Oriental Weavers Carpet · EGX:ORWE
Oriental Weavers Carpet — Oriental Weavers Carpets — Q1 2016 Earnings Presentation
29 slides from Oriental Weavers Carpet's earnings presentation, 2016
Slide 1: Oriental Weavers Carpets 1Q2016 Investor Presentation
Oriental Weavers Carpets 1Q2016 Investor Presentation •
Slide 2: Global Macro Fundamentals
Global Macro Fundamentals Egyptian Market International Markets o Sustained economic growth o US fundamentals are strong. GDP is expected to record a growth ranging from 4.5-5% annually up to 2020. o Healthy demographics o Strong potential in African The demand for floor coverings are increasing as
Slide 3: OW Demand Triggers in Egypt
OW Demand Triggers in Egypt o Strong growth in the real estate market driven by economic growth, increasing interest in gated-urban communities and increasing government social housing. Sizeable youth bracket o Sizeable youth population with 50% below the age of 25. o Increasing stringent procedures
Slide 4: Strong US fundamentals
Strong US fundamentals Total Housing starts Housing starts and sales of new single family home sales are expected to see 15% strong growth in the coming period. 11% 8% A home improvement survey conducted 6% in April 2016 suggested that at least half of US homeowners are planning remodeling works
Slide 5: Oriental Weavers in Numbers
Oriental Weavers in Numbers 37 years 10 130 In the global rugs Manufacturing market Export countries facilities 230 111 55% Showrooms in Million sqm of Export Egypt capacity contribution INVESTOR PRESENTATION - 5
Slide 6: Group's key Milestones
Group’s key Milestones • Sphinx, the US • OW China. US subsidiary Oriental Weavers distribution arm. • Patent rights for partnering with • OW largest 100% acrylic rugs, Pantone & & MAC were Tommy Bahama established showroom in which emulates the Atlanta. look and feel of silk 1981-87 1993-98 2011-12
Slide 7: 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 8: Sizeable Export base and partial local raw material Procurement Ensure Dollar Self Sufficiency
Sizeable Export base and partial local raw material Procurement Ensure Dollar Self Sufficiency OW has been immune to the dollar shortage in Egypt thanks to the over 50% export contribution. Current efforts to shift some of the dollar based debt facilities to Euro to continue ensuring the naturally-h
Slide 9: Export Incentive Program
Export Incentive Program Export cash Documents proceeds submitted to Export Subsidy Fund Export Exports subsidies (% of exports in EGP) Sources: Company INVESTOR PRESENTATION - 9
Slide 10: Main segments of OW
Main segments of OW Woven Tufted Non-woven Description Surface yarn is woven simultaneously The surface yarn is Fibers bonded with the backing. Then a latex inserted into a together using compound is added. polypropylene sheet chemicals and heat. Subsidiaries OWC OWI OWUSA OW MAC New MAC EFCO China
Slide 11: International Premier Partners
International Premier Partners Relationships count – Oriental Weavers’ enduring relationships with the world’s best retailers, clients, resorts and other lifestyle centers ensure continued market leadership. INVESTOR PRESENTATION - 11
Slide 12: American & Canadian Premier Partners: Retail Segment
American & Canadian Premier Partners: Retail Segment INVESTOR PRESENTATION - 12
Slide 13: OW's long standing position in the US
OW’s long standing position in the US Secured partnership agreements with Tommy Bahama and Pantone. 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, A
Slide 14: 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. INVESTOR PRESENTATION - 14
Slide 15: 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. INVESTOR PRESENTATION - 15
Slide 16: OW Hospitality: Recently Completed Projects
OW Hospitality: Recently Completed Projects List of projects in the pipeline: JW Marriott Grosvenor House, London In the US Ritz Chicago Four seasons Dallas Disney Cruise Fairmont Empress Caesars main Casino Marriott Richmond, Virginia In the UAE The Atlantis Fountainview Towers 1,2,3 and 4
Slide 17: Recent and Future Expansions
Recent and Future Expansions 2015 2016 2017-20 Woven 13 looms added increasing 4 new goblin Plan to add 20% of additional production capacity by 6% looms woven capacity by 2020 2 new looms through an additional total of 15 looms (pending market conditions). Tufted MAC penetrated the artificial turf
Slide 18: Merger of Rosetex with OW Textiles
Merger of Rosetex with OW Textiles Oriental Weavers Textiles will become one of the subsidiaries of Oriental Weavers Carpets. The merger should add 2-3% additional attributable net earnings with no expected additions to top line revenues given the intercompany transactions between Oriental Weavers
Slide 19: Financial and Operational Performance
Financial and Operational Performance 1Q2016 financial Summary Net sales EBITDA (EGP bn) (EGP mn) 1.46 Working capital Net 230 +1% growth y-o-y borrowings Flat y-o-y performance EGP202 EGP32mn mn Capex Recorded Net Profit EBITDA Margin EGP31.6 rebates 15.7% (EGP mn) mn +EGP57 103.3 mn -12 bps y-o-y
Slide 20: Diversified Product Mix
Diversified Product Mix 1Q 2016 Revenue Mix (by volume) 1Q 2016 Revenue Mix (by value) Tufted- EFCO Fibers & EFCO Pieces 3% others Tufted- Woven 14% Tufted: 10% 13% Pieces A Wall-Wall 24% 2% 2% Woven- A Woven 7% Tufted- B Wall- 18% Wall Woven- 5% Woven C C 28% Woven- 37% B 32% Woven-Grade A EGP211/s
Slide 21: 1Q 2016 Financial summary
1Q 2016 Financial summary Revenue performance (EGPmn) Local Export 1Q revenue performance (Sqm) 1,369 1,441 1,458 1,197 1,416 Local Export 841 870 825 783 667 530 528 546 616 675 1Q2012 1Q2013 1Q2014 1Q2015 1Q2016 18 17 16 17 12 EBITDA EBITDA margin 300 EGPmn 20.0% 17.1% 15.9% 15.7% 250 14.8% 12.6%
Slide 22: Financial Overview
Financial Overview Growing revenue base (EGPbn) Export vs. Local Revenue Contribution Export Local 5.8 5.9 EGPbn 5.5 Export Local 4.6 4.9 2.1 2.3 2.7 1.8 2.1 39% 40% 40% 44% 45% 3.4 3.5 3.2 2.8 2.8 2011 2012 2013 2014* 2015 61% 60% 60% 56% 55% mn sqm Export Local 113 115 116 113 111 44 46 48 48 51 2
Slide 23: Financial Summary
Financial Summary EBITDA EBITDA margin 900 13.9% 13.7% 16% Net income Net margin EGPmn 700 12.6% 14% 11.3% 400 6.5% 8% 12% EGPmn 6.3% 6.1% 500 9.7% 807 803 10% 350 694 300 553 448 8% 5.6% 300 100 6% 2011 2012 2013 2014* 2015 5.3% 250 6% EGPbn Net debt Net debt/EBITDA 200 2.5 5 4.4 2.0 3.2 4 150 243
Slide 24: Cost Structure: Polypropylene is OW main raw material
Cost Structure: Polypropylene is OW main raw material Polypropylene — used in synthetic and blended rugs and carpets — is an oil derivative, representing around 26% of costs. Polypropylene prices are driven in large part by: i) Petroleum prices ii) Market demand for polypropylene Polypropylene gran
Slide 25: Cost Structure: Polypropylene is OW main raw material
Cost Structure: Polypropylene is OW main raw material 1Q2016 COGS breakdown Other 3% Wool 14% Selling Exp. Raw material 26% Polypropylene 26% 47% 11% Backing 7% Finishing material Industrail Exp. 13% Sources: Company Almost 65-70% of costs are dollar based. Wages (9% of COGS) are subject to an an
Slide 26: Impact of Energy Subsidy Reform on Costs
Impact of Energy Subsidy Reform on Costs OW costs (EGP000) and Energy cost Old prices New prices % increase % %∆ US$/mmbtu 2014 2015 Natural gas 2.25 5 122% 23,485 34,727 47.9% 0.45% 0.70% EGP/KW Electricity 0.28 0.435 55% 104,382 128,318 22.9% 1.6% 2.6% EGP Diesel/Litres Transportation costs 110 18
Slide 27: Share Data
Share Data o 450 mn shares at par value of 1 EGP per share. o Listed on EGX September 1997. EGP EPS Payout ratio o 6 Month average daily value USD0.5mn. 80% o Market Cap USD285mn (as of Jul, 2016). o Distributed DPS of EGP0.5 in May 2016. 0.80 63% o Issued and Paid-in Capital 450 MN EGP. 56% 52% 60%
Slide 28: 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 29: For More Information, please contact
For More Information, please contact Ingy El-Diwany Investor Relations Manager +202-22685166 ieldiwany@orientalweavers.com www.orientalweavers.com INVESTOR PRESENTATION - 29
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