Lazurde Company For Jewelry · TADAWUL:4011

Lazurde Company For Jewelry — Q2 2017 Earnings Presentation

22 slides from Lazurde Company For Jewelry's earnings presentation

  1. Slide 1: Presentation Results Q2 2017

    Presentation Results Q2 2017

  2. Slide 2: Disclaimer

    Disclaimer Information contained in this presentation is subject to change without further notice, its accuracy is not guaranteed and it may not contain all material information concerning the company. Neither we nor our advisors make any representation regarding, and assume no responsibility or lia

  3. Slide 3: Agenda

    Agenda Pages 1. Executive Summary 4-5 2. Business Model 6-8 3. Results 9-18 4. Group Key Initiatives 19-20 5. Conclusion 21 3

  4. Slide 4: Executive Summary

    Executive Summary Core wholesale revenues impacted mainly by the EGP devaluation and lower consumer spending in GCC. We raised prices in Egypt the last 12 months and introduced new jewelry collections at lower weights and lower Karat (18K and 14K) across all markets to reach more appropriate consume

  5. Slide 5: Executive Summary

    Executive Summary Net income for H1 2017 at SAR28.4 Million came at 35% below H1 2016. This was impacted by lower operating revenues partially compensated by operating cost reductions and a one-off foreign exchange gain in H1 last year amounting to SAR12.5 million. Our profitability from the Retail

  6. Slide 6: L'azurde Business Model Evolution

    L’azurde Business Model Evolution L’azurde House of Brands L’azurde Jewelry Gold Wholesale Business Gold Wholesale Business L’azurde retail L’azurde Jewelry L’azurde Mono Brand Kenaz Value diamond jewelry diamonds jewelry Gold Wholesale retail stores Business Amazing Silver fashion jewelry Others TB

  7. Slide 7: L'azurde Group: House of Brands

    L’azurde Business Model Evolution L’azurde Group: House of Brands L’AZURDE GROUP Jewelry Accessories L’azurde Other L’azurde Wholesale Retail Men Line Extensions L’AZURDE KENAZ AMAZING Others TBD, - 14K (Diamonds) Acquisitions (Value Diamonds) (Silver Fashion) 25 Locations - 18K 15 Locations 4 Locat

  8. Slide 8: Wholesale Business Model

    Wholesale Business Model Gold Jewelry Wholesale Business Model Banks Value Creation at L’azurde: • Creating great Gold jewelry products Bank Bank Facilities (Design, technology, value offering, Facilities (Murabaha) + Margin innovation,….) • Brand marketing • Revenues = LSC (Labor Service Charge ) +

  9. Slide 9: Most of the Revenues Decline Due to EGP Devaluation

    Most of the Revenues Decline Due to EGP Devaluation Revenue Variance – YTD June 2017 Million SAR 300 250 (51.0) 200 (21.7) (14.5) 4.3 1.2 (8.7) (3.6) 12.8 150 285.2 100 204.1 50 0 Wholesale Retail Net Volume and Price Impact 9

  10. Slide 10: Retail Revenues at +24% in H1 2017 vs. LY

    Retail Revenues at +24% in H1 2017 vs. LY Operating Revenues by Distribution Channel Million SAR 107 300 285 100 21 47 19% 250 16% 82 80 204 26 200 32% 58 60 28% 150 86 239 40 81% 84% 100 56 147 68% 72% 20 50 - - Q2-2016 Q2-2017 YTD Jun 2016 YTD Jun 2017 Wholesale Retail Wholesale Retail 10

  11. Slide 11: KSA Outperforms Other Markets thanks to Retail

    KSA Outperforms Other Markets thanks to Retail Operating Revenues by Country – YTD June 2017 Million SAR 160 140 134.3 120 100 80 60 46.5 40 19.0 20 4.2 - KSA Egypt Other GCC Other Export % of Total 66% 23% 9% 2% Vs. 2016 9% ▼ 53% ▼ 36% ▼ 46% ▼ 11

  12. Slide 12: Retail Gross Margin at +53% in H1 2017 vs. LY

    Retail Gross Margin at +53% in H1 2017 vs. LY Gross Margin by Distribution Channel Million SAR 125 160 158 17 105 140 126 120 85 26 100 65 52 80 45 40 12 141 8 60 25 100 39 40 33 5 20 (15) - Q2-2016 Q2-2017 YTD Jun 2016 YTD Jun 2017 Wholesale Retail Wholesale Retail Gross Margin % Wholesale 38% 70%

  13. Slide 13: Operating Expenses Decline by 25% in H1 2017 vs. LY

    Operating Expenses Decline by 25% in H1 2017 vs. LY Operating Expenses Million SAR 40 120 35 36 35 100 100 30 80 75 25 20 60 15 40 10 20 5 - 0 Q2-2016 Q2-2017 YTD Jun 2016 YTD Jun 2017 13

  14. Slide 14: EBITDA Declines by 11% in H1 2017 vs. LY

    EBITDA Declines by 11% in H1 2017 vs. LY EBITDA Million SAR 20 25% 70 30% 18 63 18 22% 27% 60 56 25% 16 20% 22% 14 50 20% 12 15% 40 10 15% 8 30 8 10% 10% 6 7% 20 4 5% 5% 10 2 - 0% 0 0% Q2-2016 Q2-2017 YTD Jun 2016 YTD Jun 2017 EBITDA EBITDA Margin EBITDA EBITDA Margin 14

  15. Slide 15: Finance Charges Decline by 19% in H1 2017 vs. LY

    Finance Charges Decline by 19% in H1 2017 vs. LY Finance Charges Million SAR 10 10 25 9 8 20 8 20 7 16 6 15 5 4 10 3 2 5 1 - 0 Q2-2016 Q2-2017 YTD Jun 2016 YTD Jun 2017 15

  16. Slide 16: Group Consolidated Income Statements

    Healthy gross margin % despite challenging market Group Consolidated Income Statements Million SAR Q2 YTD 2016A 2017A Delta 2016A 2017A Delta Revenue 106.8 100.0% 82.2 100.0% -23% 285.2 100.0% 204.1 100.0% -28% Cost of revenue (37.8) -35.4% (30.6) -37.2% -19% (98.8) -34.6% (78.3) -38.4% -21% *Invent

  17. Slide 17: Working Capital

    Q2 2017AR and Inventory less than Q2 2016 by 32% and 14% Working Capital Million SAR 1,752 1,783 1,800 1,696 1,600 1,400 1,318 1,358 795 947 825 1,231 1,200 1,000 425 625 644 800 600 957 400 836 870 806 693 715 200 - Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Inventories Accounts Receivable 17

  18. Slide 18: Group's Capital Structure

    Q2 2017 borrowing is less than Q2 2016 by 26% Group’s Capital Structure Million SAR 1,600 1,521 1,488 1,397 1,400 1,200 1,130 1,082 1,021 1,000 800 600 509 486 479 402 422 405 400 200 - Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Loans Equity 18

  19. Slide 19: Group Wholesale Initiatives

    Group Wholesale Initiatives Balqees Celebrity First Ever Electro Forming Expand 18K Market Collaboration Technology Share • New Collections • Large volume Low • Raise number of models Campaign weight jewelry for most profitable line Develop Export Outside Reduce Receivables To Raise Prices In Egypt

  20. Slide 20: Group Retail Initiatives

    Group Retail Initiatives L’azurde Retail Shops Amazing Jewelry Kenaz Jewelry Expansion Franchise Expansion • Focus top locations, top • Build brand awareness • Expand kiosks in top Malls • Leverage Global best malls practice L’azurde Men Line Duty Free Vendor E-Commerce and New Extension KSA Airport

  21. Slide 21: Conclusion

    Conclusion A Challenging H1, 2017 Many promising mid-term initiatives leveraging the brand and company capabilities Growing company market share with fragmented competition Acquisition opportunities Stabilizing and Recovering Markets in KSA/Egypt 21

  22. Slide 22: Thank You

    L’azurde, a great history, a greater future Thank You For investors relations matters please contact: investors@lazurde.com 22

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