Slide 1: Oriental Weavers Investor Presentation
ORIENTAL WEAVERS Investor presentation
Slide 2: Oriental Weavers in Numbers
Oriental Weavers in Numbers No. 1 8 130 World Largest Manufacturing producer by volumes Export countries companies 85% c. 80% 64% Market share in Egypt Export contribution in Utilization rate 1Q2018 Slide 2
Slide 3: Main segments of OW
Main segments of OW Woven Tufted Non-woven Description Surface yarn is woven simultaneously The surface yarn is Fibers bonded together with the backing. Then a latex inserted into a using chemicals and compound is added. polypropylene sheet heat. Subsidiaries OWC OWI & OWUSA OW MAC New MAC EFCO OWT
Slide 4: 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 5: Policy towards higher PP Prices
Policy towards higher PP Prices 2,100 USD /ton An initial step all new product developments 1,629 1,585 1,584 have the new pp prices priced in – should be 1,500 1,363 1,456 1,295 reflected more in the second half of 2018. 1,218 1,082 990 979 900 International markets are in a wait and see 300 mo
Slide 6: Export Market development
Export Market development Revenue contribution & performance by region in 1Q2018 Egypt 36% ▼10% Africa & GCC 2% Russia & China Russia & Asia ▲8% 3% Americas ▼20% ▼7% Europe ▲2% Asia US 21% 38% ▼27% ▲49% Africa Slide 6
Slide 7: Longstanding relationship with major customers
Longstanding relationship with major customers Slide 7
Slide 8: Export performance overview
Export performance overview Export revenues (EGPbn) Export vs. Local Revenue volume % Export volumes (mn sqm) Export Local 6.7 40% 43% 46% 46% 68 3.5 3.7 65 63 3.4 60 60% 57% 54% 54% 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Slide 8
Slide 9: Export Market Development in 1Q2018
Export Market Development in 1Q2018 Contribution to Percentage ∆ Volume Value Average Price Export Revenues 1Q 2018 1Q2017 Woven ▲4% 0% ▼3% 78% 76% Tufted ▼9% ▼5% ▲4% 20% 21% Non-woven Felt ▼32% ▼42% ▼15% 2% 3% Total ▼4% ▼2% ▲2% 100% 100% Slide9
Slide 10: Industry overview | Global carpets & rugs market
Industry overview| Global carpets & rugs market Global Carpets & rugs market by value (USD bn) Global Carpets & rugs market by bn sqm (5 yr CAGR) North America: 2.6% Europe:1.1% Asia & pacific:3.2% others:3.8% Total 5 4.4 0.6 5 year CAGR 0.5 5 year CAGR 4.1% 2.6% 1.7 45 1.5 1.1 1.0 37 1.4 1.6 2016 2
Slide 11: Global Macro Fundamentals
Global Macro Fundamentals US Market Europe Asia & Africa Expected continuous growth in new home sales driven by European economy is set to follow a Strong potential in African employment gains and a rise in household formations. moderate growth path. beside East Asian markets. Residential renovation
Slide 12: Demand Triggers in Egypt
Demand Triggers in Egypt Growing economy GDP is expected to grow by 5-6% annually up to 2020 Sizeable youth bracket as per the IMF. Sizeable youth 50% of the Egyptian population are near the marriage population with around one million marriages taking place annually. Housing gap Housing gap is about
Slide 13: Local market overview
Local market overview Growing local revenues (EGPbn) Export vs. Local revenues% Local sales volumes (mn sqm) Export Local 33% 40% 40% 45% 3.0 3.4 54 48 51 46 67% 2.3 2.3 60% 60% 55% 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Slide 13
Slide 14: Local Market Development in 1Q2018
Local Market Development in 1Q2018 Contribution to Percentage ∆ Volume Value Average Price Local Revenues 1Q 2018 1Q 2017 Woven ▲3% ▲1% ▼2% 83% 84% Tufted ▼30% ▲3% ▲47% 12% 12% Non-woven Felt ▲16% ▲16% - 4% 3% Others (imported & yarn 1% 1% sales) ▼56% Total ▼1% ▲2% 100% 100% Slide14
Slide 15: Revenue progress
Revenue progress Revenues (EGPbn) Sales volumes (mn sqm) EGPbn Export Local 10.1 mn sqm Export Local 113 111 117 114 3.4 6.8 48 54 46 5.7 5.8 51 3.0 2.3 2.3 6.7 65 60 63 68 3.4 3.5 3.7 2014 2015 2016 2017 2014 2015 2016 2017 3-year CAGR 21% Slide 15
Slide 16: 1Q2018 Revenue summary
1Q2018 Revenue summary Value (EGP mn) Volume (sqm) 1Q 2018 1Q 2017 % Change 1Q 2018 1Q 2017 % Change Woven- Egypt based 1,464 1,407 4% 13.9 13.1 6% OW USA 521 562 -7% 2.9 3.1 -6% OW China 16 21 -22% 0.2 0.2 -9% Tufted 428 441 -3% 7.4 8.7 -15% Non-woven Felt 73 90 -19% 4.0 4.0 -1% Other 6 3 80% Total
Slide 17: Diversified Product Mix
Diversified Product Mix 1Q 2018 Revenue Mix (by volume) 1Q 2018 Revenue Mix (by value) Non- Non-woven woven Felt Felt 3% 14% Tufted 17% Woven 49% Tufted OW China 26% Woven 1% 58% OW USA 21% OW China 1% OW USA 10% Woven-Grade A EGP300/sqm Tufted wall-to-wall EGP46/sqm Woven-Grade B EGP128/sqm Tufted
Slide 18: OW Hospitality: Recently delivered Projects in Egypt
OW Hospitality: Recently delivered Projects in Egypt Mosques related to the Egyptian Endowments Authority Galalah coastal resort in Suez Governorate Semiramis Intercontinental, Cairo The Vox Cinemas in Alexandria, The Azhar Grand Mosque in Cairo. Currently the company has started production fo
Slide 19: Policy towards EGP floatation & high EGP i/r
Policy towards EGP floatation & high EGP i/r Revised local selling prices Increasing focus on export exposure ( 64% as of 1Q 2018) to secure foreign currency, ensure better profitability, and Settlement all EGP debt facilities in 2017 to avoid the high finance charges. OW signed forward contr
Slide 20: Recent and Future Expansions
Recent and Future Expansions 2015 2016 2017 2018 Woven 13 looms added 4 new goblin increasing looms Establishing a new factory production 9 new looms 6-8 new looms pending local 10 new looms pending local capacity by 6% 2 yarn and international demand and international demand production Four yar
Slide 21: 1Q 2018 Cost Breakdown
1Q 2018 Cost Breakdown OW China 2% Other 9% Polypropylene- Selling Nylon 22% Raw Material 31% 54% Backing 10% Depreciation Wool Finishing material 4% Wages 5% 8% 9% Almost 63% of costs are dollar based. Source: Company Slide 21
Slide 22: Financial Summary
Financial Summary EBITDA Performance (EGPbn) Net Income Performance Net Debt (EGPbn) EGPbn EGPmn EBITDA EBITDA margin Net income Net margin Net debt Net debt/EBITDA EGPmn 1,700 1.5 1.4 16.5% 15.1% 16% 800 6.8% 8% 1.2 1.2 1,500 13.8% 700 6.1% 7.1% 1.0 1.2 1,300 13.6% 0.7 1,100 14% 600 6.5% 1.0 1.0 12
Slide 23: Impact of Energy Subsidy Reform on Costs
Impact of Energy Subsidy Reform on Costs % Jun-14 Jul-15 Jul-16 Jul-17 Energy cost Change Natural gas (US$/mmbtu) 2.25 5 5 5 - Electricity (EGP/KW) 0.28 0.435 0.53 0.77 48% Transportation costs (EGP Diesel/Liter) 1.1 1.80 2.35 3.65 55% * Energy cost represents less than 4% of the company’s total cos
Slide 24: Export Incentive Program:
Export Incentive Program: Export cash Documents submitted proceeds to Export Subsidy EGP360 mn delayed Fund disbursement till April 2018 OW collected EGP91mn in 2017. Export subsidies Exports (% of exports in EGP) Sources: Company Slide 24
Slide 25: Export Incentive Program
Export Incentive Program The program includes only very minor changes to incentive rates, but does offer exporters extra incentives in growing USD exports from 10%–25%, exporting to Africa and opening new markets (such as Russia, China, Latin America, CIS). These amendments should be implemented r
Slide 26: Share Data
Share Data EPS Payout ratio o450 mn shares at par value of EGP 1 per share. 2.00 92% 100% 81% 1.80 81% 90% 1.81 o Issued and Paid-in Capital EGP 450 mn. 1.60 78% 80% 1.40 66% 76% 70% 1.46 oListed in EGX since September 1997. 1.20 60% 1.00 59% 50% o3 Month average daily value EGP8.3mn. 0.80 0.55 40%
Slide 27: 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 28: For More Information, please contact
For More Information, please contact Ingy El-Diwany, CFA Investor Relations Manager +202-22685166 ieldiwany@orientalweavers.com www.orientalweavers.com Slide 28