Lecico Egypt Sae · EGX:LCSW
Lecico Egypt Sae — H1 2006 Earnings Presentation
24 slides from Lecico Egypt Sae's earnings presentation, September 2006
Slide 1: An Egyptian Exporter
An Egyptian Exporter Taher Gargour Colin Sykes Khaled Hamza Business Development Group CFO Investor Relations 2Q 2006 results presentation September 2006
Slide 2: Corporate Summary
| Corporate Summary
Slide 3: Introduction: An Egyptian exporter
Introduction: An Egyptian exporter • Lecico Egypt S.A.E. is a leading sanitary ware producer in the Middle East and a large tiles producer Kfarchima • Lecico was founded in 1959 and has been majority owned Established 1959 by the Gargour family since 1969 Sanitary ware capacity: 600,000 pcs 2005 • T
Slide 4: Corporate Overview
Corporate Overview
Slide 5: Investment case
Investment case Management and brand Regional leadership Growing exports Significant cost advantage history • Brand with over 45 years of history • Sanitary ware market leader in •Targeting growth in typically higher • Economies of scale Egypt and Lebanon margin exports • Low labour and energy costs
Slide 6: Strong management & over 40 years brand history
Strong management & over 40 years brand history Management team Lecico founded in Lebanon 1959 Tile production started Sanitary ware Gilbert Gargour 1967 production started in Chairman and CEO Lebanon Operations established in Egypt Sanitary ware 1978 production started Georges Ghorayeb Elie Baroudi
Slide 7: New key appointments
New key appointments Colin Sykes • Chartered Accountant with an MBA from Duke University. Spent 15 years with Lecico and 5 in the technology sector Group CFO • Began his career in accountancy, followed by a five year stint in the City before embarking on a 15 year international business career that
Slide 8: Domestic market leadership
Domestic market leadership Market leadership in Egypt Sanitary ware market (4.5 million pieces)1 Tile market (80 million m2)1 7% • Leading sanitary 23% 25% Cleopatra • Competitive pricing to 7% Lecico Cleopatra ware market share Pharaos support distributors’ 8% 38% Gravena Lecico sanitary ware sales
Slide 9: Growing exports
Growing exports Growth in group’s exports Lecico’s total export volumes (sanitary ware) Egypt’s leading sanitary ware exporter 3,000 56% 59% 80% • Lecico exports 50% of its sales vs. 20% for local peers 51% 46% 50% 2,000 42% 60% 40% • Lecico sells to over 50 countries (inc OEM sales) 1,000 20% 1,229
Slide 10: Significant cost advantage
Significant cost advantage International cost advantage Lecico produces sanitary ware at an all-in average cost of US$10.2 / piece – In Egypt, manufacturing cost averages US$8.1 / piece of sanitary ware – The difference reflects higher packing costs for EU-destined exports and significantly higher i
Slide 11: Growth strategy
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Slide 12: Long-term sanitary ware growth strategy…
Long-term sanitary ware growth strategy… Expand regional and international exports • Aim to increase market growth − UK, Ireland • Increase presence opportunistically − France, South Africa • Potential future markets − Germany, Algeria, Saudi Arabia, Iraq, Syria • Build on leading domestic positions
Slide 13: …translates into concrete actions
…translates into concrete actions Strategy Action Expand regional and international exports Expand regional and international exports ● Aim to increase market growth ● Started unbranded sales to UK builders merchants − UK, Ireland ● Started unbranded sales to DIY market in the UK ● Increase presence
Slide 14: 1H 2006 – Recovery in a difficult period
1H 2006 – Recovery in a difficult period Revenue-led sequential recovery in operations… • Sanitary ware recovery drives 1H revenues up 4% Y-o-Y (vs. 12% drop in 2H 2005) – New DIY contracts in the UK and France help drive a 13% increase in sanitary ware export volumes – Egyptian sanitary ware market
Slide 15: 1H 2006 - Recovery in a difficult period
1H 2006 - Recovery in a difficult period Sanitary ware volume and growth at highest level in 6 quarters Highest sanitary ware gross profit in 4 quarters 000 pieces Y-o-y (%) LE million Y-o-y (%) 18.5% -6.0% -3.0% 1,400 20% 55 0% 5.0% -6.0% -29.0% -27.0% -20% 1,200 -11.0% -9.0% 0% -12.0% -38.0% 45 -4
Slide 16: External shocks to hit 2H 2006 performance
External shocks to hit 2H 2006 performance Conflict in Lebanon leads to plant closure and market collapse • On 20 July, Lecico closed its Lebanese plant due to security-related business interruptions – Temporary closure will continue until the situation in Lebanon normalises • Every month of closure
Slide 17: Financial overview
at — Financial overview
Slide 18: Profit and loss
Profit and loss Net sales Cost of sales breakdown (1H 2006) LE million Exports (%) 800 64% Raw materials (36%) 49.6% 49.2% 50.4% 51.4% 44.1% 600 39.1% 36.3% 48% Other materials (19%) 32% Energy (12%) 400 16% Salaries and wages (14%) 200 0% Depreciation (8%) 265 382 559 697 652 330 344 0 -16% 2001 20
Slide 19: Revenues and margins
Revenues and margins Segmental sales breakdown (2005 vs. 1H 2006) Sanitary ware sales volume by geography Sanitary ware export volumes by geography 2005 1H 2006 2005 1H 2006 2005 1H 2006 Egypt (36%) Egypt (34%) Europe (80%) Europe (83%) Sanitary w are (60%) Sanitary w are (61%) Lebanon (5%) Lebanon
Slide 20: Segmental analysis
Segmental analysis Sanitary ware – sales volumes and revenue Sanitary ware – selling price and cost per piece Sanitary ware – gross profit and margin 120 500 4.3 5.0 250 60% 4.0 50% 3.9 46% 46% 47% 100 44% 42% 50% 3.4 Volumes (000's pcs) 400 4.0 200 39% Gross margin (%) Gross profit (LE m) Revenues
Slide 21: Balance sheet and cash flow - quarterly
Balance sheet and cash flow - quarterly Working capital Days 300 250 200 150 100 50 266 208 126 226 217 129 99 99 192 96 103 105 209 78 126 73 242 110 99 159 226 96 109 174 241 125 108 222 0 2001 2002 2003 2004 2005 1H05 1H06 Inventory days (inventory/cost of sales) Receivables days (receivables/net
Slide 22: Share performance and data
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Slide 23: Share structure and history
Share structure and history • Lecico listed in November 2004 and is currently valued at a market cap of US$ 194 million with a 53% free float – Trading history: GDR trades an average of US$ 0.41 million in trading a day Shareholding structure and trades on 35% of market trading days (August 2005-Jul
Slide 24: Thank you
Thank you For additional information, please contact: Taher G. Gargour Khaled E. Hamza Telephone: +203 518 0011 Telephone: +203 518 0011 Fax: +203 518 0029 Fax : +203 518 0029 Mobile: +2012 104 1047 Mobile : +2010 847 8118 E-mail: tgargour@lecico.com.eg E-mail : kelmahdy@lecico.com.eg Visit our webs