Slide 1: Q1/17 Results Presentation
Q1/17 Results Presentation May 9th 2017
Slide 2: Disclaimer
Disclaimer This information contained in the enclosed presentation summarizes preliminary and introductory information on RAK Ceramics PSC (the Company). This presentation has been prepared for information purposes only and is not and does not form part of or constitute any prospectus, offering memo
Slide 3: Operating Highlights
Operating Highlights Mr. Abdallah Massaad, Chief Executive Officer 3
Slide 4: Q1/17 Operational Highlights
Q1/17 Operational Highlights Core Revenues Tiles Sales Sanitaryware Sales • AED 620.6mn • -10% YoY, +13.0% QoQ • +9.6% YoY, +2.9% QoQ • -3.7% YoY, +10.8% QoQ • Tiles ASP’s +1.3% YoY • UAE main driver, +17.9% YoY • ASP’s +2.3% YoY Tile GM Improvement Local Market Strength KSA Rebound • Tile GM +160bp
Slide 5: Financial Highlights and Segment Review
Financial Highlights and Segment Review Mr. PK Chand, Chief Financial Officer 5
Slide 6: Q1/17 Financial Highlights
Q1/17 Financial Highlights Group Revenue Consolidated GM EBITDA AED681.1mn 31.7%, +150bps YoY AED114.8mn -7.4% YoY, +4.0% QoQ Core 32.1%, +190bps YoY -17.0% YoY, +11.5% QoQ Non core 27.1%, -320bps YoY Core Revenue Core EBITDA AED620.6mn AED96.4mn, flat YoY -3.7% YoY, +10.8%QoQ Margin 15.5%, +60bps Y
Slide 7: Tile Revenues
Tile Revenues • Q1/17 tile revenues decreased by 10% YoY but rose Tile Revenues by End Market 13.0% QoQ. (AED Millions) Q1/16 Q4/16 Q1/17 YoY QoQ • Sales to the UAE rose 2.2% YoY with growth in UAE 129.0 114.9 131.9 2.2% 14.8% project sales leading the way. Footfall in our retail Saudi Arabia 77.0 2
Slide 8: Tile Margins
Tile Margins • Q1/17 consolidated tile margins rose 160bps YoY to 27.1%, a 3-year high. Tile Gross Margin 40% 35.8% 36.9% • Tile gross margins in the UAE increased 120bps YoY to 29.2% 30.5% 30.4% on the back of a more favorable product mix 30% 25.5% 27.1% and production cost savings. 20% 17.2% 16.6%
Slide 9: Sanitaryware Revenues
Sanitaryware Revenues • Q1/17 sanitaryware sales rose 9.6% YoY. Sales to the important UAE market rose 17.9% YoY. Sanitaryware Revenues by End Market • Sales to Europe rose 19.1% YoY. Sales to Europe (AED Millions) Q1/16 Q4/16 Q1/17 YoY QoQ include the impact of Italian consolidation of AED4.1 32.7
Slide 10: Sanitaryware Margins
Sanitaryware Margins • Q1/17 sanitaryware margins fell 120bps YoY to 39.3%. The main reasons for the decline are lower Sanitaryware Gross Margin production and the impact of the lower British Pound 50% and Euro. 44.3% 44.8% 45% • In terms of production location, UAE margins decreased from 40.6% to 3
Slide 11: Tableware
Tableware • On a like for like basis, Q1/17 tableware revenues rose 4.3% YoY on stable volumes. Tableware Revenues 60 39.8% • During the quarter, the company began full 52.0 YoY 50 consolidation of its 47% interest in Restofair RAK, a AED Millions 13.2 13.0% UAE based distributor of tableware, glass
Slide 12: Non-Core Revenues
Non-Core Revenues • Q1/17 non core revenues fell ~AED30mn YoY, a 33.5% decline. Non Core Revenues 160 • Lower non core revenues reflect the sale of Electro 95.1 RAK during quarter as well as lower rough grading 140 91.1 revenues at AHCC as a result of the renegotiation of 13.1 the terms of that cont
Slide 13: Non-Core Margins
Non-Core Margins • Non Core EBITDA fell to AED18.4mn from AED42.1mn in Q1/16, primarily a reflection of significantly lower Non Core EBITDA profitability at AHCC on the basis of revised terms for 45 the company’s rough grading work. 42.1 40 4.4 34.9 35 6.6 4.8 30 0.5 4.1 3.4 AED Millions 1.2 0.3 25
Slide 14: Group EBITDA
Group EBITDA • We calculate EBITDA adding back Provisions EBITDA Calculation against receivables collection, extraordinary (AED Millions) Q1/16 Q1/17 YoY provisions which totaled AED1.7mn in Q1/17 and AED8.7mn in Q1/16. Net Profit 65.9 64.5 -2.1% Tax 4.2 6.6 57.1% • We exclude from EBITDA, any gains
Slide 15: COGS Evolution and Breakdown
COGS Evolution and Breakdown Revenue down by -7.4% Q1 2017 COGS Breakdown -8.7% 509.9 5.3 6.2% 35.1 465.3 7.6% 5.8 41.0 28.7 7.1% 38.5 35.5 46.8% 32.8 68.3 18.7% 63.6 108.9 13.7% 86.8 212.7 212.1 Q1/16 Q1/17 Raw Materials Consumed Direct Labour Raw Materials Consumed Packing Materials &Others Energy
Slide 16: SG&A Breakdown
SG&A Breakdown • Many efforts have been made during the quarter to SG&A manage SG&A costs in line with the revenue performance. 180 -6.2% 160.2 • SG&A during the quarter includes AED14mn on the 160 150.3 consolidation of Italy and Restofair. On a like for like basis, SG&A across the group was 6.2% l
Slide 17: Net Debt and CAPEX
Net Debt and CAPEX • Net debt fell 6.1% YoY but rose 4.1% QoQ to Net Debt AED1,728.4mn; higher net debt QoQ reflects seasonal borrowings including for the payment of cash AED Mns Q1/16 Q4/16 Q1/17 dividends which were disbursed in late March. Long Term Loan 1281.9 1,307.9 1248.7 • Net Debt to EBITDA
Slide 18: Working Capital
Working Capital • Trade receivables were roughly flat QoQ at Working Capital Days AED850.2mn vs. AED838.3mn in Q4/16.Receivables from JVs improved by AED9mn 250 214 215 to AED155mn as a result of better collections in 200 KSA. 150 113 110 • More significantly, inventory during the quarter 100 declin
Slide 19: Closing Comments
Closing Comments Mr. Abdallah Massaad, Chief Executive Officer 19
Slide 20: 2017 Group Initiatives
2017 Group Initiatives UAE local market India Iran • Grow market share, pursue • Morbi JV expected 2017 • Ramp up production near 65% project channel penetration and • Strategic tie up under capacity and develop regional grow retail channel. Flagship discussions sales. showroom in Dubai in planning
Slide 21: Thank you
CERAMICS Thank you