Slide 1: Oriental Weavers Investor Presentation
ORIENTAL WEAVERS Investor presentation
Slide 2: Global Macro Fundamentals
Global Macro Fundamentals Egyptian Market International Markets oSustained 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 beside East 50% of the Egyptian popu
Slide 3: Demand Triggers in Egypt
Demand Triggers in Egypt o Strong growth in the real estate market driven Sizeable youth bracket by economic growth, increasing interest in gated- urban communities and increasing government social housing. o Sizeable youth population with 50% below the age of 25. o Increasing stringent procedures o
Slide 4: Strong US fundamentals
Strong US fundamentals Expected steady gradual recovery in 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 to new con
Slide 5: Oriental Weavers in Numbers
Oriental Weavers in Numbers 38 years 8 130 In the global rugs Manufacturing market Export countries companies 230 117 64% Showrooms in Egypt Export contribution in mn sqm sold in 2016 2Q FY2017 Slide 5
Slide 6: Group’s key Milestones
Group’s key Milestones Oriental Weavers • Sphinx, the US •OW China. US subsidiary OW Sphinx was & MAC were distribution arm. •Patent rights for 100% partnering with named “the Supplier established • OW largest showroom acrylic rugs, which emulates Pantone & Tommy of the Year “ for the look and feel
Slide 7: The Group’s structure
The Group’s structure Oriental Weavers Carpets OW USA OW Textiles OW MAC EFCO International OW China New MAC Slide 7
Slide 8: Main segments of OW
Main segments of OW Woven Tufted Non-woven Description Surface yarn is woven simultaneously The surface yarn is Fibers bonded together with the backing. Then a latex inserted into a using chemicals and compound is added. polypropylene sheet heat. Subsidiaries OWC OWI & OWUSA OW MAC New MAC EFCO OWT
Slide 9: A Vertically Integrated Business Model
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 extrusion: Raw w
Slide 10: OW: A large player in the Egyptian market
OW: A large player in the Egyptian market 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 10
Slide 11: Local Market Development in 2Q2017
Local Market Development in 2Q2017 Contribution to Percentage Change Local Revenues Percentage Change Volume Value Avg. 1H 2017 vs Volume Value 2Q 2017 vs Price 1H 2016 2Q 2016 2Q 2017 2Q 2016 Woven ▼15% ▲46% ▲71% 83% 65% Woven ▼16% ▲53% Tufted ▲14% ▲22% ▲8% 11% 10% Tufted ▲10% ▲42% Non-woven felt ▼
Slide 12: Export Market development
Export Market development Revenue contribution & performance by region in 2Q 2017 Egypt 36% Others 9% ▲112% ▲101% ▲82% Russia & China Europe ▲146% 20% ▲13% US 35% ▲112% Slide 12
Slide 13: Export Market Development in 2Q2017
Export Market Development in 2Q2017 Contribution to Percentage Change Export Revenues Percentage Change 2Q 2017 vs Volume Value Avg. vs. Volume Value Price 1H 2017 vs 2Q 2016 1H 2016 2Q2017 2Q2016 Woven ▼4% ▲102% ▲106% 76% 73% Woven ▼4% ▲105% Tufted ▲1% ▲79% ▲78% 16% 24% Tufted ▲11% ▲120% Non-woven
Slide 14: International Premier Partners
International Premier Partners Relationships count – Oriental Weavers’ enduring relationships with the world’s best retailers, clients, resorts and other lifestyle centers ensure continued market leadership. Slide 14
Slide 15: American & Canadian Premier Partners
American & Canadian Premier Partners Slide 15
Slide 16: OW’s long standing position in the US
OW’s long standing position in the US 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, Amazon, an
Slide 17: Export Market Development
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 Market -OW is t
Slide 18: Premier Partners: Hospitality Segment
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
Slide 19: OW Hospitality: Recently delivered Projects
OW Hospitality: Recently delivered Projects In Egypt: 103% growth in 1H FY2017 El-Masah Hotel, New Administrative Capital New Capital Airport , New Administrative Capital Conference center, New Administrative Capital Al-Sahaba Mosque, Sharm El Sheikh, The Military Judgment House, New Cairo, C
Slide 20: Export Incentive Program:
Export Incentive Program: Export cash Documents submitted proceeds to Export Subsidy EGP160 mn delayed Fund disbursement till May 31st 2017 OW recorded EGP60 mn as of 1H 2017. Export subsidies Exports (% of exports in EGP) Sources: Company Slide 20
Slide 21: Export Incentive Program
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 implemented r
Slide 22: OW’s policy towards EGP floatation
OW’s policy towards EGP floatation Revising local selling prices Increasing focus on export exposure ( 64% as of 2Q 2017) to secure foreign currency, ensure better profitability, and increase our receipts from export subsidies. Slide 22
Slide 23: Recent and Future Expansions
Recent and Future Expansions 2015 2016 2017 Woven 13 looms added increasing production 4 new goblin looms capacity by 6% 9 new looms 6-8 looms to be added 2 yarn production (pending market conditions). lines 2016-2020 Tufted MAC penetrated the artificial turf 2017: Digital Printing Machine segment f
Slide 24: 2Q2017 KPIs vs. 2Q2016 REPORTED
2Q2017 KPIs vs. 2Q2016 REPORTED Sales (EGP mn) EBITDA (EGP mn) Net Income (EGP mn) 2,389 388 204 ▲54% ▲55% ▲28% Export Contribution EBITDA Margin Net Margin 64% 16.2% 8.5% ▲12 bps 174 bps Slide 24
Slide 25: Diversified Product Mix
Diversified Product Mix 2Q 2017 Revenue Mix (by volume) 2Q 2017 Revenue Mix (by value) Non- Non- woven woven Others 4% 4% 1% Tufted Woven 19% 47% Tufted Woven OW China 62% 28% 2% OW USA 12% OW China OW USA 2% 8% Woven-Grade A EGP319/sqm Tufted wall-to-wall EGP48/sqm Woven-Grade B EGP138/sqm Tufted p
Slide 26: 2Q 2017 Financial summary
2Q 2017 Financial summary 2Q Revenue Performance (EGP mn) 1H Revenue Performance (EGP mn) Local Export Local Export 4,913 EGP mn EGP mn 2,389 1,541 1,549 Revenue Contribution (%) 2,982 3,006 1,429 1,528 2,845 3,179 809 786 Local Export 1,634 1,569 892 1,763 732 763 860 51% 1,734 536 62% 53% 1,082 1,
Slide 27: 2Q 2017 Financial summary
2Q 2017 Financial summary 2Q EBITDA Performance (EGP mn) 2Q Net Income (EGP mn) EBITDA EBITDA Margin Net income Net Margin EGP mn 16.2% 500 18% 250 10.3% 12% 16% 8.5% 400 200 10% 16.1% 14% 7.4% 14.1% 12% 6.8% 8% 300 9.0% 150 10% 6% 388 200 8% 100 204 6% 159 4% 250 215 115 201 4% 50 97 2% 100 2% - 0%
Slide 28: 2Q 2017 Cost Breakdown
2Q 2017 Cost Breakdown Other Wool 12% 3% Polypropylene- Nylon 32% Selling Exp. Raw material 21% 55% Backing 11% Finishing material 9% Industrial Exp. 12% Almost 63% of costs are dollar based. Source: Company Slide 28
Slide 29: Annual Financial and Operational Performance
Annual Financial and Operational Performance FY 2016 financial Summary Net sales EBITDA (EGP bn) (EGP mn) 6.8 1,116 +15% growth y-o-y Net Cash Flow +39% y-o-y performance Net debt Paid off from Operations EGP 1,422mn EGP57 mn Net Profit EBITDA Margin 16.5% (EGP mn) Capex Recorded rebates 484 EGP529
Slide 30: Annual Financial Overview
Annual Financial Overview Growing revenue base (EGPbn) Sales Volumes (mn sqm) Export Local Export Local 6.8 124 122 120 115 5.8 5.9 5.5 3.0 48 48 2.1 2.3 2.7 51 54 3.4 3.5 3.7 76 74 69 61 3.2 2013 2014* 2015 2016 2013 2014 2015 2016 Export vs. Local Revenue Contribution Export Local •On adjusted bas
Slide 31: Financial Summary
Financial Summary EBITDA Performance Net Income Performance EGPmn EBITDA EBITDA margin Net income Net margin 16.5% 18% EGPmn 1,100 500 8% 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% 350 200 100 6% 347 377 356 484 2013 2014* 2015 2016 100 4% Net Debt (EGPbn) 201
Slide 32: Polypropylene is OW main raw material
Polypropylene is OW main raw material Polypropylene — used in synthetic and blended rugs and Polypropylene granules are carefully sourced after carpets — is an oil derivative, representing around 28% receiving monthly price quotations from different of costs. Polypropylene prices are driven in larg
Slide 33: Impact of Energy Subsidy Reform on Costs
Impact of Energy Subsidy Reform on Costs % Jun-14 Jul-15 Jul-16 Jul-17 Energy cost Change Natural gas (US$/mmbtu) 2.25 5 5 5 - Electricity (EGP/KW) 0.28 0.435 0.53 0.77 48% Transportation costs (EGP Diesel/Liter) 1.1 1.80 2.35 3.65 55% * Energy cost represents less than 4% of the company’s total cos
Slide 34: Share Data
Share Data EGP EPS Payout ratio 1.800 92% 100% o450 mn shares at par value of EGP 1 per share. 1.600 78% 76% 81% 1.400 80% o Issued and Paid-in Capital EGP 450 mn. 1.200 60% 1.000 oListed in EGX since September 1997. 0.800 40% o3 Month average daily value EGP6.2mn. 0.600 0.400 20% o Market Cap USD46
Slide 35: Disclaimer
Disclaimer 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, performance or achie
Slide 36: For More Information, please contact
For More Information, please contact Ingy El-Diwany, CFA Investor Relations Manager +202-22685166 ieldiwany@orientalweavers.com www.orientalweavers.com Slide 36