Rak Ceramics Pjsc · ADX:RAKCEC
Rak Ceramics Pjsc — RAK Ceramics PSC — FY2016 Earnings Presentation
26 slides from Rak Ceramics Pjsc's earnings presentation, 2017
Slide 1: 2016 Full Year Results Presentation
2016 Full Year Results Presentation
Slide 2: Disclaimer
Disclaimer This information contained in the enclosed presentation summarizes preliminary and introductory information on RAK Ceramics PSC (the Company). This presentation has been prepared for information purposes only and is not and does not form part of or constitute any prospectus, offering memo
Slide 3: Operating Highlights
Operating Highlights Mr. Abdallah Massaad, Chief Executive Officer 3
Slide 4: 2016 Operational Highlights
2016 Operational Highlights Capacity Expansions in Integration of Raw Material Savings Growth Segments European Distribution • AED30mn saved in raw • 20% increase in SW • Sales teams reorganized materials, packing and Capacity in UAE • New Frankfurt showroom shipping. • 42% increase in Tile and offi
Slide 5: Financial Highlights and Segment Review
Financial Highlights and Segment Review Mr. PK Chand, Chief Financial Officer 5
Slide 6: 2016 Financial Highlights
2016 Financial Highlights Group Revenue Gross Margins EBITDA • 2016 AED2.8bn, -9.3% YoY • Csldtd. 30.5%, +230bps • AED485.7mn, -18.2% YoY • Core Revenue -6.1% YoY YoY • EBITDA margin 17.4% - • Non Core Revenue -26.1% • Core 30.5% +120bps YoY 190bps YoY YoY • Non core 30.3% +770bps YoY Like for Like
Slide 7: Tile Revenues
Tile Revenues • 2016 tile revenues decreased by 10% YoY. Tile Revenues by End Market • Sales to the UAE, our largest market, rose 1.3% YoY. (AED Millions) 2015 2016 YoY Project sales rose 6.1% YoY while retail sales were UAE 482.6 488.8 1.3% flat due to the remodeling of UAE showrooms which Saudi Ar
Slide 8: Tile Margins
Tile Margins • 2016 tile margins rose by 80bps YoY to 25.3%. Tile Gross Margin • By production location, Tile Gross Margins in the UAE 30% were weaker by 70bps to 29.4% vs. 30.1% in 2015, led by lower volumes and pricing in exports. • Tile margins in India fell to 15.1% from 18.1%, reversing the mar
Slide 9: Sanitaryware Revenues
Sanitaryware Revenues • 2016 Sanitaryware sales rose 2.7% YoY. Sanitaryware Revenues by End Market • Sales to the UAE rose 2.1% YoY as Q4/16 sales (AED Millions) 2015 2016 YoY bounced 15.5%. Reversing the slight pressure in the UAE 136.7 139.6 2.1% first nine months of the year. Saudi Arabia 29.3 20
Slide 10: Sanitaryware Margins
Sanitaryware Margins • 2016 sanitaryware margins fell 220bps YoY to 41.3%. The main reason for the decline in gross margin is an SW Gross Margin unfavorable product mix and the impact of the lower 50% British Pound on our sales to the UK. • In terms of production location, UAE margins 45% decreased
Slide 11: Tableware
Tableware • 2016 tableware revenues increased to AED175.0mn from AED145.6mn in 2015, a 20.1% increase YoY. Tableware Revenues Excluding the impact of consolidation of RAK Porcelain 200 Europe, YoY growth was 8.3% • During 2016, the company was very successful in 150 AED Millions introducing new prod
Slide 12: Non-Core Revenues
Non-Core Revenues • 2016 non core revenues were AED363.7mn vs. AED492.4mn, a -26.1% decline YoY. Non Core Revenues 1000 • About 40% of the decline in attributable to the 492.4 contribution of RAK Logistics (AED56mn) to 2015 revenues whereas the unit was sold in late 2015. The 46.9 800 remainder of t
Slide 13: Non-Core Margins
Non-Core Margins • For non core, we show EBITDA margin, as we believe it is a more relevant metric for this group. Non Core EBITDA 200 • Non Core EBITDA fell 13.7% YoY. EBITDA margin rose 600bps YoY to 41.5% from 35.5%. 180 175.0 • Stronger profitability at AHCC was offset by weakness 151.0 160 in E
Slide 14: 2016 Revenue Bridge
2016 Revenue Bridge RAK CERAMICS AED Millions 3,500 3,000 2,500 2,000 1,500 1,000 500 (0) 3,079 2015 Revenues Key 2016 Revenue Drivers KSA India Core Growth Non Core 2,793 2016 Revenues 14
Slide 15: EBITDA
EBITDA • We calculate EBITDA adding back Provisions EBITDA Calculation against receivables collection, extraordinary (AED Millions) 2015 2016 YoY provisions and other non recurring items Net Profit 310.3 30.8 -90.1% • On this basis, 2016 EBITDA was AED485.7mn, a - Tax 22.4 15.8 -29.5% 17.8% decline
Slide 16: Provisions Breakdown
Provisions Breakdown Items Amount – AED Mns In COGS Provision for slow moving or obsolete inventory 70.7 Write Off of Inventories 18.0 In G&A Provision for impairment loss on trade receivables / amounts due from related 61.7 parties Impairment charge on goodwill 12.9 In Share in Results of Equity Ac
Slide 17: COGS Breakdown
COGS Breakdown COGS Evolution 2016 COGS Breakdown 2,350 2.2% 164.1 6.9% 139.1 8.4% 1,850 41.6 163.9 133.3 47.0% 160.9 21.0% 445.9 402.9 AED MILLIONS 1,350 274.8 279.1 14.5% 850 995.9 903.2 350 -150 2015 2016 Raw Materials Consumed Direct Labour Raw Materials Consumed Direct Labour Energy Depreciatio
Slide 18: SG&A Breakdown
SG&A Breakdown • Administrative and general expenses during 2016 SG&A rose 20.1% YoY to AED247.8mn from 205.5mn in 2015. Of the increase, AED19mn relates to 450 additional layer of costs from the consolidation of European distribution infrastructure and 400 AED24.6mn from one offs and provisions. •
Slide 19: Net Debt and CAPEX
Net Debt and CAPEX • Net debt rose 3.1% YoY but -4.1% QoQ to AED1.7bn. Net Debt Net Debt/EBITDA rose to 3.4x from 2.7x at end Q4/15 and 3.2x at end Q3/16 on account of lower AED Mns Q4/15 Q3/16 Q4/16 profitability. Long Term Loan 1,309.7 1,243.2 1,307.9 Revised 2017e CAPEX Guidance STL & TR 654.7 76
Slide 20: Working Capital
Working Capital • During the year and particularly in Q4/16, Working Capital Days distributors in the GCC were skittish about taking on more inventory and as a result of days of 250 inventory on hand rose to 221 days from 188 days in Q4/15. 221 • We continue to manage our receivables well as a 200 1
Slide 21: Closing Comments
Closing Comments Mr. Abdallah Massaad, Chief Executive Officer 21
Slide 22: 2017 Group Initiatives
2017 Group Initiatives UAE local market India Iran • Grow market share, pursue • Morbi JV expected 2017 • Ramp up production near project channel penetration • Strategic tie up under 65% capacity and develop and grow retail channel. discussions regional sales. Flagship showroom in Dubai • Planning p
Slide 23: Appendix
RAK CERAMICS Appendix
Slide 24: VCP 2.0
VCP 2.0 High “Ball out of the Park” Sustaining Growth India Margin Strategy Improvement Supply Chain Real Estate Optimisation Tableware Iran New Strategy Overhead Products/ Cost Markets Savings Financial Impact “Clean Up” Strengthening the Firm GCC Human Taps & Resources Expansion Faucets B2B Sales
Slide 25: Focus Markets Sales Trends
Focus Markets Sales Trends UAE KSA 115 140 110 111 118 112 120 122 122 118 129 131 114 115 120 120 85 88 87 85 89 AED Millions AED Millions 100 82 77 74 100 80 70 80 60 40 60 31 34 29 29 33 36 34 34 33 35 32 40 25 40 40 20 20 6 6 8 8 8 10 8 4 7 7 3 3 0 0 Tile Revenue Sanitaryware Revenue Tile Revenu
Slide 26: Thank you
CERAMICS Thank you