Al Hassan Ghazi Ibrahim Shaker Co. · TADAWUL:1214
Al Hassan Ghazi Ibrahim Shaker — Shaker Group — Q1 2020 Earnings Presentation
38 slides from Al Hassan Ghazi Ibrahim Shaker's earnings presentation, 2020
Slide 1: Shaker Group Investor Presentation Q1 2020
Shaker Group Investor Presentation Q1 2020 as at 31 March 2020
Slide 2: Attractive Industry Experiencing Growth
Attractive Industry Experiencing Growth Alignment with socioeconomic objectives of in two key areas: Government commitment of approx. Superior technology for the Saudi air conditioner market Saudi market forecast to reach Nationwide energy efficiency 1 consultancy and retrofitting services Household
Slide 3: Core Products
Core Products Air Conditioning (A/C) Home appliances Core products Consumer A/C Commercial A/C Applied A/C Major Domestic Dishwasher Food preparation Split A/C Ceiling concealed Chillers appliances duct A/C Home laundry Irons Window A/C Ducted split Fan coil unit appliances Small cooking Floor stand
Slide 4: Brand Portfolio
Brand Portfolio Air conditioners Home appliances Competitive positioning High-end Brand portfolio Flexibility targets most consumer segments Low-end Functionality Page 4
Slide 5: Highlights: Q1 2020
Highlights: Q1 2020 reduction in Saudi in Q1 revenue program complete employee costs in net loss Ongoing roll-out of substantially optimized Q1 gross profit increase and reduced Page 5
Slide 6: Q1 2020 Key messages
Q1 2020 Key messages ▪ The Breakthrough Program is having a tangible impact on the Group’s long-term and sustainable performance ▪ The Group is well-positioned with a strong local manufacturing base, and a healthy level of Saudi localization ▪ Shaker Group has already achieved a leading share of the
Slide 7: Business Profile
BUSINESS PROFILE
Slide 8: Strategy Update
Strategy Update • Breakthrough transformation program completion • Ongoing focus on increasing sales and reducing costs 2021 targets High single digit percentage profit increase • Organic growth enhanced by efficient distribution channels, solid partnerships and dynamic sales strategy Adjusted EBITD
Slide 9: Four pillars
Core Business Turnaround (CBT) • Profitable and responsible sales • Deliver excellence in cost management Strategic Moves (STR) • Strengthen relationships with Talent Upgrade Plan (TUP) principals and Four business partners • Explore new • Attract and develop talent pillars opportunities beyond core
Slide 10: Progress highlights
As at 31 March 2020 Core Business Turnaround ▪ Q1 sales in Saudi Arabia increased 12% compared to Q1 2019 with momentum achieved across business segments ▪ Q1 net loss reduction of 88.5% compared to the same period for 2019 ▪ Working capital optimized and reduced ▪ Employee costs in Saudi Arabia dec
Slide 11: Financial Performance Highlights
Financial Performance Highlights Revenue and Income vs. Margins 2016 – Q1 2020 600.00 30.0% 500.00 20.0% 10.0% 400.00 0.0% 300.00 SAR million -10.0% 200.00 % -20.0% 100.00 -30.0% - -40.0% -100.00 -50.0% -200.00 -60.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2016 2016 2016 2017 2017 2
Slide 12: Growth Avenues
GROWTH AVENUES Page 12
Slide 13: Growth Avenue Highlights
Growth Avenue Highlights Housing SEEC Multi V ESCO & Retrofit Aftersales 670,000 planned Multifold rise in KSA Shaker Group 250,000 government Growing houses requiring 4- energy tariff from product already has buildings 25-30 yrs replacement market 5m ACs 2018 healthy market old = retrofit with shif
Slide 14: Financials
FINANCIALS Page 14
Slide 15: Sales Recovery
Sales Recovery Revenue growth driven by transformation initiatives 600.00 500.00 Revenue increase from Q1 2019 driven by outcomes of Breakthrough Program 400.00 • Enhanced distribution network, sales processes SAR million and training 300.00 • Investment in technology to manage inventory • Strategic
Slide 16: Profitability
Profitability Gross Profit (SAR million) Net profit/(loss) (SAR million) % = GP margin % = NP margin 500 500 28% 450 23% 400 400 25% 24% 22% 300 350 300 200 8% 7% 250 100 3% 200 17% 19% 150 0 13% FY FY FY FY FY FY FY Q1 Q2 Q3 Q4 Q1 100 (100) 2013 2014 2015 2016 2017 2018 2019 2019 2019 2019 2019 202
Slide 17: EBITDA & RoE
EBITDA & RoE EBITDA (SAR million) Return on Equity (%) 60% 600 35% 50% 30% 500 40% 25% 400 30% 20% 300 20% 15% 10% 200 10% 0% 5% FY FY FY FY FY FY FY FY Q1 Q2 Q3 Q4 Q1 100 -10% 2012 2013 2014 2015 2016 2017 2018 2019 2019 2019 2019 2019 2020 0% 0 -20% FY FY FY FY FY FY FY FY Q1 Q2 Q3 Q4 Q1 -5% -100
Slide 18: Spotlight: Rationalizing the Workforce
Spotlight: Rationalizing the Workforce Rationalizing employee headcount Rationalizing employee costs (SAR 000) 1,800 50,000 1,600 45,000 1,400 40,000 1,200 35,000 1,000 30,000 800 25,000 600 20,000 400 15,000 200 10,000 0 5,000 0 Employee headcount rationalization ongoing, Employee costs decreased b
Slide 19: Trade Receivables vs. Inventory Trend
Trade Receivables vs. Inventory Trend Trade Receivable Trend (SAR '000) Inventories Trend (SAR '000) 800,000 700,000 Breakthrough Program introduced 600,000 to reduce costs, optimize inventory 500,000 400,000 Receivables begin to stabilize while inventory continues to reduce 300,000 200,000 Q1 2017
Slide 20: Trade Receivables vs. Inventory Trend
Trade Receivables vs. Inventory Trend Trade Receivable Trend (SAR ‘000) 731,710 770,142 657,542 547,170 572,023 558,940 504,603 447,532 433,089 452,792 430,201 376,039 401,038 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Inventories Trend (S
Slide 21: Cash Flow: Operational & Financing
Cash Flow: Operational & Financing Cash Flow From Operations Trend (SAR ‘000) 195,387 230,399 181,179 139,035 95,501 95,637 (3,164) 31,405 2,904 33,594 34,437 (55,658) (31,702) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Cash Flow From Fina
Slide 22: Capital Structure
Capital Structure Capital Structure (SAR million / %) 1200 100% 90% 1000 80% 70% 800 60% 600 50% 40% 400 30% 20% 200 10% 0 0% FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Equity LTL STL Debt/Equity % Page 22
Slide 23: STLs & MTLs Trend
STLs & MTLs Trend Short Term Loans Trend (SAR ‘000) 801,444 797,622 695,160 713,655 704,065 666,666 646,367 531,457 462,062 445,071 412,617 302,667 242,394 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Medium Term Loans Trend (SAR ‘000) 121,9
Slide 24: Appendix I: About the Company
APPENDIX I: ABOUT THE COMPANY Page 24
Slide 25: What is Shaker Group?
Exclusive Saudi distributor for five internationally acclaimed home appliances brands: • Maytag (1980) • Ariston (1994) • Indesit (2005) • Midea (2008) Subsidiary: ESCO • Bissell (2015) • Energy saving consultancy and retrofitting services Origins dating What is back to 1950 Shaker Group? Shaker Gro
Slide 26: Senior Management
Chief Executive Officer VP Finance Chief Strategy & Transformation Officer Azzam Almudaiheem Hossam Al Akkad Mohammed Abunayyan Azzam was previously Purchasing Hossam has over 30 years of experience in Prior to his current role, Mohammed has Senior Manager, Acting GM and GM at Masdar, having been Re
Slide 27: Corporate Milestones
Corporate Milestones Incorporation Incorporation of IHSPMC of New Vision to serve Electronics & government Electrical Part acquisition of customers Appliances Energy Incorporation and projects in Jordan Management of Energy Services (EMS) in Services Incorporation UAE Company (ESCO) of Ibrahim Incor
Slide 28: Shareholding Structure & Information
Shareholding Structure & Information Shareholding structure Share information Market Tadawul, Saudi Arabia 12.21% Currency SAR Listing date May 2010 LAFANA Holding Co. 10% Financial year-end 31 December Tawazon Arabia Co. for Commercial Investment Authorized capital (SAR) 630,000,000 5.71% LAMA Hold
Slide 29: Appendix II: About Breakthrough Program
APPENDIX II: ABOUT BREAKTHROUGH PROGRAM Page 29
Slide 30: Core Business Turnaround (CBT)
Core Business Turnaround (CBT) Profitable & responsible sales Cost excellence B2C, B2B and Aftersales Cost efficiencies and working capital excellence 1. Recover sales from top key accounts and inactive 1. Reduce costs of FTEs accounts in LG AC market 2. Cost-cut of rent and leasing expenses 2. Acti
Slide 31: Performance Infrastructure (PI)
Performance Infrastructure (PI) Infrastructure Reporting Built for transformation Measure progress 1. Set-up cadence, tools to drive the Breakthrough Program 1. Measure progress of the Breakthrough Program 2. Establish reporting templates for • Transformation Office meetings • Sales war-rooms • Tran
Slide 32: Talent Upgrade Plan (TUP)
Talent Upgrade Plan (TUP) Organization Talent Re-structure Completely upgrade 1. Restructure the sales organization to channel-wise basis 1. Hire and/or replace the necessary talents needed to rather than regional basis, shifting from regional focused implement the Breakthrough Program to customer f
Slide 33: Strategic Moves (STR)
Strategic Moves (STR) Principal relationships Strategic choices Restructure relationships Objectives 1. Restructure relationships with principals and commercial 1. Explore strategic choices beyond fixing the core partners – especially to address: business (i.e. entering new segments, developing new
Slide 34: Appendix III: Financials
APPENDIX III: FINANCIALS Page 34
Slide 35: Balance Sheet
Balance Sheet SAR ‘000 2015 2016 2017 2018 2019 Q1 2019 Q1 2020 ASSETS Non-current assets 840,349 860,595 818,770 754,766 709,647 772,189 717,601 Current assets 1,578,631 1,525,842 1,267,065 879,935 757,624 831,459 783,690 Total assets 2,418,980 2,386,437 2,085,835 1,634,701 1,467,271 1,603,648 1,50
Slide 36: Income Statement
Income Statement SAR ‘000 2016 2017 2018 2019 Q1 2019 Q1 2020 Sales 1,654,405 1,038,563 774,025 882, 822 197,333 220,975 Cost of sales (1,265,479) (862,615) (675,307) (717,176) (164,310) (171,613) Gross profit 388,926 175,948 98,718 165,646 33,023 49,362 S&D expenses (181,536) (162,530) (140,336) (1
Slide 37: Cash Flow Statement
Cash Flow Statement SAR ‘000 2016 2017 2018 2019 Q1 2019 Q1 2020 Cash flows from operating activities Profit/(loss) for the year 45,308 (176,745) (202,181) (50,860) (28,740) (3,305) Adjustments: 83,296 (69,357) (103,841) (5,480) (12,564) 12,250 Changes in operating assets & liabilities (18,128) 67,9
Slide 38: Investor Relations Contact
INVESTOR RELATIONS CONTACT MR. HOSSAM AKKAD VICE PRESIDENT, FINANCE HOSSAM_AKKAD@SHAKER.COM.SA +966-11-2638900 Page 38