Hello everyone, and welcome to RAK Ceramics first quarter 2026 earnings call and webcast. I hope you are all well and safe.

This is Mohamad Haidar from Arqaam Capital Research. 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.

Abdallah.

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 taking the time to be with us today. Across industries, the operating environment during the quarter was shaped by continuing macroeconomic uncertainty, heightened geopolitical tensions, supply chain disruptions, and elevated logistics costs, creating a more complex business environment across our markets.

Despite these headwinds, RAK Ceramics delivered a resilient first quarter performance, supported by our diversified asset footprint, strong operational execution, and proactive management actions that maintained continuity across all markets. As a local manufacturer, RAK Ceramics benefited 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 disruptions and absorbing market shocks. Strong demand in the UAE and Bangladesh, together with disciplined execution across the group, supported the quarter results.

Looking at our financial performance, our reported gross profit line by 17.1% year-on-year to 53 million dirhams. Profit after tax decreased by 21.8% year-on-year to 38.2 million dirhams.

Total revenue in the first quarter of 2026 was 763.7 million dirhams, down 2% compared to 776.5 million dirhams in the first quarter of 2025. Mainly despite 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 UAE remained our largest market, contributing 28% of group revenue, and continued to demonstrate resilience, delivering growth despite the challenging regional environment, supported by healthy construction activity and strong project demand.

Europe contributed 25% of our total revenue, with performance supported by stronger local currencies. Saudi Arabia, India, and Bangladesh each represented important strategic markets for us, where we continued to execute targeted growth and value creation initiatives.

Tiles remained the primary revenue contributor at 451.2 million dirhams, followed by faucets 133.1 million dirhams, sanitaryware at 111.4 million dirhams, and tableware at 68.1 million dirhams in the first quarter 2026. I would like to address the impact of the ongoing regional conflict on our business and the proactive actions we have taken in response to mitigate disruption.

As regional disruptions escalated in March, RAK Ceramics moved promptly and decisively. 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 in position to respond with agility.

Disruptions around the Strait of Hormuz placed pressure on regional trade routes, increasing freight, insurance, and handling costs across borders. A temporary gas disruption in Morbi affected our India operation as well.

In response, we activated alternative shipping routes via Jeddah and Oman, strengthened regional inventory buffers across Europe and India, established a centralized crisis management structure with strict cost control across operations and capital expenditure. These measures ensured our customers experienced uninterrupted service.

Production was optimized in response to disruption of material supply, where market conditions allowed. Incremental logistics costs were partially passed on as a freight surcharge.

Commercially, we redirected focus on the UAE and the GCC. Looking ahead, we remain vigilant, well-prepared, and well-positioned to capture incremental market share opportunities in the UAE, Saudi Arabia, and broader GCC.

We are fully aligned with the UAE broader emphasis on continuity, stability, and reliable market access. Now let me take you through our key markets and business segments in more detail.

In the UAE, we delivered revenue growth of 2.5% year-on-year in the first quarter 2026, reaching 211.5 million dirhams, driven by robust real estate and construction activity and a 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 conflicts and competitive pressure. 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 Gres Porcellanato, which contributed to improved gross profit margin and profitability.

In Europe, revenue increased by 1.3% year-on-year in the first quarter 2026, supported by stronger local currency, although underlying market demand remained soft. The company leveraged its inventory buffer to maintain service levels amidst supply disruptions from regional routes.

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 footprint across our key markets and business segments. Our priorities include maintaining market leadership in the UAE and GCC, while tapping incremental demand where imports remain constrained.

We will continue to focus on project-led growth, premium positioning, portfolio expansion, and growth in large-format slabs, and the modernization of our sanitaryware capacity in line with our strategic objectives. We remain aligned with national industrial initiatives such as "Make it in the Emirates".

We will continue to monitor the ongoing regional conflict, supported by our centralized crisis management team, focusing on strict cost control, improved liquidity, and efficiency across all units. We remain committed to improving operational efficiency, strengthening working capital management, and driving targeted turnaround and efficiency initiatives to improve margins.

The Kludi transformation remains a key strategic priority, including the introduction of Kludi sanitaryware to complement the RAK Ceramics sanitaryware offering, expand the group premium portfolio, and optimize international footprint. We will continue advancing our retail expansion with an omnichannel approach to digital acceleration, manufacturing optimization, and selective growth investments, including completion of the greenfield tile project in Yanbu, Saudi Arabia by first quarter 2027.

We will maintain clear focus on risk management, ESG-led sustainability, and operational excellence across all our business. In India and Bangladesh, we are expanding market reach through retail, dealer network growth, stronger distribution partnerships, and targeted pricing initiatives to improve profitability and market position.

Our first quarter 2026 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 stakeholders.

Thank you, and I will now hand over to our group CFO.

Thank you, and good afternoon, everyone. I appreciate you joining us today.

Abdallah has already covered strategic and operational highlights of the first quarter 2026. I will now take you through our financial results for the first quarter of 2026, focusing on revenue, gross profit margin, key balance sheet highlights.

We will begin with slide 11. We are pleased to share our first quarter 2026 results, enabled by resilient performance supported by strong demand across the UAE and Bangladesh.

The company confronted with regional market demand supply, ongoing geopolitical tensions, supply chain disruptions, and elevated logistics costs. Total revenue marginally decreased by 1.6% year-on-year to 763.7 million dirhams in first quarter of 2026 on account of disruptions caused by ongoing regional conflict.

Tiles and sanitaryware segments revenue decreased by 2.9% year-on-year to 562.6 million dirhams due to ongoing regional conflict, Red Sea disruptions. Additionally, heat waves prompted long weekend shutdowns in the Emirates in the last week of March 2026, which further led to dip in demand.

Tiles revenue decreased by 3.8% year-on-year to 451.2 million dirhams, primarily driven by lower sales in all markets except Bangladesh. Sanitaryware revenue grew by 1.8% year-on-year to 111.4 million dirhams, driven by higher sales in the UAE.

However, all other markets impacted by ongoing regional conflict. Tableware segment revenue decreased by 8.5% year-on-year to 78.7 million dirhams.

Gross margin decreased by 28 basis points year-on-year to 39.4% in the first quarter of plant utilization. Profit before tax for first quarter of 2026 amounted to 53 million dirhams, a decrease of 17.9% from 64.6 million dirhams in the same quarter of 2025.

Decrease was primarily driven by lower revenue and lower gross profit margin. Net operating income was also lower by 6.1 million dirhams due to lower gross profit and 1.9 million dirhams due to lower gain on sale of investment property.

The margin decreased to 7% compared with 8.3% in the last year. Net profit after tax decreased by 21.8% year-on-year to 38.2 million dirhams.

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 127.3 million dirhams.

EBITDA margin decreased to 16.7% compared to 17.5% last year. Overall working capital remained stable with a slight decrease of 4 million dirhams at 1.40 billion dirhams in first quarter of 2026 compared to 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 decreased from 288 days to 261 days quarter-on-quarter, reflecting the utilization of inventory buffers to maintain service levels and capture incremental market demand. Trade payable days decreased from 65 days in the fourth quarter of 2025 to 64 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 32.6 million dirhams at 1.56 billion dirhams compared to December 2025 due to payment of dividend of 99.4 million dirhams.

Net debt to EBITDA also increased from 2.40 times in December 2025 to 2.53 times in March 2026. Capex in the first quarter of 2026 is 52.8 million dirhams, which includes 28.6 million dirhams towards new greenfield facility in Yanbu, KSA, which remains on track for commissioning by the first quarter of 2027.

Our 2026 capex guidance is 400 million dirhams, including 250 million dirhams related to the Saudi greenfield project. Excluding Saudi, remaining working capital is 150 million dirhams.

We continue to maintain comfortable liquidity and remain well-positioned to meet our upcoming obligations. When we move to slide 18, reflecting our share price performance over the last 12 months, our share price has remained stable.

The stock is currently traded at a P/E multiple of 10.25 times, reflecting investors' confidence and long-term value. This concludes with the financial overview for the quarter.

I will now hand over call back to Mr. Abdallah for closing remarks.

Thank you, P.K. As outlined, RAK Ceramics delivered a resilient first quarter performance in 2026 despite ongoing regional geopolitical

As outlined, RAK Ceramics delivered a resilient first quarter performance in 2026 despite ongoing regional geopolitical tensions, supply chain disruptions, and elevated logistics costs. As a local manufacturer, RAK Ceramics benefited from its operational agility and ability to adapt quickly to changing market conditions.

The company was able to ensure uninterrupted supply for its clients and partners across its network, while effectively mitigating supply chain disruption and absorbing market shocks. With a strong foundation, clear strategic priorities, and continuous investment in capacity and innovation, we are well-positioned to drive sustainable, profitable growth, as well as long-term value for our stakeholders.

Thank you for your continued support. I will now hand over the call back to the operator for the Q&A session.

Tiles we are at almost 80% capacity, sanitaryware slightly above 70%, and tableware at more than 65%.

Thank you, Abdallah and P.K. A question on the logistics supply chain for RAK Ceramics.

How easy is it to really route out from Hormuz through land transportation, either through Oman or through Saudi? Do you have to deal with truck dealers, other trucks, and 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, as they say.

It's not easy at all, it's for us first thing as a factory, a lot of issues our raw materials are shipped by and to run our production and that is the most important for us. Fortunately, we weren't forced to shut down or to stop supply because of non-availability of raw materials, cheers to our team.

In term of supplying by road to Saudi, to Jeddah or to Yanbu, or as you go to Oman or here from Fujairah, it's so many demand which and we have to go through trucks where [unclear] containers from Jeddah will take to our [unclear] compared with the export, and we go through dry ports or aquatic ports where they adjust the shipping line directly. It is much more expensive, at that time prices are [unclear] for everyone.

As we mentioned, we are trying 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.

Our shipments in the UAE from our record is not slowdown, which it is honestly we are seeing more demand and we are trying to catch up more market share. As we are happily export, we are finding all the traders or projects that imported material they were having issue to unpack it.

Yes, we have [unclear] market share, but our market share is almost 30% and we are happy to increase our market share.

Thanks, Abdallah. Very clear.

Is it easy to pass on the cost to end users and pick up insulation? Because your margins were more or less very resilient in Q1.

First quarter it is still early for this, Mohamad, because for us during March, we had the one [unclear] anything in the UAE and the impact of the conflict was on the last week of March, it's too early to assess. What I can tell you that we're working case-by-case, we're trying for [unclear] developers, whatever, in the UAE not to increase our prices, that meaning to increase our market share, while for some exports, yeah, we are trying to pass when the margins are tight.

We honestly, whatever we'll do, it will be very dependent on export, and we want to preserve to be competitive and to sustain the supplies, our focus is the regional, and in the region historically we had higher margin, despite all the cost increase what we are incurring and we're trying to absorb it by selling more in the region.

That's very clear, Abdallah. Interestingly, given that imports were also disrupted in the UAE and you benefited a bit when it comes to market share gains, does the same apply to you in other markets?

If you are late on shipments, let's say in Europe, will other competitors there, local ones, take market share from you? No,

no doubt, Muhammad, yeah. We acknowledge this.

We know that today we're having a drawback. We're trying to say in Europe we operate by ourselves, where we're trying to source material from places where we can at least supply and hold our market share in Europe.

We know it's very difficult. In some time, we even send by truck to Europe, and that was very costly, but in order to supply our client on time, we were forced to do it.

As they mentioned something where we are able to load from here, we continue to load and increase our prices in Europe to kiss a part of the transport or the freight increase and some where we're trying to also source, as I mentioned. We know that in markets we will have [unclear] and we will have to lose on market share here and there.

We're trying to hold it by gaining also market share in the UAE and the region.

Thank you. My last question is on Yanbu, the new plant.

Will that be used predominantly for 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 would be easier for us. No doubt, in our studies majority will be for local, but we have also to export.

Even we have 30% in our study to be exported, 70% for Saudi. For sure, once it's ready and when it will be ready, this will be a balanced scenario for ourselves at least to export.

Very helpful, Abdallah. Thank you.

Thank you, Mohamad.

Yeah. Honestly, it is too early to go and predict, but I can tell you that at least in the UAE for us we saw a more demand on our product.

What I can say that for us April will be better, and as I mentioned going forward we acknowledge where we'll lose and where we will gain, and as far as our work toward the best interest of our stakeholders' company, short-term and long-term, is to focus on the opportunity or at least where we are able to sell and where we are able to supply, and we hope that we'll be gaining more market share hopefully in the UAE and the region also. India and Bangladesh demand, we can say it is stable and better, especially Bangladesh after the interim government is more stable and we can see momentum in the market.

In India, it was with the shutdown earlier in Morbi of non-availability of gas. In April, we started taking gas which impact will be on the cost in India of margin, which was increase in energy cost will impact further in the margin only in India.

I don't think we can predict the margin for full year, it is too early. Let us see how it moves.

Thank you very much.