Slide 1: Oriental Weavers Investor Presentation
ORIENTAL WEAVERS Investor presentation
Slide 2: Oriental Weavers in Numbers
Oriental Weavers in Numbers No. 1 8 130 World Largest Manufacturing producer by volumes Export countries companies 85% c. 82% 67% Market share in Egypt Export contribution in Utilization rate 3Q FY2017 Slide 2
Slide 3: Group's key Milestones
Group’s key Milestones Oriental Weavers • Sphinx, the US •OW China. US subsidiary OW Sphinx was & MAC were distribution arm. •Patent rights for 100% partnering with named “the Supplier established • OW largest showroom acrylic rugs, which emulates Pantone & Tommy of the Year “ by the look and feel o
Slide 4: Main segments of OW
Main segments of OW Woven Tufted Non-woven Description Surface yarn is woven simultaneously The surface yarn is Fibers bonded together with the backing. Then a latex inserted into a using chemicals and compound is added. polypropylene sheet heat. Subsidiaries OWC OWI & OWUSA OW MAC New MAC EFCO OWT
Slide 5: The Group's structure
The Group’s structure Oriental Weavers Carpets OW USA OW Textiles OW MAC EFCO International OW China New MAC Slide 5
Slide 6: A Vertically Integrated Business Model
A Vertically Integrated Business Model Oriental Weavers has complete control over the manufacturing process. Raw material procurement: The wool is sourced from suppliers in Egypt, New Zealand and the UK; Polypropylene granules are sourced from local and regional suppliers. Fiber extrusion: Raw w
Slide 7: Policy towards EGP floatation & high EGP i/r
Policy towards EGP floatation & high EGP i/r Revised local selling prices Increasing focus on export exposure ( 67% as of 3Q 2017) to secure foreign currency, ensure better profitability, and With 4% local currency debt as of September 30 2017, OW is working on gradually settling its EGP debt
Slide 8: Industry overview | Global carpets & rugs market
Industry overview| Global carpets & rugs market Global Carpets & rugs market by value (USD bn) Global Carpets & rugs market by bn sqm (5 yr CAGR) North America: 2.6% Europe:1.1% Asia & pacific:3.2% others:3.8% Total 5 4.4 0.6 5 year CAGR 0.5 5 year CAGR 4.1% 2.6% 1.7 45 1.5 1.1 1.0 37 1.4 1.6 2016 2
Slide 9: Global Macro Fundamentals
Global Macro Fundamentals US Market Europe Asia & Africa Expected continuous growth in new home sales driven by European economy is set to follow a Strong potential in African employment gains and a rise in household formations. moderate growth path. beside East Asian markets. New residential constr
Slide 10: Demand Triggers in Egypt
Demand Triggers in Egypt Growing economy GDP is expected to grow by 4 -5% annually up to 2021 Sizeable youth bracket as per the IMF. Sizeable youth 50% of the Egyptian population are near the marriage population with around one million marriages taking place annually. Housing gap Housing gap is abou
Slide 11: OW: A large player in the Egyptian market
OW: A large player in the Egyptian market Capturing a strong market share in the local market. Sells directly through a network of 230 showrooms. 80k sqm of retail and wholesale selling area. Adding between 6-8 showrooms annually. Slide 11
Slide 12: Local market overview
Local market overview Growing local revenues (EGPbn) Export vs. Local Revenue % Local sales volumes (mn sqm) 3-year CAGR 12% Export Local 3-year CAGR 4% 39% 40% 45% 45% 3.0 2.7 51 54 2.1 2.3 48 48 61% 60% 55% 55% 2013 2014* 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 •On adjusted basis includi
Slide 13: Local Market Development in 9M 2017
Local Market Development in 9M 2017 Contribution to Percentage Change Local Revenues Percentage Change 3Q 2017 vs Volume Value Avg. 9M 2017 vs Volume Value Price 3Q 2016 9M 2016 3Q 2017 3Q 2016 Woven ▼25% ▲31% ▲73% 84% 71% Woven ▼19% ▲45% Tufted ▲1% ▲18% ▲16% 10% 9% Tufted ▲7% ▲34% Non-woven felt ▲8
Slide 14: Export Market development
Export Market development Revenue contribution & performance by region in 3Q 2017 Africa & GCC Russia & 3% Egypt Asia 33% 4% ▲113% US ▲163% Russia & China Europe ▲110% 25% Asia ▲9% ▲132% ▲86% US 34% ▲96% Slide 14
Slide 15: Longstanding relationship with major customers
Longstanding relationship with major customers Slide 15
Slide 16: OW's long standing position in the US
OW’s long standing position in the US Extended partnership agreement with Tommy Bahama. America’s most magnificent rug award in Atlanta Floor covering exhibition. Opened corporate showrooms in 2012 in Fifth Avenue, New York and Las Vegas Growing online business with Target, Kohl’s, Amazon, an
Slide 17: Export performance overview
Export performance overview Export revenues (EGPbn) Export vs. Local Revenue % Export volumes (mn sqm) Export Local 39% 40% 45% 45% 3.4 3.5 3.7 76 74 71 3.2 63 61% 60% 55% 55% 2013 2014* 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 *On adjusted basis including sales of the merged Modern EFCO Sl
Slide 18: Export Market Development
Export Market Development C. Europe & Scandinavian A. New orders in the US Market -Jysk (1500 stores), Rusta (70 stores) -Home Depot, Menards, Lowe’s -Ikea -Walmart, Big Lots -France | St Maclau, BUT, Le Claire, Gifi, -Tuesday mornings Dealing with agents that sell online -Dotcom retailers, Home cit
Slide 19: Export Market Development in 9M2017
Export Market Development in 9M2017 Contribution to Export Revenues Percentage Change Percentage Change vs. 3Q 3017 vs Volume Value Avg. 9M 2017 vs Volume Value Price 3Q 3016 9M 2016 3Q3017 3Q3016 Woven ▲18% ▲107% ▲75% 73% 76% Woven ▲3% ▲105% Tufted ▲53% ▲229% ▲115% 23% 16% Tufted ▲23% ▲152% Non-wov
Slide 20: Revenue progress
Revenue progress Revenues (EGPbn) Export vs. Local Revenue % Sales volumes (mn sqm) Export Local Export Local Export Local 6.8 5.8 5.9 124 122 5.5 122 117 39% 40% 45% 45% 3.0 2.1 2.3 2.7 48 48 51 54 61% 60% 55% 55% 3.4 3.5 3.2 3.7 76 74 71 63 2013 2014* 2015 2016 2013 2014 2015 2016 2013 2014 2015 2
Slide 21: 9M 2017 Financial summary
9M 2017 Financial summary Quarterly Revenue Performance (EGPmn) 9M Revenue Performance (EGPmn) Local Export Local Export 7,507 2,594 4,349 4,501 4,546 4,914 1,504 1,519 1,584 1,735 2,468 2,322 834 798 2,641 878 2,224 2,593 786 859 1,708 2,033 626 685 3Q 2014 3Q 2015 3Q 2016 3Q2017 9M 2014 9M 2015 9M
Slide 22: Diversified Product Mix
Diversified Product Mix 3Q 2017 Revenue Mix (by volume) 3Q 2017 Revenue Mix (by value) Non- Others Non- woven 0% woven 4% 4% Tufted 19% Woven 48% Woven Tufted OW China 29% 2% 58% OW USA 17% OW China 1% OW USA 9% Woven-Grade A EGP325/sqm Tufted wall-to-wall EGP53/sqm Woven-Grade B EGP133/sqm Tufted p
Slide 23: Premier Partners: Hospitality Segment
Premier Partners: Hospitality Segment OW Hospitality, the London-based hospitality carpeting arm, is the preferred supplier for the Four Seasons and several other major hotel chains. We continue to see solid and continuous growth in the US and the KSA. Slide 23
Slide 24: OW Hospitality: Recently delivered Projects
OW Hospitality: Recently delivered Projects El-Masah Hotel, New Administrative Capital New Capital Airport , New Administrative Capital Conference center, New Administrative Capital Al-Sahaba Mosque, Sharm El Sheikh, The Military Judgment House, New Cairo, Cairo Marriott Hotel, M.S. Mayfair
Slide 25: Recent and Future Expansions
Recent and Future Expansions 2015 2016 2017 Woven 13 looms added increasing production 4 new goblin looms capacity by 6% 9 new looms 8 looms were added till November 2 yarn production 2 looms should be received before lines yearend 2016-2020 Tufted MAC penetrated the artificial turf 2017: Digital Pr
Slide 26: 3Q 2017 Cost Breakdown
3Q 2017 Cost Breakdown Other Wool 18% 5% Polypropylene- Nylon 30% Selling Exp. Raw material 19% 52% Backing 10% Finishing material 7% Industrial Exp. 11% Almost 63% of costs are dollar based. Source: Company Slide 26
Slide 27: Polypropylene is OW main raw material
Polypropylene is OW main raw material Polypropylene — used in synthetic and blended rugs Polypropylene granules are carefully sourced and carpets — is an oil derivative, representing after receiving monthly price quotations from around 28% of costs. Polypropylene prices are driven different supplie
Slide 28: Annual Financial and Operational Performance
Annual Financial and Operational Performance FY 2016 financial Summary Net sales EBITDA (EGP bn) (EGP mn) 6.8 1,116 +15% growth y-o-y Net Cash Flow +39% y-o-y performance Net debt Paid off from Operations EGP 1,422mn EGP57 mn Net Profit EBITDA Margin 16.5% (EGP mn) Capex Recorded rebates 484 EGP529
Slide 29: Financial Summary
Financial Summary EBITDA Performance (EGPbn) Net Income Performance Net Debt (EGPbn) EBITDA EBITDA margin Net income Net margin EGPbn Net debt Net debt/EBITDA EGPmn EGPmn 2.0 16.5% 18% 500 8% 1,100 7.1% 1.5 1.2 2.5 13.7% 400 1.2 2.0 850 13.3% 6.5% 1.0 12.6% 14% 6.3% 6.1% 1.0 1.5 600 1,116 300 6% 694
Slide 30: 9M 2017 Financial summary
9M 2017 Financial summary Quarterly EBITDA Performance (EGPmn) 9M EBITDA Performance (EGPmn) EBITDA EBITDA margin EBITDA EBITDA margin 350 16.0% 12.6% 18% 1,400 16.8% 17% 300 13.9% 16% 15.6% 13.0% 1,200 17% 14% 250 1,000 16% 12% 15.0% 14.9% 200 10% 800 16% 327 1,169 150 8% 600 15% 254 765 209 6% 400
Slide 31: 9M 2017 Financial summary
9M 2017 Financial summary Quarterly Net income Performance (EGPmn) 9M Net income Performance (EGPmn) Net income Net Margin Net income Net Margin 140 8.4% 10.0% 600 8.7% 10.0% 7.3% 120 4.2% 8.0% 500 7.1% 8.0% 100 6.5% 6.0% 400 80 4.6% 6.0% 133 548 300 109 60 4.0% 4.0% 395 40 2.1% 200 309 69 294 2.0%
Slide 32: Impact of Energy Subsidy Reform on Costs
Impact of Energy Subsidy Reform on Costs % Jun-14 Jul-15 Jul-16 Jul-17 Energy cost Change Natural gas (US$/mmbtu) 2.25 5 5 5 - Electricity (EGP/KW) 0.28 0.435 0.53 0.77 48% Transportation costs (EGP Diesel/Liter) 1.1 1.80 2.35 3.65 55% * Energy cost represents less than 4% of the company’s total cos
Slide 33: Export Incentive Program
Export Incentive Program: Export cash Documents submitted proceeds to Export Subsidy EGP200 mn delayed Fund disbursement till October 2017 OW recorded EGP78mn as of 9M 2017. Export subsidies Exports (% of exports in EGP) Sources: Company Slide 33
Slide 34: Export Incentive Program
Export Incentive Program The program includes only very minor changes to incentive rates, but does offer exporters extra incentives in growing USD exports from 10%–25%, exporting to Africa and opening new markets (such as Russia, China, Latin America, CIS). These amendments should be implemented r
Slide 35: Share Data
Share Data EGP EPS Payout ratio 1.800 92% 100% o450 mn shares at par value of EGP 1 per share. 1.600 78% 76% 81% 1.400 80% o Issued and Paid-in Capital EGP 450 mn. 1.200 60% 1.000 oListed in EGX since September 1997. 0.800 40% o3 Month average daily value EGP6.2mn. 0.600 0.400 20% o Market Cap USD 4
Slide 36: Disclaimer
Disclaimer Certain information contained in this document consists of forward-looking statements reflecting the current view of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achie
Slide 37: For More Information, please contact
For More Information, please contact Ingy El-Diwany, CFA Investor Relations Manager +202-22685166 ieldiwany@orientalweavers.com www.orientalweavers.com Slide 37