Rak Ceramics Pjsc · ADX:RAKCEC
Rak Ceramics Pjsc — RAK Ceramics PSC — Q3 2016 Earnings Presentation
28 slides from Rak Ceramics Pjsc's earnings presentation, 2016
Slide 1: Q3 2016 Results Presentation
Q3 2016 Results Presentation
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: Q3/16 Operational Highlights
Q3/16 Operational Highlights KSA Performance Europe Lost Sales UAE Sales Tile & SW Sales -65% YoY & Logistics issues started in July -6.4% in Q3/16, +1.3% YTD -56% YoY. Had KSA been flat, lasting through Sept on shift driven by project and retail total Tiles & SW sales would of warehouse to Italy. s
Slide 5: Financial Highlights and Segment Review
Financial Highlights and Segment Review Mr. PK Chand, Chief Financial Officer 5
Slide 6: Q3/16 Financial Highlights
Q3/16 Financial Highlights Group Revenue Consolidated GM EBITDA Q3/16 AED646mn, -17.5% Q3/16 29.5%, -110bps YoY, Q3/16 AED100.3mn, -35.4% YoY flat QoQ YoY & -30.4% QoQ 9-mth AED2,138mn, -8.3% 9-mth 29.7%, +90bps YoY 9-mth AED382.8mn, -13% YoY YoY Normalized Net Profit One Time Charges Reported Net P
Slide 7: Tile Revenues
Tile Revenues Q3/16 tile revenues decreased by 20.9% YoY and Tile Revenues by End Market 13.7% QoQ. (AED Millions) Q3/15 Q2/16 Q3/16 QoQ YoY Sales to the UAE decreased 6.5% YoY reflecting UAE 122.4 130.5 114.4 -12.3% -6.5% impact of timing of local holidays and negative Saudi Arabia 114.5 73.9 40.1
Slide 8: Tile Margins
Tile Margins Q3/16 tile margins rose 110bps QoQ to 25.8% but decreased by 100bps YoY. Tile Gross Margin 30.0% By production location, tile gross margin rose in Bangladesh by 460bps to 35.6% on higher fixed 26.8% cost absorption due to tile capacity expansion 25.7% 25.4% 25.8% while margins in India
Slide 9: Sanitaryware Revenues
Sanitaryware Revenues Q3/16 Sanitaryware sales declined 4.7% YoY and 15.4% QoQ. Sanitaryware Revenues by End Market (AED Millions) Q3/15 Q2/16 Q3/16 QoQ YoY Sales to the UAE decreased 6.1% YoY and 7.7% UAE 34.4 35.0 32.3 -7.7% -6.1% QoQ; Q3 was an exceptionally weak sales quarter Saudi Arabia 7.4 7.
Slide 10: Sanitaryware Margins
Sanitaryware Margins Q3/16 sanitaryware margins increased by 90 bps QoQ but decreased by 310bps compared to Q3/15 SW Gross Margin due to change in product mix sold. Q3/15 was in 46.0% fact, a record quarter. In terms of production location, UAE margins 45.0% 44.8% decreased from 46.4% to 42.9% YoY d
Slide 11: Tableware
Tableware Q3/16 tableware revenues increased by 12.0% YoY but 21% QoQ due to seasonality. Results Tableware Revenues were lead by higher average selling prices. 60 51.2 Excluding the impact of consolidation of RAK 50 40.6 Porcelain Europe, revenue growth was 8.2% YoY AED Millions 36 36.2 38.3 37.2 4
Slide 12: Non-core Revenues
Non-core Revenues Q3/16 non core revenues were AED81.4mn vs. 160 106.4mn in Q3/15, a decline of 23.5% YoY. The decline in non core revenues YoY reflects AED 137.6 13mn from RAK Logistics in Q3/15 and a decline 140 130.6 in construction related activity in the UAE impacting our MEP business. Rough gr
Slide 13: Non-core Margins
Non-core Margins For non core, we show EBITDA margin, as we believe it is a more relevant metric for this group. Non Core EBITDA by Segment (AED Millions) Q3/15 Q2/16 Q3/16 QoQ YoY Non Core EBITDA fell 41.4% YoY to AED33.2mn, AHCC 38.8 25.2 23.1 -8.3% -40.4% EBITDA declined for all of the non core b
Slide 14: Results Summary
Results Summary AED Mns Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 QoQ YoY Revenue (Net) Tiles 542.0 524.3 480.4 514.2 531.5 470.8 496.0 487.0 420.2 -13.7% -20.9% SW 111.8 111.6 110.9 116.2 108.6 108.2 111.5 122.4 103.5 -15.4% -4.7% Porcelain - 35.1 35.1 36.1 36.2 38.2 37.2 51.2 40.6 -20.
Slide 15: Q3/16 Revenue Bridge
Q3/16 Revenue Bridge 800 780 760 740 (78.5) AED Millions 720 700 782.8 (28.1) 680 660 (25.0) (5.5) 640 620 645.7 600 Q3/15 Sales KSA Performance India Performance Non Core Sales Other Q3/16 Sales Company Confidential 15
Slide 16: EBITDA
EBITDA We calculate EBITDA adding back Provisions against receivables collection and other non recurring items EBITDA Calculation (AED Millions) Q3/15 Q2/16 Q3/16 QoQ YoY On this basis, Q3/16 EBITDA fell 35.4% YoY and 30% QoQ. EBITDA Margin fell 430bps YoY and Net Profit 83.2 65.3 18.2 -72.1% -78.1%
Slide 17: COGS Breakdown
COGS Breakdown COGS Evolution 600.0 COGS Composition 140% 500.0 120% 400.0 100% 80% AED Millions 300.0 60% 40% 200.0 20% 100.0 0% Q3/15 Q2/16 Q3/16 -20% 0.0 Q3/15 Q2/16 Q3/16 -40% Raw Material Labour (100.0) Energy Depreciation Raw Material Labour Repairs & Maintenance Packing Materials Energy Depre
Slide 18: SG&A Breakdown
SG&A Breakdown G&A expenses are 1.6% higher YoY. SG&A 100.0 Selling and distribution expenses fell 0.9% YoY 90.0 due to lower performance rebates & advertisement expenses. The decline in selling and distribution YoY is understated as the 80.0 consolidation of Europe entities (UK, Italy, Germany & Po
Slide 19: Net Debt and CAPEX
Net Debt and CAPEX Net debt declined 2.3% QoQ from short term debt AED Mns Q1/16 Q2/16 Q3/16 repayment and a slightly higher cash balance. Long Term Loan 1,281.9 1,190.2 1,243.2 While our Net Debt to Equity declined to 62% from 64% in Q2/16., Net Debt/EBITDA rose to STL & TR 898.0 861.6 768.7 3.2x f
Slide 20: Working Capital
Working Capital Dec-15 Mar-16 June-16 Sep'16 Working Capital AED mn Days AED mn Days AED mn Days AED mn Days Trade Receivable 911.6 108 909.3 108 933.8 113 908.6 115 Inventory 1,141.2 188 1,196.6 199 1,206.1 206 1,244.2 221 Due form related parties 523.8 62 403.8 48 388.3 47 342.1 43 Deposit, advanc
Slide 21: Closing Comments
Closing Comments Mr. Abdallah Massaad, Chief Executive Officer 21
Slide 22: Update on Group Initiatives for the Year
Update on Group Initiatives for the Year India Iran China Head of HR & Marketing hired, Production quality improving Inventory liquidation largely other key posts ongoing. Bulk of old tile inventory sold completed Targeting 15% cost reduction Ongoing plant sale process by year end, mainly on energy.
Slide 23: Appendix
RAK CERAMICS Appendix
Slide 24: Focus Markets Sales Trends
Focus Markets Sales Trends UAE KSA 140 129 131 140 120 112 120 122 122 118 114 115 120 111 120 AED Millions AED Millions 100 100 88 87 85 89 82 70 77 74 80 80 60 34 30 29 33 36 34 34 33 35 32 60 40 40 40 20 20 6 8 8 8 10 7 4 7 7 3 0 0 Tiles SW Tiles SW India Bangladesh 140 116 50 41 120 101 105 37 3
Slide 25: Consolidated Income Statement
Consolidated Income Statement AED Mn Q3 '15 Q3 16A YTD Sep'15 YTD Sep' 16 Revenue 782.8 645.7 2,331.0 2,138.0 Cost of sales (543.0) (455.5) (1,659.2) (1,502.6) Gross profit 239.8 190.2 671.8 635.4 Administrative and general expenses (72.9) (74.1) (232.8) (a) (199.0) Selling and distribution expenses
Slide 26: Consolidated Balance Sheet
Consolidated Balance Sheet AED Mn September September Assets Dec 2015 2016 Equity and liabilities Dec 2015 2016 Non-current assets Equity Share capital 817.5 858.4 Property, plant and equipment 1,065.5 1,155.6 Reserves 1,950.6 1,780.5 Capital work-in-progress 182.3 132.8 Equity attributable to owner
Slide 27: Cash flows Statement
RAK CERAMICS Cash flows Statement Sep-15 Sep-16 Sep-15__Sep-16| AED Mn AED Mn AED Mn_ AED Mn] (Operating activities Investing activities Profit for the period before tax 244.7 162.6] [Acquisition of property, plant and equipment and (205.5) (187.0) apital work in progress . Proceeds from disposal of
Slide 28: Thank you
CERAMICS Thank you