Slide 1: Oriental Weavers Carpets Investor Presentation
Oriental Weavers Carpets 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% annually up to 2021 as per the IMF. o Healthy demographics o Strong potential in African The demand for floor coverings is i
Slide 3: Demand Triggers in Egypt
Demand Triggers in Egypt o Strong growth in the real estate market driven by economic growth, increasing interest in Sizeable youth bracket gated-urban communities and increasing government social housing. o Sizeable youth population with 50% below the age of 25. o Increasing stringent procedures on
Slide 4: Strong US fundamentals
Strong US fundamentals Annual Growth in 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
Slide 5: Oriental Weavers in Numbers
Oriental Weavers in Numbers 37 years 10 130 In the global rugs Manufacturing Export countries market facilities 230 111 52% Export Showrooms in mn sqm sold in contribution in Egypt 2015 1H2016 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 Ensures Dollar Self Sufficiency
Sizeable Export base Ensures 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-hedged business model. OW’s solid dollar po
Slide 9: Export Incentive Program
Export Incentive Program: EGP4 bn Export cash Documents allocated to FY16/17 budget proceeds submitted to Export Subsidy Fund OW collected Export EGP137 mn as of Exports subsidies July 2016. (% 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
American & Canadian Premier Partners 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 In Egypt: 140% growth in 1H2016 7 of Egypt’s large mosques JW Marriott Grosvenor House, London A total of 17 hotels in Cairo, Alexandria & Sharm El Sheikh Buildings of different ministries and Banks In the US Ritz Chicago Four seasons Dallas Disney
Slide 17: Recent and Future Expansions
Recent and Future Expansions 2015 2016 2017-22 Woven 13 looms added increasing 4 new goblin production capacity by 6% looms 2 new looms Plan to add 25% of additional capacity by 2022, with around Tufted MAC penetrated the artificial turf Plan to add new USD65-70 mn capex to be segment following the
Slide 18: Merger of Rosetex with OW Textiles
Merger of Rosetex with OW Textiles OW is finalizing the necessary producers to merge Rostex with Oriental Weavers Textiles (OWT). Hence, OWT will become one of the subsidiaries of Oriental Weavers Carpets. The merger should add 2-3% additional attributable net earnings with no expected additions t
Slide 19: Financial and Operational Performance
Financial and Operational Performance 1H2016 financial Summary Net sales EBITDA (EGP bn) (EGP mn) 3 Working capital Net debt 480 +1% growth y-o-y paid off +8% y-o-y performance EGP185 EGP43mn mn Capex Recorded Net Profit EBITDA Margin EGP84 rebates 16% (EGP mn) mn +EGP116 262 mn +109 bps y-o-y +0.5%
Slide 20: Diversified Product Mix
Diversified Product Mix 2Q 2016 Revenue Mix (by volume) 2Q 2016 Revenue Mix (by value) Fibers & EFCO others 14% EFCO 13% Woven- A Woven-A 3% 7% Tufted- 2% Pieces Tufted- 26% Pieces Woven-B Woven-B 12% 32% 18% Tufted: Wall-Wall 2% Tufted- Wall-Wall Woven-C 7% 33% Woven- C 28% Woven-Grade A EGP235/sqm
Slide 21: 2Q 2016 Financial summary
2Q 2016 Financial summary 2Q Revenue Performance (EGPmn) 1H Revenue Performance (EGPbn) Local Export Local Export 2,000 EGP mn 3.5 EGP bn 3.01 1,541 1,549 2.84 2.98 1,600 1,382 1,429 3.0 2.75 2.5 1,200 809 786 1.63 1.57 892 2.0 1.74 1.76 898 800 1.5 400 1.0 732 763 1.44 485 536 1.08 1.35 0.5 1.01 0
Slide 22: 2Q 2016 Financial summary
2Q 2016 Financial summary 2Q EBITDA Performance (EGPmn) 1H EBITDA Performance (EGPmn) EBITDA EBITDA margin EBITDA EBITDA margin 300 EGPmn 18% 600 EGPmn 17% 16.1% 16.0% 500 15.6% 16% 14.1% 13.9% 16% 14.9% 200 13.6% 14.2% 400 15% 14% 300 250 480 14% 100 201 215 200 444 444 187 390 12% 100 13% 0 10% 0
Slide 23: Annual Financial Overview
Annual Financial Overview Growing revenue base (EGPbn) Sales Volumes (mn sqm) Export Local mn sqm Export Local EGPbn 5.8 5.9 5.5 113 115 116 113 4.9 111 4.6 2.3 2.1 2.7 48 44 46 48 51 1.8 2.1 3.4 3.5 3.2 2.8 2.8 69 69 68 65 60 2011 2012 2013 2014* 2015 2011 2012 2013 2014 2015 Export vs. Local Reven
Slide 24: Financial Summary
Financial Summary EBITDA Performance Net Income Performance EGPmn EBITDA EBITDA margin EGPmn Net income Net margin 900 13.9% 13.7% 16% 400 6.5% 8% 6.3% 6.1% 12.6% 14% 350 5.6% 700 11.3% 12% 9.7% 5.3% 300 6% 807 803 10% 500 694 553 8% 250 243 356 273 347 377 448 300 6% 200 4% 2011 2012 2013 2014* 201
Slide 25: 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 27% of costs. Polypropylene prices are driven in large part by: i) Petroleum prices ii) Market demand for polypropylene Polypropylene gran
Slide 26: Cost Structure: Polypropylene is OW main raw material
Cost Structure: Polypropylene is OW main raw material 2Q2016 COGS breakdown Other 19% 5% Wool 27% Raw material Polypropylene- 41% Nylon Selling Exp. 23% 8% Backing 6% Finishing material Industrial Exp. 12% Sources: Company Almost 60-65% of costs are dollar based. Wages (9% of COGS) are subject to
Slide 27: 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 28: Share Data
Share Data o 450 mn shares at par value of EGP 1 per share. o Issued and Paid-in Capital EGP 450 mn. EGP EPS Payout ratio o Listed in EGX since September 1997. 80% o 6 Month average daily value USD0.5mn. o Market Cap USD357mn (as of Aug, 2016). 0.80 63% o Distributed DPS of EGP0.5 in May 2016. 56% 5
Slide 29: 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 30: 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 - 30