RAK Ceramics has announced that it is selling its business interests in Sudan. The world’s largest ceramics manufacturer is offloading its North Africa asset in line with its pre-announced strategy to streamline its operations.
RAK Ceramics has entered into an initial agreement to sell its shares in RAK Ceramics Sudanese Investment Company. The board has also concluded agreements for the increase in its sanitary ware production capacity in the UAE by an additional 500,000 piece per annum.
RAK Ceramics has decided to sell RAK Sudan in order to avoid operational issues relating to imports of raw materials and spares. The transfer of the asset will also prevent further financial losses stemming from hyperinflation and FX losses, with total RAK Sudan losses from carried to consolidated financials being AED 16.48 million for the period ending September 2014.
“RAK Ceramics would like to confirm that it is in the process of selling its business operations in Sudan. We already announced our intentions in our Q3 results presentation and detailed at the time that we were reviewing the strategic options available to us in the country. The sale is the result of this review. At present, we are in a preliminary agreement status and the completion of the sale is subject to final agreement and regulatory approval. The increase in our sanitaryware production is inline with our strategy to focus on our core business; tiles, sanitaryware, taps and faucets and tableware. ,” said Abdallah Massaad, CEO, RAK Ceramics.
RAK Ceramics will be following up their announcement of their sale of RAK Sudan with a net financial impact report following consolidation status and after receiving the necessary financial and regulatory approvals.
The proposed sale is expected to be completed by March 31, 2015 and it is expected that RAK Ceramics will receive its entire proceeds in cash upon disposal of the shares.
The company received an initial non-refundable cash deposit from the prospective buyers. Upon completion RAK Ceramics would have exited its business in Sudan in entirety and this investment would have realized cash for further expansion in high margin sanitary ware business in the UAE.
