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. 80% 68% Market share in Egypt Export contribution in Utilization rate 4Q2017 Slide 2
Slide 3: 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 4: 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 5: 2018 Export outlook: ~10%
2018 Export outlook: ~10% US & Canada market: 6-8% Europe: 8-10% IKEA: 7% New promotions received from: France: Partnering with major -Lowes of $4mn distributor in France to stock and -Big Lots of $2mn distribute in France, Germany, Spain - USD 4 mn in addition -40% growth in online orders of for US
Slide 6: 2018 Export outlook: ~10%
2018 Export outlook: ~10% Latin America Africa Asia & Japan -Sodimac Wider expansion in South -20 % growth in Japan. -Bio Trade which supplies Home Africa, Congo, Benin, Ghana, -Nitori: introducing 6 new ranges Depot & Walmart Togo ($750k) - Partnering with major retailers, wholesalers, and dept sto
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 ( 68% as of 4Q 2017) to secure foreign currency, ensure better profitability, and Settlement all EGP debt facilities to avoid the high finance charges. OW signed forward contracts til
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 5-6% annually up to 2020 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 about
Slide 11: Local market overview
Local market overview Growing local revenues (EGPbn) Export vs. Local revenues% Local sales volumes (mn sqm) Export Local 33% 40% 40% 45% 3.0 3.4 54 48 51 46 67% 2.3 2.3 60% 60% 55% 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Slide 11
Slide 12: Local Market Development in 2017
Local Market Development in 2017 Contribution to Percentage Change Local Revenues Percentage Change 4Q 2017 vs Volume Value Avg. 2017 vs Volume Value Price 4Q 2016 2016 4Q 2017 4Q 2016 Woven ▼25% ▲5% ▲40% 80% 80% Woven ▼20% ▲33% Tufted ▼53% ▼4% ▲103% 12% 14% Tufted ▼12% ▲21% Non-woven felt 0% ▲34% ▲
Slide 13: Export Market development
Export Market development Revenue contribution & performance by region in 4Q 2017 Africa & Russia & GCC Egypt Asia 3% 32% 4% ▲20% US ▲39% Europe Russia & China 23% ▲24% Asia ▲5% ▲24% US ▼27% 38% ▲9% Slide 13
Slide 14: Longstanding relationship with major customers
Longstanding relationship with major customers Slide 14
Slide 15: Export performance overview
Export performance overview Export revenues (EGPbn) Export vs. Local Revenue volume % Export volumes (mn sqm) Export Local 6.7 40% 43% 46% 46% 68 3.5 3.7 65 63 3.4 60 60% 57% 54% 54% 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Slide 15
Slide 16: Export Market Development in 2017
Export Market Development in 2017 Contribution to Export Revenues Percentage Change Percentage Change vs. 4Q 2017 vs Volume Value Avg. 2017 vs Volume Value 4Q 2016 Price 2016 4Q2017 4Q2016 Woven ▲14% ▲32% ▲16% 79.3 76.3% Woven ▲6% ▲78% Tufted ▼13% ▲6% ▲21% 17.4% 20.8% Tufted ▲13% ▲92% Non-woven felt
Slide 17: 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 18: Revenue progress
Revenue progress Revenues (EGPbn) Sales volumes (mn sqm) EGPbn Export Local 10.1 mn sqm Export Local 113 111 117 114 3.4 6.8 48 54 46 5.7 5.8 51 3.0 2.3 2.3 6.7 65 60 63 68 3.4 3.5 3.7 2014 2015 2016 2017 2014 2015 2016 2017 3-year CAGR 21% Slide 18
Slide 19: 2017 Revenue summary
2017 Revenue summary Value (EGP millions) Volume (sqm) 2017 2016 % Change 2017 2016 % Change Woven- Egypt based 5,834 3,788 54% 55 60 -8% OW USA 1,958 1,142 71% 11 10 6% OW China 164 91 79% 1 2 -27% Tufted 1,776 1,042 70% 32 30 5% Non-woven Felt 357 228 57% 16 15 5% Other 86 488 -82% 0 0 - Total 10,
Slide 20: 4Q2017 revenue summary
4Q2017 revenue summary Value (EGP millions) Volume (sqm) 4Q2017 4Q2016 % Change 4Q2017 4Q2016 % Change Woven- Egypt based 1,577 1,286 23% 15 16 -6% OW USA 503 417 21% 2.9 2.5 20% OW China 43 35 24% 0.4 0.6 -27% Tufted 421 407 3% 7 9 -26% Non-woven Felt 81 78 4% 4 4 -3% Other 42 11 283% Total 2,667 2
Slide 21: Diversified Product Mix
Diversified Product Mix 4Q 2017 Revenue Mix (by volume) 4Q 2017 Revenue Mix (by value) Non- Non- Others woven woven 1% felt Tufted 4% 14% 16% Woven Tufted 51% OW China 23% 2% Woven 59% OW USA 19% OW China 2% OW USA 10% Woven-Grade A EGP316/sqm Tufted wall-to-wall EGP74/sqm Woven-Grade B EGP124/sqm T
Slide 22: OW Hospitality: Recently delivered Projects in Egypt
OW Hospitality: Recently delivered Projects in Egypt mosques related to the Egyptian Endowments Authority Al-Masah Hotel at the new administration capital, New Shuwaifat Hotel in New Cairo, the Vox Cinemas in Alexandria, the conference center in Cairo, The Azhar Grand Mosque in Cairo. Slide 2
Slide 23: Recent and Future Expansions
Recent and Future Expansions 2015 2016 2017 2018 Woven 13 looms added 4 new goblin increasing looms Establishing a new factory production 9 new looms 8-10 new looms pending local 10 new looms pending local capacity by 6% 2 yarn and international demand and international demand production Four ya
Slide 24: 4Q 2017 Cost Breakdown
4Q 2017 Cost Breakdown OW China 2% Other 14% Wool 5% Polypropylene- Selling Nylon Raw materials 29% 19% 54% Backing 13% Finishing material Depreciation 7% 4% Wages 7% Almost 63% of costs are dollar based. Source: Company Slide 24
Slide 25: 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 26: Financial Summary
Financial Summary EBITDA Performance (EGPbn) Net Income Performance Net Debt (EGPbn) EGPbn EGPmn EBITDA EBITDA margin Net income Net margin Net debt Net debt/EBITDA EGPmn 1.5 2 1,700 800 8% 1.4 16.5% 15.1% 16% 6.8% 1.3 1 1,500 13.6% 13.8% 700 6.1% 7.1% 1.2 1,300 14% 600 6.5% 0.8 1 1,100 1.0 1 12% 50
Slide 27: 4Q 2017 Financial summary
4Q 2017 Financial summary Sales EBITDA Net income (EGP million) (EGP million) (EGP million) 2,667 354 135 ▲19% ▲1% ▲52% Export EBITDA Proposed DPS Contribution Margin 68% 13.3% EGP 1.4 244 bps Yielding ̴ 9% Slide 27
Slide 28: 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 29: Export Incentive Program
Export Incentive Program: Export cash Documents submitted proceeds to Export Subsidy EGP278 mn delayed Fund disbursement till October 2017 OW collected EGP91mn in 2017. Export subsidies Exports (% of exports in EGP) Sources: Company Slide 29
Slide 30: 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 31: Share Data
Share Data EPS Payout ratio o450 mn shares at par value of EGP 1 per share. 2.00 100% 81% 92% o Issued and Paid-in Capital EGP 450 mn. 1.80 78% 1.81 90% 1.60 80% 66% 75%70% 1.40 76% 1.46 oListed in EGX since September 1997. 1.20 60% 1.00 59% 50% o3 Month average daily value EGP8.3mn. 0.80 0.48 0.55
Slide 32: 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 33: 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 33