Lecico Egypt Sae · EGX:LCSW
Lecico Egypt Sae — FY2014 Earnings Presentation
23 slides from Lecico Egypt Sae's earnings presentation, March 2015
Slide 1: Full Year 2014 Results Presentation
i oe yptian Exporter ; Dey g =~ “* Full Year2014 Results Presentation *) March 2015 = 4
Slide 2: Corporate Summary
Corporate Summary
Slide 3: Introduction: An Egyptian exporter
Introduction: An Egyptian exporter Lecico Egypt S.A.E. – one of the world’s largest sanitary ware producers and a large tiles producer – was founded in 1959 and has been majority owned by the Gargour family since 1969 Kfarchima The company has a global competitive advantage making Established 19
Slide 4: Corporate Profile
Corporate Profile
Slide 5: Investment case
Investment case Experience Regional leadership Growing exports Significant cost advantage •Brand with over 50 years of history • Sanitary ware market leader in •c 55% of sanitary ware is exported • USD 14.40/piece cost (40% of peers) Egypt and Lebanon •SW exports 3.6% CAGR (2005-14) • c USD 1.50/pie
Slide 6: Growing exports
Growing exports Growth in group’s exports Lecico’s total export volumes (sanitary ware) Egypt’s leading sanitary ware exporter • Lecico exports c58% of its sales vs. 20% for local peers • Lecico sells to over 50 countries (including OEM sales) • Approximately 24% of exports (13% of sanitary ware sal
Slide 7: Significant cost advantage
Significant cost advantage International cost advantage Lecico produces sanitary ware at an all-in average cost of US$14.40/piece – In Egypt, manufacturing cost averages US$11.30/piece of sanitary ware – The difference reflects higher packing costs for EU-destined exports and significantly higher in
Slide 8: Cost increases and slowing demand in 2H
Cost increases and slowing demand in “H
Slide 9: Energy price increases add LE 200 million in costs
Energy price increases add LE 200 million in costs In July, the government announced an massive increase in energy prices which will have a profound effect on Lecico’s financials: Item Increase Impact Natural Gas 133% from USD 3.0/mbtu to USD 7.0/mbtu 70% of energy costs, energy is 20% of cogs Ele
Slide 10: Lecico enacted significant price increases in 08/14
Lecico enacted significant price increases in 08/14… On average Lecico needs around a 15% price increase to cover the cost inflation – By segment we need a 9% increase in sanitary ware and a 20% increase in tiles average group consolidated prices – This would only absorb costs and would still resu
Slide 11: ...but oversupply has sharply hit sales volumes
…but oversupply has sharply hit sales volumes Consumer demand in Egypt squeezed in 2H – Consumer inflation squeezed spending on tiles and sanitary ware from 2H on – Over stocking of manufacturers and distributors in 3Q and the seasonal slowdown in 4Q Exports to Libya also limited and fragile – A
Slide 12: Cost increase and slowdown in 2H14 - Segments
Cost increase and slowdown in 2H14 - Segments Lecico Group 2013 2014 2013 2013 2014 2014 Sanitary Ware Analysis 1Q 2Q 3Q 4Q 2013 1Q 2Q 3Q 4Q 2014 1H 2H 1H 2H Volume (000's pieces) Egypt 670 668 511 645 2,494 473 645 533 415 2,066 1,338 1,156 1,119 948 Lebanon 36 83 52 21 192 25 39 76 10 150 119 72 6
Slide 13: Cost increase and slowdown impact in 2H14 – P&L
Cost increase and slowdown impact in 2H14 – P&L Lecico Group 2013 2014 2013 2013 2014 2014 Quarterly Profit & Loss (LE Million) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY 1H 2H 1H 2H Sanitary Ware 168.5 200.3 186.1 182.0 737.0 172.4 210.1 193.6 170.5 746.6 368.8 368.2 382.5 364.2 Tiles 152.4 188.7 182.7 198.6 72
Slide 14: Strategy for 2015: Gain volumes and cut costs
Strategy for 2015: Gain volumes and cut costs Lecico enacting aggressive pricing solutions to gain volumes in Egypt and export – Lecico decreased tile prices by c 6.5% from February 1st – Lecico introducing new lowest cost/lowest price tile and sanitary ware solutions – Lecico pushing for expanded
Slide 15: Financial overview
Financial overview
Slide 16: Profit and loss
Profit and loss Net sales Cost of sales breakdown (FY 2014) EBIT Net Profit * * = 2013 net profit excludes write-off for France 16
Slide 17: Quarterly P&L Trends
Quarterly P&L Trends Net sales Gross profit* EBIT* Net Profit* * = 4Q 2013 net profit excludes write-off for France 17
Slide 18: Segmental analysis
Segmental analysis Sanitary ware – sales volumes and revenue Sanitary ware – selling price and cost per piece Sanitary ware – gross profit and margin Tiles – sales volumes and revenues Tiles – selling price and cost per sqm Tiles – gross profit and margin 18
Slide 19: Quarterly Segmental trends
Quarterly Segmental trends Sanitary ware average price, cost and profit per piece Sanitary ware sales volume Tile Average Price, Cost and Profit per sqm Tile sales volume 19
Slide 20: Balance sheet and cash flow
Balance sheet and cash flow Working capital Returns and leverage Capital expenditures 2015e Maintenance Capex and tile diversification investment LE 60.0m 20
Slide 21: Share performance and data
are performance and data rm PET a
Slide 22: Shareholding structure and performance
Shareholding structure and performance Liquidity has moved to local share and improved Lecico share price Lecico valued at a market cap of US$ 956 million with a 51% free float – All activity is in the local share and the GDR was successfully cancelled in November 2014 – Local share trades circa U
Slide 23: Thank you
Thank you For additional information, please contact: Taher G. Gargour Telephone: +203 518 0011 Fax: +203 518 0029 E-mail: tgargour@lecico.com Visit our website at: www.lecico.com Forward-looking statements: This presentation may contain certain “forward-looking statements”, relating to Lecico Egypt