RAK Co. for White Cement & Construction Materials

1. Company Overview & Earnings Context

Ras Al Khaimah Co. for White Cement and Construction Materials P.S.C. is a UAE-based manufacturer of cement, hydraulic cement, lime products, concrete blocks, interlock tiles and other cement products. The Group's parent is owned by UltraTech Cement Limited, while its ultimate parent and controlling party is Grasim Industries Ltd.

The Group reported a weaker Q2 2026 performance, with revenue declining sharply to AED 47.73 million and net profit falling to AED 2.17 million. The decline was largely linked to regional shipping and logistics disruptions, which significantly affected export volumes and resulted in lower production utilisation.

2. Financial Performance Snapshot

• Revenue: AED 47.73 Million (-37.1% YoY)

• Gross Profit: AED 4.24 Million (-64.5% YoY)

• Interest Income: AED 4.47 Million (+6.1% YoY)

• Profit Before Tax: AED 2.35 Million (-76.7% YoY)

• Net Profit: AED 2.17 Million (-75.0% YoY)

• Earnings Per Share (EPS): AED 0.004, compared with AED 0.017 in Q2 2025

Compared with Q2 2025:

• Revenue declined from AED 75.86 million to AED 47.73 million.

• Gross profit declined from AED 11.92 million to AED 4.24 million.

• Interest income increased from AED 4.21 million to AED 4.47 million.

• Profit before tax declined from AED 10.08 million to AED 2.35 million.

• Net profit declined from AED 8.69 million to AED 2.17 million.

• EPS declined from AED 0.017 to AED 0.004.

3. Operational Highlights & Key Metrics

• Total Assets: AED 980.35 Million

• Total Equity: AED 890.97 Million

• Total Liabilities: AED 89.39 Million

• Term Deposits: AED 397.94 Million

• FVTOCI Investments: AED 73.93 Million

• Inventories: AED 71.97 Million

• Net Operating Cash Flow: AED 7.94 Million (+3.2% YoY)

• Capital Commitments: AED 5.56 Million

• Recommended Dividend: AED 0.02 Per Share, totaling AED 10.00 million

4. Key Performance Drivers

The main driver of the earnings decline was a sharp reduction in export sales. Revenue from markets outside the UAE fell to AED 12.78 million from AED 44.79 million, a decline of approximately 71.5%. By contrast, domestic UAE revenue increased to AED 34.95 million from AED 31.07 million, representing growth of approximately 12.5%.

The Group stated that regional military escalation resulted in shipping and logistics disruptions that significantly affected export sales volumes. In response to weaker demand, it reduced production levels to avoid excess inventory, leaving some manufacturing capacity temporarily idle. Fixed production overheads associated with abnormal idle capacity were charged directly to cost of sales, putting additional pressure on gross profitability.

Despite weaker operating earnings, interest income increased 6.1% to AED 4.47 million, supported by the Group's sizeable deposit portfolio. Term deposits stood at AED 397.94 million at the end of June 2026 and carried interest rates ranging from 3% to 5%.

5. Outlook & Forward Considerations

The company did not provide specific quantitative guidance for the remainder of its financial year ending 31 March 2027 and cautioned that its Q2 results are not necessarily indicative of full-year performance.

Regional logistics conditions remain the key near-term uncertainty. Management said shipping and logistics disruptions were ongoing at the time the financial statements were approved and that it was unable to reliably estimate the financial impact because of the rapidly evolving situation. The Group has implemented contingency measures to mitigate potential operational impacts.

The company also maintains a strong liquid asset position, including almost AED 398 million in term deposits, while total liabilities remained relatively low at AED 89.39 million compared with total equity of AED 890.97 million.

6. Investor Takeaway

Ras Al Khaimah White Cement's Q2 2026 results were significantly affected by external disruptions to its export business. Revenue fell 37.1% YoY, while gross profit declined 64.5% and net profit dropped 75.0% to AED 2.17 million. The major weakness came from overseas markets, where revenue fell more than 70%, while UAE sales actually increased year-on-year.

At the same time, the Group retains a strong balance sheet, with AED 890.97 million in equity and substantial term deposits. Operating cash flow also remained positive and slightly improved to AED 7.94 million. In addition, FVTOCI investments increased in value by AED 7.42 million during the quarter, lifting total comprehensive income to AED 9.86 million despite the weaker reported net profit.

The key factor to watch is therefore export normalization. A recovery in regional shipping and logistics conditions could materially improve production utilisation and sales, while prolonged disruptions would likely continue to pressure revenue and manufacturing margins.