Rak Ceramics Pjsc · ADX:RAKCEC

Rak Ceramics Pjsc — 8th Annual London EFG Hermes Conference – Frontier Emerging Markets 2018

34 slides from Rak Ceramics Pjsc's conference presentation, September 2018

  1. Slide 1: The 8th Annual London EFG Hermes Conference Frontier Emerging Markets

    INVESTOR PRESENTATION THE 8TH ANNUAL LONDON EFG HERMES CONFERENCE FRONTIER EMERGING MARKETS SEPTEMBER 2018 RAK Ceramics PJSC © 2018. All rights reserved 1

  2. Slide 2: Attendees

    INVESTOR PRESENTATION Attendees Abdallah Massaad PK Chand Wassim Moukahhal Group Chief Executive Officer Group Chief Financial Officer Executive Board Member Abdallah Massaad is Group CEO of RAK Ceramics. and has Pramod Kumar Chand is the Group Chief Financial Officer Wassim Moukahhal is a member of

  3. Slide 3: Disclaimer

    INVESTOR PRESENTATION Disclaimer This information contained in the enclosed presentation summarises preliminary and and past performance is not indicative of future results. The Company undertakes no introductory information on RAK Ceramics PJSC (the Company). This presentation obligation to publicl

  4. Slide 4: Company Overview

    INVESTOR PRESENTATION Company Overview Overview Industry Strategy Results RAK Ceramics PJSC © 2018. All rights reserved 4

  5. Slide 5: RAK Ceramics at a Glance

    INVESTOR PRESENTATION RAK Ceramics at a Glance + 25YEARS Ceramic expertise One of the largest ceramic brands in the world. 15,000 Global workforce 150 1 OWNERSHIP + + BILLION SQM 28.5% 30.9% Countries exported Tiles supplied worldwide 5.0% 7.0% 5.3% 577MN ~$800MN 6.7% 11.4% 5.3% US$ Samena Capital A

  6. Slide 6: Brief History

    INVESTOR PRESENTATION Brief History 1989 1991 1993 2000 2004 Founded by H.H. Sheikh First tile plant began in First sanitaryware plant Opening of First overseas RAK Porcelain was Saud Bin Saqr Al Qasimi the UAE began in the UAE tile plant in Bangladesh established No.1 2006 2007 2010 2014 2016 India

  7. Slide 7: Core Business Lines

    INVESTOR PRESENTATION Core Business Lines TILES SANITARYWARE We offer 6,000+ models, Complete solutions one of the largest provider offering products collections of ceramic wall designed to suit all budgets and floor tiles, gres and tastes with accessories porcelain and super-sized and bathroom furn

  8. Slide 8: Manufacturing Footprint

    INVESTOR PRESENTATION Manufacturing Footprint 2017 GLOBAL PRODUCTION • 22 plants worldwide 22 • 16 Tiles Plants in UAE (10), India (3), Bangladesh (1), Iran (1) and China (1). PLANTS WORLDWIDE • 4 Sanitaryware Plants in UAE (2), India (1), and Bangladesh (1) • Tableware - UAE (1) • Faucets - UAE (1)

  9. Slide 9: Production Capacity by Location

    INVESTOR PRESENTATION Production Capacity by Location TILES SANITARYWARE 5% 5% 13% 9% 10% 29% 59% 71% UAE (82mn sqm) Bangladesh (11.6mn sqm) India (11mn sqm) UAE (2.7mn pieces) Iran (6mn sqm) Bangladesh (1.6mn pieces) China (5.5m sqm) India (0.7mn pieces) FAUCETS TABLEWARE 100% of Faucets produced i

  10. Slide 10: Vision and Key Strengths

    INVESTOR PRESENTATION Vision and Key Strengths The world’s leading ceramics lifestyle solutions provider. EXPERIENCE WIDE RANGE INNOVATION QUALITY We have helped to create We are known for our wide Innovation is at the heart of We are able to consistently some of the world’s most product range and o

  11. Slide 11: Competitive Landscape

    INVESTOR PRESENTATION Competitive Landscape Overview Industry Strategy Results RAK Ceramics PJSC © 2018. All rights reserved 11

  12. Slide 12: World Production and Consumption - Tiles

    INVESTOR PRESENTATION World Production and Consumption - Tiles WORLD PRODUCTION (MILLION SQM & CONTRIBUTION %) WORLD CONSUMPTION (MILLION SQM & CONTRIBUTION %) Asia 9,331 71.5% Asia 8,818 69.0% Europe Union 1,304 10.0% Central S America 1,180 9.2% Central S America 1,086 8.3% Europe Union 964 7.5% O

  13. Slide 13: Market Position - Tiles

    INVESTOR PRESENTATION Market Position - Tiles PRODUCTION (MILLION SQM) In 2016 RAK Ceramics retained it position as the 4th largest tile producer globally. MOHAWK INDUSTRIES, INC 250 SIAM GROUP 201 GRUPO LAMOSA 150 RAK CERAMICS PJSC 83 PT MULIAKERAMIK 78 CERAMICA CARMELO FIOR 77 PAMESA 70 GRUPO FRAG

  14. Slide 14: Market Position, Focus Markets - Tiles

    INVESTOR PRESENTATION Market Position, Focus Markets - Tiles UNITED ARAB EMIRATES BANGLADESH The Middle East flooring market is growing due to the high volume of construction activities in the region. The # 1 # 1 three largest ceramics Market Size* 86 (MN SQM) Market Size* 59 (MN SQM) producers in t

  15. Slide 15: Business Strategy Update

    INVESTOR PRESENTATION Business Strategy Update Overview Industry Strategy Results RAK Ceramics PJSC © 2018. All rights reserved 15

  16. Slide 16: Summary of Key Achievements of VCP

    INVESTOR PRESENTATION Summary of Key Achievements of VCP Core Business Growth Non-Core Disposals New Brand Launched Cost Efficiencies The RAK Ceramics’ Value Creation Plan (VCP) Europe/KSA Acquisitions was designed to strengthen Margin Improvements core business and unlock Increase UAE Market shareh

  17. Slide 17: Non-Core Divestments

    INVESTOR PRESENTATION Non-Core Divestments Non-core revenue 12 >US$ 130MN GROUP REVENUE SPLIT (AED MN) contribution to total revenues 5.5% 8.4% 8.6% has steadily declined to an all Exits since Q2 14 Divestment proceeds 14.7% 16.0% 13.0% 18.7% time low of 5.5%. In 2017, Electro RAK and RAK Warehouse

  18. Slide 18: Core Business Performance

    INVESTOR PRESENTATION Core Business Performance CORE NET PROFIT (AED MN) Cost savings Oil price increases Oil price collapse Production efficiencies Gas price increases Increase in energy and raw Geopolitical headwinds Gas price increases Capacity expansions material prices have been Regional econom

  19. Slide 19: Value and Growth in India & Bangladesh

    INVESTOR PRESENTATION Value and Growth in India & Bangladesh BANGLADESH INDIA $ 197MN 23% -2.8% Only multinational ceramics producer in India Market Cap. Ownership of Market Cap. Revenue Growth as at 31st August 2018 68% 15% 12MN SQM 18MN SQM 15% Ownership of Group Net Tile Production Cap. with new

  20. Slide 20: Restructure/Turnaround of Europe & Saudi Arabia

    INVESTOR PRESENTATION Restructure/Turnaround of Europe & Saudi Arabia EUROPE SAUDI ARABIA Completed acquisitions of distribution JVs into full ownership to give greater control and access into key markets AED 179mn of Tiles and Sanitaryware sales in H1 2018 +2.8% AED 136.6m of Tiles and Sanitaryware

  21. Slide 21: Tableware Performance Overview

    INVESTOR PRESENTATION Tableware Performance Overview REVENUE (AED MN) GROSS PROFIT MARGIN (%) The tableware business continues to show growth with revenues increasing by 14.2% YoY to AED 129.4m driven by growth in United States, 237.8 61.4% 61.0% 58.1% 56.0% 50.1% 52.0% Europe & Asian markets. 145.8

  22. Slide 22: New Brand Identity

    INVESTOR PRESENTATION New Brand Identity RAK Ceramics PJSC © 2018. All rights reserved 22

  23. Slide 23: Dividend Highlights

    INVESTOR PRESENTATION Dividend Highlights DIVIDEND PAYOUT (%/SHARE) Extract from company dividend policy in 2014 40% 10.0 5.0 30% 30.0 5.0 “Payout ratio in excess 60% of 10.0 25.0 25.0 consolidated net income subject to 20% 20.0 consideration factors such as the 15.0 15.0 * business outlook, capital

  24. Slide 24: 2018 Priorities

    INVESTOR PRESENTATION 2018 Priorities Maintain/Increase market share and profitability of UAE, India, Europe profitability Continue product portfolio Bangladesh, Porcelain improvement optimization and Kludi-RAK Continue focus on branding roll India turnaround and hub for Optimized production out sup

  25. Slide 25: Financial Performance

    INVESTOR PRESENTATION Financial Performance Overview Industry Strategy Results RAK Ceramics PJSC © 2018. All rights reserved 25

  26. Slide 26: H1 2018 Financial Highlights

    INVESTOR PRESENTATION H1 2018 Financial Highlights Core revenues increased by Core gross profit margin SG&A and finance cost (net) +1.8% to AED1.30bn YoY. increased by +20bps to 33.4% increased by +10.5% to AED385m. Total revenues decreased by compared to H1 2017. SG&A increased on consolidation -1.

  27. Slide 27: Financial Performance

    INVESTOR PRESENTATION Financial Performance REVENUE (AED BN) GROSS PROFIT (%) Core revenue increased by 26.0 28.2 30.5 31.6 33.2 32.5 1.8% in H1 2018 as a result of 33.4 33.2 3.3 3.1 32.5 2.9 steady growth in tiles by 1.6% & 0.5 2.8 28.2 29.3 30.530.3 29.0 0.5 0.2 24.9 strong growth in tableware by

  28. Slide 28: Segment Performance

    INVESTOR PRESENTATION Segment Performance REVENUE BY SEGMENT (AED MN) Core revenue in H1 2018 increased by +1.8% due to H1 2018 H1 2017 strong performance in tiles & tableware segments. Amount Amount Growth Effective from 1st Jan 2018, revenue Tiles 937.6 923.1 1.6% recognition is changed as per IFR

  29. Slide 29: Tiles & Sanitaryware Regional Performance

    INVESTOR PRESENTATION Tiles & Sanitaryware Regional Performance REVENUE BY REGION (AED MN) UAE, Saudi Arabia and India H1 2018 H1 2017 markets are key drivers of growth year on year. Amount Amount Growth UAE 391.0 357.4 9.4% Revenue in Bangladesh decreased -2.8% due to Ramadan & EID holidays. Saudi

  30. Slide 30: Gross Profit Margins

    INVESTOR PRESENTATION Gross Profit Margins GROSS PROFIT (%) TILES GROSS PROFIT (%) Total gross profit margin of 26.0 28.2 30.5 31.6 33.2 32.5 33.2%, +70bps compared to 33.4 33.2 32.5 28.0 28.6 28.7 H1 2017, an all-time high. 28.2 29.3 30.530.3 29.0 24.4 24.6 24.8 24.9 22.6 For better efficiencies ac

  31. Slide 31: Core Net Profit and Shareholder Return

    INVESTOR PRESENTATION Core Net Profit and Shareholder Return CORE NET PROFIT (AED MN) Core net profit increased by 100% 80.0 73.1 65.8 70.2 67.9 +14.3% compared to Q1 2018 52.2 39.3 50.7 48.2 27.3 42.1 41.7 39.5 44.4 41.7 47.8 with a margin improvement of 1.9 +40bps QoQ. -35% -135.8 -170% Q1'14 Q2'1

  32. Slide 32: Balance Sheet Evolution

    INVESTOR PRESENTATION Balance Sheet Evolution MANAGEMENT COMMENTS RETURN ON EQUITY (%) OPERATING CYCLE (DAYS) 11.4 281 289 Return on equity is 9.4% in H1 10.4 218 225 262 9.4 2018 (LTM). 9.0 227 249* 180 188 214 Operating Cycle increased compared 7.1 to 2017 due to an increase in inventory (Adjusted

  33. Slide 33: Market Valuation

    INVESTOR PRESENTATION Market Valuation CURRENT VALUATION (AED M) RELATIVE RETURNS - DIVIDEND ADJUSTED SHARE PRICE PERFORMANCE (%) 31/08/18 31/12/17 200% Amount Amount VILLEROY & BOCH +111.9% Share price 2.35 2.75 TOTO +83.4% Number of shares 901 858.4 150% Market Cap 2,118 2,360 GRUPO LAMOSA +72.6%

  34. Slide 34: INVESTOR PRESENTATION RAK Ceramics PJSC © 2018. All rights reserved

    INVESTOR PRESENTATION RAK Ceramics PJSC © 2018. All rights reserved 34

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