RAK Ceramics (Bangladesh) financial analysis: gas cost doubled, 2025 loss, H1 2026 recovery (Oct 2026)

Investment considerations: a scale tile brand whose margins depend on gas, with a related-party distributor at the centre of sales

RAK Ceramics (Bangladesh) PLC makes ceramic and porcelain wall and floor tiles and sanitaryware at Gazipur, near Dhaka. It was set up in 1998 as a UAE-Bangladesh joint venture, started production in November 2000 and listed on the DSE and CSE in June 2010 [1 p.86]. The parent, RAK Ceramics PJSC of Ras Al Khaimah, owns 291.59m of the 427.97m shares (68.1%) [1 p.66]. Two fully owned subsidiaries complete the group: RAK Power, which sells all its electricity to the ceramics company [1 p.104], and RAK Security and Services [1 p.65]. The financial year ends on 31 December, so the latest audited year is 2025 and the latest filed interim is the half-year to June 2026.

For most of the last decade RAK was the most profitable tile maker on the DSE: gross margin stayed between 22% and 39% from 2017 to 2023 and net profit ranged from BDT 311m to BDT 1,018m [4 p.113] [1 p.66]. That changed in 2024-2025. Gas supply to the Gazipur kilns was disrupted, the gas bill per square foot of tiles roughly doubled after 2022, and interest costs rose with borrowings. The company lost BDT 27m in 2024 and BDT 396m in 2025 [1 p.64]. From July 2025 the plant received uninterrupted LNG-based supply [1 p.64], and H1 2026 returned to a small profit of BDT 22.8m [2 p.3].

Business: a tile-led brand whose last three years were decided by gas supply

RAK sells tiles and sanitaryware through dealers and showrooms across Bangladesh, to homeowners, contractors, architects and designers [1 p.61]. Tiles are the larger business: they were 77.3% of gross local sales in 2025, up from 70.7% in 2020 [12]. The tile plant runs four production lines on Italian SACMI equipment with a capacity of 10.32m sqm (111.04m sft); the single sanitaryware plant can make 1.45m pieces a year [1 p.62] [1 p.18]. Exports are negligible: BDT 31m of tiles in 2025, under 0.5% of sales [1 p.123].

Tiles and sanitaryware carry heavy indirect taxes. In 2025 gross local sales of BDT 10,151m bore BDT 1,042m of supplementary duty and BDT 1,328m of VAT, and dealers received BDT 505m of commissions, incentives and breakage allowances, leaving net sales of BDT 7,307m for the ceramics company [1 p.123]. Gross-to-net has stayed between 27.7% and 30.6% since 2020 [12], so any change in supplementary duty in the national budget moves net revenue directly.

The decade falls into three phases. From 2017 to 2019 sales hovered around BDT 6.3-7.0bn and margins drifted down as competition grew [4 p.113]. Covid cut 2020 sales to BDT 5,289m, followed by a sharp rebound to BDT 6,851m in 2021 and a peak of BDT 7,819m in 2023 [1 p.66]. Since 2023 gas has been the story: power and gas cost rose from BDT 721m (2022) to BDT 1,416m (2023) on similar output [3 p.128], and in 2024 the shortage itself cut tile output to 79m sft [1 p.126]. The directors attribute the 2025 loss to 'inadequate gas pressure' that 'hampered production as well as sales' [1 p.58].

Volumes and prices: tiles back to 91% utilisation in 2025, sanitaryware down to 61%

Tiles. Local tile volume peaked at 101.7m sft in 2022, fell to 93.5m sft in 2023 and 81.4m sft in 2024, and recovered to 93.4m sft in 2025 [3 p.127] [1 p.123]. Production followed gas: 98.9m sft in 2022 and 102.5m sft in 2023 (89% and 92% of capacity), then 79.0m sft in 2024 (71%) and 100.6m sft in 2025 (91%) [3 p.130] [1 p.126]. The 2025 production gain of 27% came mostly after July, when LNG supply became uninterrupted [1 p.62] [1 p.64].

Price did more of the work than volume in 2022-2023. The gross tile price (including SD and VAT) rose from BDT 70.3 per sft in 2021 to BDT 86.4 in 2023, about 23%, as the company passed on the taka's fall and higher gas cost [12]. It then held at BDT 86.8 in 2024 and eased to BDT 84.0 in 2025, about BDT 905 per sqm. Management describes 'strategic price calibration for adjusting to market dynamics' and a push into both premium large-format tiles and a value range [1 p.62] [1 p.54]. Dealer commissions fell from 7.1% of gross sales in 2024 to 5.0% in 2025 [12], which supported net realisation but rose again in H1 2026, when commission and incentives were BDT 370m against BDT 215m a year earlier [2 p.32].

Sanitaryware. Volume fell from 1.33m pieces in 2021 to 0.94m in 2025, while the gross price per piece rose from BDT 2,058 to BDT 2,341 [12]. Production was 0.89m pieces in 2025, 61% of capacity, against 92% in 2022 [3 p.130] [1 p.126]. Unlike tiles, sanitaryware did not recover with gas in 2025, which points to demand and competition rather than energy. The division plans two to three new premium water-closet models in 2026 [1 p.18].

Gas: power and gas rose from 9.7% to 19.1% of sales and decided the margin

Power and gas is the cost line that broke the margin. In the standalone accounts it was BDT 555m in 2020, BDT 692m in 2021 and BDT 721m in 2022, then BDT 1,416m in 2023, BDT 1,183m in 2024 and BDT 1,398m in 2025 [4 p.240] [3 p.128] [1 p.123]. Per square foot of tiles produced it went from BDT 6.82 (2021) and BDT 7.29 (2022) to BDT 13.82 (2023), BDT 14.97 (2024) and BDT 13.89 (2025) [12]. As a share of net sales it rose from 9.7% to 19.1%. The ratio uses tile output only, because the filings do not split energy between tiles and sanitaryware, so it overstates the tile cost slightly.

Two things drove it. First, tariffs: the jump in 2023 came with almost the same tile output as 2022 (102.5m vs 98.9m sft), so it was price, not volume [3 p.128] [3 p.130]. Second, supply: in 2024 the shortage cut output by 23% while the bill fell only 16%, so fixed energy and overhead were spread over less product [1 p.123] [1 p.126]. The directors say margins were hit by 'unabsorbed fixed costs incurred up to June'25 due to disruptions of gas supply' and that supply became uninterrupted with LNG support from July 2025 [1 p.64]. The 2025 power and gas bill includes power bought from the subsidiary RAK Power, BDT 556m in 2025 against BDT 459m in 2024 [1 p.103]; RAK Power itself runs on gas, so its cost is part of the same exposure.

The problem has not gone away. In August 2026 the company secretary of RAK told The Business Standard that kilns need at least 25 PSI of gas pressure but pressure often falls to 8-10 PSI, and the vice president of the manufacturers' association, Rasheed Mymunul Islam, who is also managing director of peer Monno Ceramic [6 p.64], said many ceramic factories were running at only 20-30% of capacity [10]. This is a single-outlet report and we attribute it to TBS. In H1 2026 the consolidated power and gas cost was BDT 413m, slightly below BDT 420m a year earlier, on higher sales [2 p.32]; the company explained the turnaround to TBS as improved gas pressure, higher production and lower costs, together with tax rule changes and lower depreciation [9].

History gives a sense of the sensitivity: between 2022 and 2023 the power and gas bill rose by BDT 695m, which equals 8.9pp of 2023 standalone net sales; standalone gross margin fell only 1.2pp that year because price increases offset most of it, but in 2024, when volume fell as well, standalone gross margin dropped a further 7.8pp to 17.3% [12].

Raw materials and the taka: materials rose to 39.4% of sales, with more sourced from the parent group

Materials consumed were BDT 2,877m in 2025, 39.4% of standalone net sales, up from 33.3% in 2020 [1 p.123] [12]. Clay, feldspar, glazes and frits are largely imported through Chittagong; in 2021 the CIF value of imported raw materials was BDT 2,397m [4 p.244], and the plant's location is chosen partly for port access [1 p.18]. A growing part comes from the parent group: purchases from Ceramin FZ LLC, a fellow subsidiary, rose from BDT 493m in 2024 to BDT 904m in 2025 [1 p.103].

The taka matters three ways. Import prices rise as the currency falls; foreign-currency trade payables and USD short-term loans revalue, and the royalty owed to the parent is a USD liability. At December 2025 the company owed USD 2.45m of trade payables, USD 3.44m of short-term borrowings and USD 4.23m of royalty and technical fees, with the year-end rate at BDT 122.20 per USD against BDT 119.50 a year earlier [1 p.102]. The foreign-exchange loss was BDT 29.2m in 2025 and BDT 16.0m in 2024, booked in finance expense [1 p.100]. The company's own sensitivity puts a 3% move in USD at about BDT 0.3m of profit on the year-end balance sheet [1 p.102]; the larger effect is on the cost of each new import shipment, which the filings do not quantify.

Line items: gas, inventory write-downs and interest turned a BDT 858m operating profit (2023) into a loss

Gross margin. Consolidated gross margin was 38.9% in 2017, 29.7% in 2021, 25.0% in 2023, 17.2% in 2024 and 13.2% in 2025 [12]. Besides gas, 2025 carried BDT 108m of provisions for slow-moving and obsolete inventory against BDT 19m in 2024, and repairs and stores rose to BDT 527m from BDT 377m [1 p.98] [1 p.99]. Depreciation in cost of sales was steady at about BDT 455m [1 p.98].

Operating costs. Marketing and selling expenses were BDT 627m in 2025, of which freight was BDT 281m [1 p.124]; administrative expenses were BDT 348m [1 p.84]. Together they took 13.2% of sales in 2025; on the five-year-table basis the two lines were 14.0% of sales in 2023 [1 p.66]. The managing director's remuneration is 3% of profit before tax, so it falls to zero in loss years: BDT 28.4m in 2022, BDT 25.2m in 2023, BDT 1.2m in 2024 and nil in 2025 [3 p.128] [1 p.99]. Receivable impairments were BDT 31.9m in 2025, of which BDT 9.4m related parties [1 p.99].

Finance cost. Financial expenses were BDT 10m in 2021 and BDT 267m in 2025 [1 p.66]: BDT 224m of loan interest, BDT 29m of FX loss and the rest lease interest and bank charges [1 p.100]. Short-term taka loans cost 13.0-14.5% and the EBL term loan 13-15% [1 p.102]. Finance expense rose to 3.6% of sales from 0.2% [12].

Tax. Because of minimum tax on turnover and withholding at source, RAK paid tax even when it lost money: current tax was BDT 195m in 2025 on a pre-tax loss of BDT 286m, against BDT 34m that would have been due on taxable profit [1 p.100]. The effective rate was 24-31% in 2017-2023 and 153% in 2024 [12]. In H1 2026 tax was only BDT 12.5m on PBT of BDT 35.3m [2 p.3]; the company told TBS that changes in income tax regulation helped the turnaround [9].

Parent and related parties: royalty follows profit; the MD's distributor holds 55% of receivables

The UAE parent. RAK Ceramics PJSC is listed in Abu Dhabi, makes about 123m sqm of tiles and 5m pieces of sanitaryware a year, and has a group turnover of around USD 1bn [1 p.64]. It nominates four of the seven directors, including the chairman, Abdallah Massaad [1 p.66]. RAK Bangladesh pays the parent a royalty and technical know-how fee 'calculated 8% on business profit' [1 p.123]: BDT 91m in 2021, BDT 70m in 2022, BDT 67m in 2023, BDT 1.8m in 2024 and nil in 2025 [4 p.240] [3 p.128] [1 p.123]. Because the fee is tied to profit, it fell away in the loss years. The amount payable to the parent stood at BDT 519m at both December 2024 and December 2025 [1 p.103], so past fees have accrued but not been paid; the USD 4.23m royalty liability is part of the FX exposure [1 p.102]. Purchases from the parent itself were BDT 18m in 2025 [1 p.103].

The power subsidiary. RAK Power sells all its output to the ceramics company: BDT 556m in 2025 (+21%), on which it made a loss of BDT 2.8m [1 p.55] [1 p.103]. RAK Ceramics guaranteed a BDT 392.9m Al-Arafah Islami Bank loan to RAK Power for a new 2x4.3MW genset, approved at the AGM of 22-Mar-2025; BDT 154.9m was outstanding at December 2025 [1 p.104]. RAK Security and Services earned BDT 7.3m in 2025 [1 p.55].

Mohammed Trading. The largest related party is a distributor. Note 37 states that the owner of Mohammed Trading is the managing director of RAK Ceramics, and that shareholders at the 26th AGM on 22-Mar-2025 approved supplying it with goods equal to 10% or more of revenue [1 p.104]. Sales to Mohammed Trading, including tax and VAT, were BDT 1,841m in 2024 and BDT 2,228m in 2025, 19.4% and 21.9% of gross ceramics sales; the receivable from it was BDT 1,235m and BDT 1,467m, 44.8% and 55.5% of trade receivables [1 p.103] [1 p.98] [12]. The receivable is secured by guaranteed cheques [1 p.103]. Note 37 also lists purchases from three other related parties in 2025: Kea Printing & Packaging (BDT 134m, against 86m in 2024), International Trade Agency (BDT 87m, against 35m) and Palli Properties (BDT 21m) [1 p.103]; the filing does not say who owns them. On its own purchases that is about 240 days of credit [12], much longer than the group average. The related-party receivable was already BDT 1,269m at December 2023 [3 p.130]. The auditor made credit risk on trade receivables a key audit matter, noting that 'a significant portion of the Group's trade receivables relates to a single customer, which is also a related party', but gave an unmodified opinion [1 p.82] [1 p.64].

Ratios: margin, returns and cash conversion all peaked in 2017-2021; receivable days now 131

Growth. Sales grew only 0.7% a year from 2017 to 2025 (BDT 6,956m to BDT 7,373m), and the best years were rebounds: +29.5% in 2021 after Covid and +10.6% in 2025 after the gas shortage [12]. Profit shrank throughout: EPS on today's share count fell from BDT 2.38 in 2017 to BDT 1.45 in 2023 before the losses [12].

Returns. The company's own return on shareholders' funds was 12.07% in 2021, 8.79% in 2022 and 7.9% in 2023, then negative; its ROCE fell from 15.17% (2021) to -0.78% (2025) [1 p.58]. The median net margin from 2017 to 2023 was 11.7% [12].

Working capital. Inventory days have been above 200 since 2021, at 208 in 2025 [12]; finished goods rose 23% to BDT 1,225m while raw materials fell 8% [1 p.56]. Receivable days rose from 65 (2021) to 151 (2024) and 131 (2025) as the Mohammed Trading balance grew [12]. Payables stretched from 67 to 113 days, which the directors say reflects renegotiated vendor terms [1 p.64]. The cash conversion cycle was 226 days at December 2025 and 247 days at June 2026 (annualised) [12].

Cash conversion. Operating cash flow was BDT 1,229m in 2020 and BDT 426m in 2025, while capex reached BDT 1,046m in 2022 and BDT 1,007m in 2023 [4 p.157] [3 p.91] [1 p.85]. Free cash flow was negative in 2022-2024 and BDT 205m in 2025; after dividends it has been negative every year since 2021 [12]. In H1 2026 operating cash flow was BDT 51m against capex of BDT 245m [2 p.5].

Balance sheet: net debt of BDT 1,995m at June 2026 after net cash of BDT 1.8bn in 2021

RAK moved from net cash to net debt in three years. Cash was BDT 2,277m at December 2021 with BDT 430m of borrowings; at June 2026 cash was BDT 282m and borrowings BDT 2,278m, of which BDT 1,884m short-term [4 p.154] [2 p.2]. Net debt was BDT 1,995m, 0.31x equity [12]. The money went into plant (capex BDT 2,052m in 2022-2023), into working capital and into dividends of about BDT 428m a year even in 2024-2025 [1 p.85]. Equity fell from BDT 7,828m (2023) to BDT 6,452m (June 2026); NAV per share from BDT 18.29 to BDT 15.08 [12].

Receivable quality is the main balance-sheet question. Of BDT 2,646m of trade receivables at December 2025, BDT 2,027m were not past due and BDT 49m were more than 90 days overdue [1 p.101]. Expected-credit-loss provisions totalled about BDT 51m [1 p.101]. Current tax liability was BDT 434m [1 p.84]. The auditor's report carries no qualification, reservation or adverse remark [1 p.65].

Peers: RAK's 2025 gross margin was 13pp below Fu-Wang's, but Fu-Wang carries 4.1x debt to equity

The listed ceramics peers report on a June year and are much smaller, so the comparison uses each company's latest annual report in our corpus: Fu-Wang Ceramic (tiles, FY to June 2025), Monno Ceramic (tableware, FY to June 2025) and Shinepukur Ceramics (porcelain and bone-china tableware, FY to June 2024; its FY2025 report is not in the corpus). All ratios below use the same definitions from each filing: gross margin = gross profit / net sales; operating margin = profit from operations as each company reports it (Shinepukur and Fu-Wang include small other income; Monno excludes its BDT 118m); borrowings / equity = all interest-bearing loans / total equity [5 p.43] [5 p.44] [6 p.63] [6 p.64] [7 p.98] [7 p.99].

RAK's 2025 gross margin of 13.2% was 13.0pp below Fu-Wang's 26.2% and 10.8pp below Monno's 24.0%, and close to Shinepukur's 13.5% [12]. The peers are not immune to the same pressures: Fu-Wang made BDT 226m of operating profit but paid BDT 184m of finance cost and earned BDT 14m after tax, with borrowings of BDT 6,643m, 4.1x its equity [5 p.43] [5 p.44]. Monno's profit came from BDT 118m of other income, not operations [6 p.64]. Shinepukur ran its porcelain line at 71% and bone china at 61% of capacity and cited 'absence of required gas pressure' [7 p.118].

Competitors' expansion. The clearest expansion among listed peers is Fu-Wang: capital work in progress of BDT 1,315m at June 2025 and new long-term loans, with total loans of BDT 6,643m called out as a key audit matter [5 p.43] [5 p.40]. RAK itself describes around 30 domestic manufacturers plus imports, especially from China [1 p.54]. The largest private tile makers are unlisted and do not file with the DSE; we found no 2025-2026 report on the T2 allowlist of a new tile plant, and TBS reported in August 2026 that factories were running well below capacity on gas shortages [10]. New capacity is therefore a medium-term risk to price rather than a current one.

Governance and dividends: 10% cash every year, but 2025's went to minorities only

Ownership. At 31-Dec-2025 RAK Ceramics PJSC held 291,586,431 shares (68.1%) and the managing director, S.A.K. Ekramuzzaman, 16,895,824 shares (3.9%); sponsors and directors together held 72.08% [1 p.64] [1 p.66]. The board has seven members including two independent directors; the appointment of a female independent director was awaiting BSEC consent [1 p.65]. The auditor changed from A. Qasem & Co. (2023) to ACNABIN (2025) [3 p.90] [1 p.84].

Dividends. RAK has paid a cash dividend every year since listing. Declared amounts were BDT 642m for 2019 (15%), BDT 428m for 2020 (10%), BDT 535m for 2021 (12.5%) and BDT 428m (10%) for each of 2022, 2023 and 2024 [1 p.98] [1 p.64]. For 2024 the 10% was paid out of retained earnings although the year was a loss. For 2025 the board recommended 10% in cash to general shareholders only: sponsors and directors, holding 72.08%, are excluded from it, so the payout is BDT 119.5m on 119.49m shares [1 p.64]. Retained earnings fell from BDT 2,074m (2023) to BDT 698m (June 2026) [3 p.90] [2 p.2].

What's next: Q3 statements, capex commissioning and the FY2026 dividend in early 2027

Q3 2026. The board met on 27-Oct-2026 [8]. The DSE announcement of 28-Oct-2026 gives NAV per share of BDT 14.96 and operating cash flow per share of BDT 0.90; its EPS figures are not labelled by period in our feed, so we do not use them until the Q3 statements are filed [8].

FY2026 accounts and dividend. Last year the board met on 3-Feb-2026 to approve the 2025 accounts and dividend, with a record date of 25-Feb-2026 [8]; the FY2026 equivalent would fall around early February 2027 if the company keeps the same timetable.

Capex. Capital work in progress rose from BDT 101m (December 2025) to BDT 281m (June 2026) [2 p.2]; the 2025 report says the heavy equipment in progress is 'expected to be commissioned in the coming year', i.e. during 2026 [1 p.56]. Commissioning would add depreciation to cost of sales; the directors plan larger-format tiles and 50-60 new SKUs a quarter in 2026 [1 p.18].

Risks: gas first, then the related-party distributor and debt

Gas supply and price remain the dominant risk; each step in the tariff or loss of pressure moves cost of sales directly, as 2023-2025 showed. Related-party concentration in sales and receivables is the second: a fifth of gross sales and over half of receivables sit with one distributor owned by the managing director [1 p.103]. Third, leverage: short-term borrowings at 13-14.5% now cost more than the operating margin earned in 2024-2025 [1 p.102] [12]. Fourth, the taka and imported materials. Fifth, new capacity from competitors.

Key questions: durability of gas supply, the distributor's balance and the dividend

RAKCERAMIC at BDT 24.3 trades at 1.61x June 2026 NAV of BDT 15.08; trailing EPS to June 2026 is BDT -0.39, so P/E is not meaningful [11] [2 p.3]. The company-reported year-end P/E was 20.9x (2021), 27.3x (2022) and 29.8x (2023) [1 p.59], and the listed peers trade at 0.66-0.94x their latest book [12]. These are facts about the price, not a view on it.

FAQ

When does RAK Ceramics (Bangladesh)'s financial year end?

31 December; the latest audited year is 2025 and the latest filed interim is H1 2026 [1 p.84] [2 p.3].

Why did RAK Ceramics lose money in 2025?

Gas disruptions to June 2025, higher power and gas cost, inventory provisions and higher finance expense; the loss was BDT 396m [1 p.64].

Who owns RAK Ceramics (Bangladesh)?

RAK Ceramics PJSC (UAE) owns 68.1%; the managing director 3.9% [1 p.66].

What is Mohammed Trading?

A distributor owned by the managing director; it bought BDT 2,228m of goods in 2025 and owed BDT 1,467m [1 p.103] [1 p.104].

What dividend did RAK declare for 2025?

The board recommended 10% cash (BDT 1 a share) to general shareholders only; sponsors and directors are excluded [1 p.64].

Which results does this report use?

Annual reports 2017-2025 and the unaudited H1 2026 statements; Q3 2026 figures are from the DSE announcement until the filing is in the corpus.

Sources

1. RAK Ceramics (Bangladesh) PLC Annual Report 2025 (year to 31-Dec-2025) · link · accessed 2026-10-31
2. RAK Ceramics (Bangladesh) unaudited consolidated financial statements, six months to 30-Jun-2026 · link · accessed 2026-10-31
3. RAK Ceramics (Bangladesh) Annual Report 2023 · link · accessed 2026-10-31
4. RAK Ceramics (Bangladesh) Annual Report 2021 (five-year data 2017-2021) · link · accessed 2026-10-31
5. Fu-Wang Ceramic Industry Ltd. Annual Report 2024-25 (year to 30-Jun-2025) · link · accessed 2026-10-31
6. Monno Ceramic Industries Ltd. Annual Report 2024-25 (year to 30-Jun-2025) · link · accessed 2026-10-31
7. Shinepukur Ceramics Ltd. Annual Report 2023-24 (year to 30-Jun-2024) · link · accessed 2026-10-31
8. Dhaka Stock Exchange announcements for RAKCERAMIC (Q2 and Q3 2026 results, board meetings) · link · accessed 2026-10-31
9. The Business Standard, 'RAK Ceramics turns around H1 performance, posts Tk2.28cr profit' (26-Jul-2026) · link · accessed 2026-10-31
10. The Business Standard, 'Gas crisis chokes plastic, ceramic industries' (5-Aug-2026) · link · accessed 2026-10-31
11. AnalystBro price data (TradingView feed): DSE daily bars to 29-Oct-2026 · link · accessed 2026-10-31
12. AnalystBro model for this report (workbook tabs below) · link · accessed 2026-10-31