Oriental Weavers Carpet · EGX:ORWE
Oriental Weavers Carpet — 4Q 2016 Earnings Presentation
34 slides from Oriental Weavers Carpet's earnings presentation, March 2017
Slide 1: Investor Presentation 4Q2016 Results
Slide - 1 Investor Presentation 4Q2016 Results
Slide 2: Global Macro Fundamentals
Slide - 2 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 cove
Slide 3: Demand Triggers in Egypt
Slide - 3 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 pro
Slide 4: Strong US fundamentals
Slide - 4 Strong US fundamentals Expected steady gradual recovery of the housing market. Further growth in new home sales is expected throughout the year, spurred on by employment gains and a rise in household formations. As the supply of existing homes remains tight, more consumers will turn
Slide 5: Oriental Weavers in Numbers
Slide - 5 Oriental Weavers in Numbers 38 years 8 130 In the global rugs Manufacturing market Export countries companies 230 117 55% Showrooms in Export mn sqm sold in Egypt 2016 contribution in FY2016
Slide 6: Group's key Milestones
Group’s key Milestones Slide - 6 • Sphinx, the US • OW China. Oriental OW Sphinx is named Weavers distribution arm. • Patent rights for US subsidiary 100% acrylic rugs, partnering with “the Supplier of the & MAC were • OW largest Year “ for which emulates the Pantone & established showroom in Rugsdi
Slide 7: The Group's structure
The Group’s structure Slide - 7 Oriental Weavers Carpets OW OW USA OW Textiles MAC EFCO International OW China New MAC
Slide 8: Main segments of OW
Slide - 8 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
Slide 9: A Vertically Integrated Business Model
Slide - 9 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 extrus
Slide 10: OW: A large player in the Egyptian market
OW: A large player in the Egyptian market Slide - 10 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.
Slide 11: Local Market Development
Slide - 11 LOCAL MARKET DEVELOPMENT A. 4Q 2016 - Local revenues were up 30% on implemented price increase and 3% higher volumes. B. JANUARY & FEBRUARY - OW volumes slowed 10%
Slide 12: Export Market Development
Slide - 12 EXPORT MARKET DEVELOPMENT Europe US 17% Revenue contribution & performance by region in FY16 31% Others 7% Egypt 45% ▲31% ▲ 4% ▲15%
Slide 13: International Premier Partners
International Premier Partners Slide - 13 Relationships count – Oriental Weavers’ enduring relationships with the world’s best retailers, clients, resorts and other lifestyle centers ensure continued market leadership.
Slide 14: American & Canadian Premier Partners
American & Canadian Premier Partners Slide - 14
Slide 15: OW's long standing position in the US
OW’s long standing position in the US Slide - 15 Extended partnership agreement with Tommy Bahama. 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, Am
Slide 16: Export Market Development
Slide - 16 EXPORT MARKET DEVELOPMENT A. New orders in the US Market B. New Orders in the European Market -Home Depot in 2017 -IKEA. -Mohawk -French retailers such as -QVC -St. Mclau, -Gifi, -Growing online business -Amazon France -Italy retailers such as Natotci and OBI C. African Market D. GCC Mark
Slide 17: Premier Partners: Hospitality Segment
Slide - 17 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.
Slide 18: OW Hospitality: Recently delivered Projects
Slide - 18 OW Hospitality: Recently delivered Projects In Egypt: 200% growth in FY2016 Part of Al-Azhar Mosque JW Marriott Grosvenor House, London Four Seasons renovations, Marriott Mena House, Radisson Blu, Hilton Ramses Cinemas of the Mall of Egypt and Citystars Terminal 2 of Cairo Airport In
Slide 19: Export Incentive Program
Slide - 19 Export Incentive Program: EGP4 bn Export cash Documents allocated to FY16/17 budget proceeds submitted to Export Subsidy Fund OW recorded Export EGP214 mn as of Exports subsidies Dec 2016. (% of exports in EGP) Sources: Company
Slide 20: Export Incentive Program
Slide - 20 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 im
Slide 21: OW's Policy Towards EGP Floatation
Slide - 21 OW’S POLICY TOWARDS EGP FLOATATION Revising local selling prices Increasing focus on export exposure ( 55% as of Dec 2016) to secure foreign currency, ensure better profitability, and increase our receipts from export subsidies.
Slide 22: Recent and Future Expansions
Recent and Future Expansions Slide - 22 2015 2016 2017 Woven 13 looms added increasing 4 new goblin production capacity by 6% looms 8-10 looms to be added 9 new looms (pending market conditions). 2 yarn production lines Tufted MAC penetrated the artificial turf 2017: Digital Printing Machine segment
Slide 23: Financial and Operational Performance
Slide - 23 Financial and Operational Performance FY 2016 financial Summary Net sales EBITDA (EGP bn) (EGP mn) 6.8 Net Cash Flow from Net debt 1,116 +15% growth y-o-y Operations Paid off +39% y-o-y performance EGP EGP57 mn 1,422mn Capex Recorded Net Profit EBITDA Margin EGP529 rebates 16.5% (EGP mn)
Slide 24: Diversified Product Mix
Slide - 24 Diversified Product Mix 4Q 2016 Revenue Mix (by volume) 4Q 2016 Revenue Mix (by value) Woven- Non-woven Non-woven Grade A felt Woven- Tufted- felt 2% Woven- 13% Grade B Pieces 3% Grade A 16% Tufted- 14% 9% Wall-Wall Tufted- 4% Woven- Pieces OW China Grade B 21% 2% 26% Woven- OW USA Tuft-
Slide 25: 4Q 2016 Financial summary
4Q 2016 Financial summary Slide - 25 4Q Revenue Performance (EGP mn) Revenue Contribution (%) Local sales Export sales Local sales Export sales 2,234 60% 60% 55% 1,491 1,462 64% 1,374 1,424 900 870 751 40% 40% 45% 810 36% 591 592 622 4Q2013 4Q2014* 4Q2015 4Q2016 4Q2013 4Q2014* 4Q2015 4Q2016 *4Q 2014
Slide 26: 4Q 2016 Financial summary
4Q 2016 Financial summary Slide - 26 4Q EBITDA Performance (EGP mn) 4Q Net Income (EGP mn) EBITDA EBITDA margin 400 18.0% 350 15.7% 300 14.0% 250 12.2% 200 11.1% 10.5% 150 10.0% 100 50 156 162 167 351 74 68 63 89 - 6.0% 4Q2013 4Q2014* 4Q2015 4Q2016 4Q2013 4Q2014* 4Q2015 4Q2016 *4Q14 adjusted for the
Slide 27: Annual Financial Overview
Annual Financial Overview Slide - 27 Growing revenue base (EGPbn) Sales Volumes (mn sqm) Export Local Export Local 6.8 5.8 5.9 124 122 120 5.5 115 3.0 2.1 2.3 2.7 48 48 51 54 3.4 3.5 3.2 3.7 76 74 69 61 2013 2014* 2015 2016 2013 2014 2015 2016 Export vs. Local Revenue Contribution Export Local •On a
Slide 28: Financial Summary
Financial Summary Slide - 28 EBITDA Performance Net Income Performance EGPmn EBITDA EBITDA margin Net income Net margin 16.5% 18% EGPmn 500 8% 1,100 7.1% 13.3% 13.7% 850 12.6% 14% 400 6.5% 6.3% 6.1% 1,116 600 300 6% 694 803 772 10% 350 200 347 377 356 484 100 6% 2013 2014* 2015 2016 100 4% Net Debt
Slide 29: Cost Breakdown
Slide - 29 Cost Breakdown 4Q2016 COGS breakdown Other Wool 19% 4% Polypropylene- Nylon 23% Raw materials Selling Exp. 44% 27% Backing 11% Finishing material 6% Industrial Exp. Source: Company 10% Almost 65% of costs are dollar based.
Slide 30: Polypropylene is OW main raw material
Polypropylene is OW main raw material Slide - 30 Polypropylene — used in synthetic and Polypropylene granules are carefully blended rugs and carpets — is an oil sourced after receiving monthly price derivative, representing around 26% of costs. quotations from different suppliers, Polypropylene pri
Slide 31: Impact of Energy Subsidy Reform on Costs
Impact of Energy Subsidy Reform on Costs Slide - 31 % Jun-14 Jul-15 Jul-16 OW costs (EGP000) and % %∆ Energy cost Change 2014 2015 Est. 2016 Natural gas (US$/mmbtu) 2.25 5 5 - 23,485 34,727 34,727 - % of costs 0.45% 0.70% 0.70% Electricity (EGP/KW) 0.28 0.435 0.53 22% 104,382 128,318 156,341 22% % o
Slide 32: Share Data
Share Data Slide - 32 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 1.800 92% 100% o Listed in EGX since September 1997. 1.600 81% 78% 76% o 3 Month average daily value USD0.5mn. 1.400 80% o Market Cap USD455mn (as of March 2017). 1.20
Slide 33: Disclaimer
Disclaimer Slide - 33 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, performan
Slide 34: For More Information, please contact
Slide - 34 For More Information, please contact Ingy El-Diwany, CFA Investor Relations Manager +202-22685166 ieldiwany@orientalweavers.com www.orientalweavers.com
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