vision 2030. The demand in Saudi Arabia is robust, driven by prestigious projects and substantial governmental investments. Compared to other markets, Saudi Arabia offers unique growth potential due to its ambitious infrastructure goals, presenting RAK Ceramics with opportunities to leverage our strong brand reputation and diverse product offerings.

What has been your strategy for entering and expanding in the Saudi Arabian market? Could you share the key challenges and opportunities you have encountered while establishing your presence in Saudi Arabia?

Our strategy in Saudi Arabia has been to focus on enhancing our retail and projects business by opening new flagship showrooms and expanding our dealer network. We aim to strengthen our brand presence and engage with architect and designer communities to promote all our solutions and confirm our positioning as a Lifestyle Solution Provider. We focus on premium products and differentiation by addressing specific market requests in terms of technical and aesthetic performances.

Which specific products or product lines are driving growth for RAK Ceramics in Saudi Arabia? How do you tailor your products to meet the needs and preferences of the Saudi market?

RAK Ceramics’ presence in Saudi Arabia is primarily driven by our technical products, which stand out due to their advanced specifications and high performance, making them highly sought after in various construction and renovation projects. Our products specifically developed for Saudi Arabia are designed to meet regional needs, such as innovations like Klima or Barefoot+, which are tailored for outdoor use in warm climates. We adopt a meticulous and customer-centric approach, engaging closely with our customers to obtain precise details and market feedback. Our Product Development team and Innotech lab develop innovative and tailored solutions that meet the high standards and aesthetic preferences of our Saudi customers. This ensures our offerings are always aligned with local market demands and trends.

In a competitive market like Saudi Arabia, what sets RAK Ceramics apart from other ceramics companies? How do you leverage your global presence and manufacturing capabilities to maintain a competitive edge?

RAK Ceramics distinguishes itself through a combination of service excellence, a diverse product range, and a strong global brand reputation. Our global presence allows us to implement best practices and innovations across all markets, ensuring high-quality standards. In Saudi Arabia, we leverage our extensive manufacturing capabilities to offer a wide variety of premium products that meet the unique demands of the market. This focus on premium products helps us maintain gross margins and offset revenue declines. Our strategic investments in digitalization and technology upgrades also enhance productivity and efficiency, further solidifying our competitive edge.

What are the key trends you see shaping the ceramics industry in Saudi Arabia over the next few years? How does RAK Ceramics plan to adapt to these trends and continue its growth trajectory in the region?

Several key trends are shaping the ceramics industry in Saudi Arabia. There is an increasing tendency among consumers to prefer established brands, emphasizing the importance of brand reputation and trust. Local brands and consumers seek high-performance ceramics, which are essential in the harsh climatic conditions of the region. Continuity in supplies is crucial, especially for large-scale projects and long-term maintenance. To adapt to these trends, RAK Ceramics is building up selective stocks of high-demand products to ensure immediate availability and reduce lead times. Continuous innovation is central to our strategy, regularly introducing new products aligned with the latest trends, designs, and performance standards. We are bolstering our project sales team to enhance market presence and customer engagement. By focusing on these strategies, RAK Ceramics aims to stay ahead of market trends and maintain its leadership position as a Lifestyle Solution Provider.

How is RAK Ceramics incorporating sustainability and innovation into its manufacturing processes and product development? Can you highlight any recent initiatives or technologies that demonstrate your commitment to these areas?

RAK Ceramics is committed to fulfilling the ever-increasing demand for unique and sustainable ceramic products. We have made substantial efforts to enhance energy efficiency in our production processes. For instance, the company operates two cogeneration plants with gas turbines, maximizing efficiency by using exhaust air for ceramic spray dryers, significantly reducing natural gas consumption and emissions. Additionally, we employ thermal energy recovery from roller kilns, where waste heat is repurposed for other processes within the manufacturing cycle, conserving energy and minimizing the overall carbon footprint. The use of cooling towers instead of conventional chillers further enhances energy efficiency by reducing the power required for cooling operations. The implementation of Variable Frequency Drives (VFD) on machines and equipment across different departments has also contributed to reducing electricity consumption, leading to significant reductions in energy intensity within various product lines, such as a 48.78% reduction in energy intensity for faucets production and a 6.31% reduction in energy intensity for tableware production. RAK Ceramics has established a Closed Loop Manufacturing System that optimizes water and waste management across its production processes. We treat 100% of our wastewater and partially reuse it on-site, significantly reducing the need for fresh water and recycling waste materials within the production cycle. In tile production, 85-90% of waste is reintroduced into the production process, including fired tiles, green tiles, squaring waste powder, and polishing sludge. Similarly, in sanitaryware production, 100% of greenware waste and a significant portion of fired ware rejects and waste glaze materials are recycled and reused. We also pioneer sustainable logistics by partnering with DHL and Rail Direct – Etihad.

How has RAK Ceramics navigated the recent global geopolitical and economic challenges, particularly in the Red Sea region? What measures have you taken to ensure resilience and growth amidst these disruptions?

RAK Ceramics has demonstrated resilience and adaptability in navigating recent global geopolitical and economic challenges, particularly those impacting the Red Sea region. The company has taken several strategic measures to ensure continued growth and stability amidst these disruptions. We have adjusted our product mix to maintain and even improve gross margins despite revenue declines, offsetting negative impacts from increased competition and economic challenges in key markets. We focus on offering differentiated products to combat competition and pricing pressures, supporting revenue growth in specific segments like tableware. We practice prudent debt management, reducing net debt by AED 49.8 million in September 2023, maintaining a healthy balance sheet and flexibility to navigate economic uncertainties.