Slide 1: Oriental Weavers Investor Presentation
ORIENTAL WEAVERS Investor presentation
Slide 2: Oriental Weavers in Numbers
Oriental Weavers in Numbers No. 1 8 130 World Largest Manufacturing producer by volumes Export countries companies 85% c. 80% 61% Market share in Egypt Export contribution in Utilization rate 2Q2018 Slide 2
Slide 3: Main segments of OW
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 EFCO OWT
Slide 4: 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 5: Policy towards higher PP Prices
Policy towards higher PP Prices 2,100 USD /ton An initial step all new product developments 1,629 have the new pp prices priced in – should be 1,456 1,585 1,584 1,500 1,363 reflected more in the second half of 2018. 1,218 1,082 1,303 990 979 900 International markets are in a wait and see mode.
Slide 6: Export Market development
Export Market development Revenue contribution & performance by region in 2Q2018 Arab Africa Countries 1% Asia & 3% Russia 4% ▼44% Local Sales 39% Russia & China ▼3% America & Canada Americas 34% ▼19% Europe ▲2% 19% ▲13% Asia ▲153% ▲13% Africa Slide 6
Slide 7: Longstanding relationship with major customers
Longstanding relationship with major customers Slide 7
Slide 8: Export performance overview
Export performance overview Export revenues (EGPbn) Export vs. Local Revenue volume % Export volumes (mn sqm) Export Local 6.7 40% 43% 46% 46% 68 3.5 3.7 65 63 3.4 60 60% 57% 54% 54% 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Slide 8
Slide 9: Export Market Development in 2Q2018
Export Market Development in 2Q2018 Percentage ∆ Volume Value Average Contribution to Price Export Revenues 2Q 2018 2Q 2108 2Q 2017 Woven ▲11% ▲8% ▼3% 80% 74% Tufted ▼12% ▼19% ▼8% 18% 22% Non-woven Felt ▼37% ▼44% ▼10% 2% 4% Total ▼2% ▼0.2% ▲2% 100% 100% USDEGP 17.88 ▼1% Slide9
Slide 10: Industry overview | Global carpets & rugs market
Industry overview| Global carpets & rugs market Global Carpets & rugs market by value (USD bn) Global Carpets & rugs market by bn sqm (5 yr CAGR) North America: 2.6% Europe:1.1% Asia & pacific:3.2% others:3.8% Total 5 4.4 0.6 5 year CAGR 0.5 5 year CAGR 4.1% 2.6% 1.7 45 1.5 1.1 1.0 37 1.4 1.6 2016 2
Slide 11: Global Macro Fundamentals
Global Macro Fundamentals US Market Europe Asia & Africa Expected continuous growth in new home sales driven by European economy is set to follow a Strong potential in African employment gains and a rise in household formations. moderate growth path. beside East Asian markets. Residential renovation
Slide 12: Demand Triggers in Egypt
Demand Triggers in Egypt Growing economy GDP is expected to grow by 5-6% annually up to 2020 Sizeable youth bracket as per the IMF. Sizeable youth 50% of the Egyptian population are near the marriage population with around one million marriages taking place annually. Housing gap Housing gap is about
Slide 13: Local market overview
Local market overview Growing local revenues (EGPbn) Export vs. Local revenues% Local sales volumes (mn sqm) Export Local 33% 40% 40% 45% 3.0 3.4 54 48 51 46 67% 2.3 2.3 60% 60% 55% 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Slide 13
Slide 14: Local Market Development in 2Q 2018
Local Market Development in 2Q 2018 Percentage ∆ Volume Value Average Contribution to Price Export Revenues 2Q 2018 2Q 2108 2Q 2017 Woven ▲10% ▲12% ▼3% 82% 83% Tufted ▲8% ▲12% ▼8% 11% 11% Non-woven Felt ▲1% ▲11% ▼10% 4% 4% Others ▲121% 3% 2% Total ▲8% ▲13% ▲4% 100% 100% Slide14
Slide 15: Revenue progress
Revenue progress Revenues (EGPbn) Sales volumes (mn sqm) EGPbn Export Local 10.1 mn sqm Export Local 113 111 117 114 3.4 6.8 48 54 46 5.7 5.8 51 3.0 2.3 2.3 6.7 65 60 63 68 3.4 3.5 3.7 2014 2015 2016 2017 2014 2015 2016 2017 3-year CAGR 21% Slide 15
Slide 16: 2Q2018/1H 2018 Revenue summary
2Q2018/1H 2018 Revenue Value (EGP mn) summary Volume (sqm) 2Q 2018 2Q 2017 % Change 2Q 2018 2Q 2017 % Change Woven- Egypt based 1,488 1,351 13.9 12.7 10% 10% OW USA 511 454 13% 2.7 2.2 22% OW China 30 51 -41% 0.4 0.5 -26% Tufted 391 444 7.1 7.6 -12% -7% Non-woven Felt 71 89 3.4 3.9 -21% -13% Other 3
Slide 17: Diversified Product Mix
Diversified Product Mix 2Q 2018 Revenue Mix (by volume) 2Q 2018 Revenue Mix (by value) Non- Non-woven woven Felt Felt Tufted 3% 12% 16% Woven Tufted 51% 26% OW China 1% Woven 60% OW USA 20% OW China 1% OW USA 10% Woven-Grade A EGP300/sqm Tufted wall-to-wall EGP46/sqm Woven-Grade B EGP128/sqm Tufted
Slide 18: Hospitality segment recorded 6% y-o-y growth
Hospitality segment recorded 6% y-o-y growth: Among the projects that were installed in 2Q 2018 were Vida Al-Alamein Hotel at Marrasi North Coast, Sharm El Sheikh Conference Center, A number of hotels in Sahl Hashesh, Marsa Alam, and Giza. Currently the company has started production for the axm
Slide 19: Hospitality segment recorded 6% y-o-y growth in 2Q 2018
Hospitality segment recorded 6% y-o-y growth in 2Q 2018: Among the projects that were installed in 2Q 2018 were Vida Al-Alamein Hotel at Marrasi North Coast, Sharm El Sheikh Conference Center, A number of hotels in Sahl Hashesh, Marsa Alam, and Giza. Currently the company has started production
Slide 20: International Hospitality segment recorded 39% y-o-y growth in 2Q2018
International Hospitality segment recorded 39% y-o-y growth in 2Q2018: We installed the carpets at a number of projects worldwide, including: the Ritz Carlton-Charlotte, Hyatt Mission Bay, and Westin Houston Galleria in the US. Also, we finished the installations of a number of projects in Dubai
Slide 21: Recent and Future Expansions
Recent and Future Expansions 2015 2016 2017 2018e Woven 13 looms added 4 new goblin increasing looms Establishing a new factory production 9 new looms 8-10 new looms pending local 10 new looms pending local capacity by 6% 2 yarn and international demand and international demand production Six ya
Slide 22: 2Q 2018 Cost Breakdown
2Q 2018 Cost Breakdown OW China 2% Other 15% Polypropylene- Selling Nylon 21% Raw Material 29% 50% Backing 10% Depreciation Wool 4% Finishing material 4% Wages 7% 8% Almost 63% of costs are dollar based. Source: Company Slide 22
Slide 23: Financial Summary
Financial Summary EBITDA Performance (EGPbn) Net Income Performance Net Debt (EGPbn) EGPbn EGPmn EBITDA EBITDA margin Net income Net margin Net debt Net debt/EBITDA EGPmn 1,700 1.5 1.4 16.5% 15.1% 16% 800 6.8% 8% 1.2 1.2 1,500 13.8% 700 6.1% 7.1% 1.0 1.2 1,300 13.6% 0.7 1,100 14% 600 6.5% 1.0 1.0 12
Slide 24: Impact of Energy Subsidy Reform on Costs
Impact of Energy Subsidy Reform on Costs % Jun-14 Jul-15 Jul-16 Jul-17 Jul-18 Energy cost Change Natural gas (US$/mmbtu) 2.25 5 5 5 5 - Electricity (EGP/KW) 0.28 0.435 0.53 0.69 0.99 43% Transportation costs (EGP Diesel/Liter) 1.1 1.80 2.35 3.65 5.5 55% * Energy cost represents less than 4% of the c
Slide 25: Export Incentive Program
Export Incentive Program: Export cash Documents submitted proceeds to Export Subsidy EGP414 mn delayed Fund disbursement till August 2018 OW collected EGP60 mn in 1H 2018. Export subsidies Exports (% of exports in EGP) Sources: Company Slide 25
Slide 26: 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 27: Share Data
Share Data EPS Payout ratio o450 mn shares at par value of EGP 1 per share. 2.00 92% 100% 81% 1.80 81% 90% 1.81 o Issued and Paid-in Capital EGP 450 mn. 1.60 78% 80% 1.40 66% 76% 70% 1.46 oListed in EGX since September 1997. 1.20 60% 1.00 59% 50% o3 Month average daily value EGP8.3mn. 0.80 0.55 40%
Slide 28: 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 29: 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 29