37 slides from Al Hassan Ghazi Ibrahim Shaker's earnings presentation, Jun 30, 2020
Slide 1: Shaker Group Investor Presentation Q2 2020
Shaker Group Investor Presentation Q2 2020 as at 30 June 2020
Slide 2: Attractive industry experiencing growth
Attractive industry experiencing growth Alignment with socioeconomic objectives of in two key areas: Government commitment of approx. Superior technology for the Saudi air conditioner market Saudi market forecast to reach Nationwide energy efficiency 1 consultancy and retrofitting services Household
Slide 3: Core products
Core products Air Conditioning (A/C) Home Appliances Core products Consumer A/C Commercial A/C Applied A/C Major Domestic Dishwasher Food preparation Split A/C Ceiling concealed Chillers appliances duct A/C Home laundry Irons Window A/C Ducted split Fan coil unit appliances Small cooking Floor stand
Slide 4: Brand portfolio and competitive positioning
Brand portfolio Air Conditioners Home Appliances Competitive positioning High-end Brand portfolio Flexibility targets most consumer segments Low-end Functionality Page 4
Slide 5: Highlights: H1 2020
Highlights: H1 2020 reduction in H1 Saudi in 1H revenue program complete employee costs net profit Continued roll-out of First profitable quarter substantially optimized H1 gross profit increase since Y-o-Y Page 5
Slide 6: Key messages
Key messages ▪ The Breakthrough Program is having a tangible impact on the Group’s long-term and sustainable performance ▪ The Group is well-positioned with a strong local manufacturing base, and a healthy level of Saudi localization ▪ Shaker Group has already achieved a leading share of the governm
Slide 7: Performance highlights
Performance highlights Revenue and Income vs. Margins Q1 2016 – Q2 2020 600.00 30.0% 500.00 20.0% 10.0% 400.00 0.0% 300.00 SAR million -10.0% 200.00 % -20.0% 100.00 -30.0% - -40.0% -100.00 -50.0% -200.00 -60.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2016 2016 2016 2017 2017 2017
Slide 8: Business Profile
BUSINESS PROFILE
Slide 9: Strategy update
Strategy update • Breakthrough Program completion 2021 targets • Ongoing focus on increasing sales and reducing costs High single digit percentage profit increase • Organic growth enhanced by efficient distribution channels, solid partnerships and dynamic sales strategy Adjusted EBITDA increase • Ro
Slide 10: Four pillars
Core Business Turnaround (CBT) • Profitable and responsible sales • Deliver excellence in cost management Talent Upgrade Plan (TUP) • Attract and develop talent • Organization restructuring Four pillars Strategic Moves (STR) • Strengthen relationships with principals and business partners Performanc
Slide 11: Progress highlights
As at 30 June 2020 Core Business Turnaround ▪ Q2 sales in Saudi Arabia increased 7.9% compared to Q2 2019 with momentum achieved across business segments, H1 2020 sales grew by 10.5% compared to H1 2019. ▪ First half gross profit was SAR 101.48 million, improving by 25% year-on-year. ▪ Achieved net
Slide 12: Growth avenue highlights
Growth avenue highlights AC Sales HA Sales Services & Support Home ESCO & Housing SEEC Multi V Aftersales Appliances Retrofit 670,000 planned Multifold rise in Shaker Group Growing the size 250,000 Growing houses requiring KSA energy tariff product already and diversity of government replacement 4-5
Slide 13: Financial Performance
FINANCIAL PERFORMANCE Page 13
Slide 14: Sales recovery
Sales recovery Revenue growth driven by transformation initiatives 600.00 Revenue growth in 2019 and 2020 driven by 500.00 impact of the Breakthrough Program 400.00 ▪ Enhanced distribution network, sales processes and training SAR million 300.00 ▪ Investment in technology to manage inventory 200.00
Slide 15: Profitability
Profitability Gross Profit (SAR million) Net profit/(loss) (SAR million) % = GP margin % = NP margin 500 200 450 23% 150 7% 400 24% 100 350 3% 50 300 2% 0 250 FY FY FY FY FY Q1 Q2 Q3 Q4 Q1 Q2 200 17% (50) 2015 2016 2017 2018 2019 2019 2019 2019 2019 2020 2020 19% 150 (100) -6% -15% -4% -3% -3% -1% 1
Slide 16: EBITDA & RoE
EBITDA & RoE EBITDA (SAR million) Return on Equity (%) 20% 200 10% 15% 150 10% 5% 100 5% 0% 50 0% FY FY FY FY FY Q1 Q2 Q3 Q4 Q1 Q2 -5% 2015 2016 2017 2018 2019 2019 2019 2019 2019 2020 2020 0 -10% FY FY FY FY FY Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 2018 2019 2019 2019 2019 2019 2020 2020 -5% -15% -50 -2
Slide 17: Rationalizing the workforce
Rationalizing the workforce Rationalizing employee headcount Rationalizing employee costs (SAR 000) 1,800 50,000 1,600 45,000 1,400 40,000 1,200 35,000 1,000 30,000 800 25,000 600 20,000 400 15,000 200 10,000 0 5,000 0 Employee headcount rationalization ongoing, Employee costs in Saudi Arabia decrea
Slide 18: Trade receivables vs. inventory trend
Trade receivables vs. inventory trend Trade Receivable Trend (SAR '000) Inventories Trend (SAR '000) 800,000 700,000 Breakthrough Program introduced 600,000 to reduce costs, optimize inventory 500,000 400,000 Receivables stabilize, with 300,000 inventory levels reduced 200,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 19: Cash flow: operational and financing
Cash flow: operational and financing Cash Flow From Operations Trend (SAR ‘000) 195,387 230,399 181,179 139,035 95,501 95,637 (3,164) 31,405 2,904 33,594 34,437 40,658 (55,658) (31,702) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Ca
Slide 20: Capital structure
Capital structure Capital Structure (SAR million / %) 1200 100% 90% 1000 80% 70% 800 60% 600 50% 40% 400 30% 20% 200 10% 0 0% FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Equity LTL STL Debt/Equity % Page 20
Slide 21: STLs & MTLs trend
STLs & MTLs trend Short Term Loans Trend (SAR ‘000) 801,444 797,622 695,160 713,655 704,065 666,666 646,367 531,457 462,062 445,071 412,617 302,667 242,394 237,277 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Medium Term Loans Trend
Slide 22: Appendix I: About the Company
APPENDIX I: ABOUT THE COMPANY Page 22
Slide 23: What is Shaker Group?
Exclusive Saudi distributor for five internationally acclaimed home appliances brands: • Maytag (1980) • Ariston (1994) • Indesit (2005) Subsidiary: ESCO • Midea (2008) • Energy saving consultancy • Bissell (2015) and retrofitting services Origins dating What is back to 1950 Shaker Group? Shaker Gro
Slide 24: Senior management
Chief Executive Officer VP Finance Chief Strategy & Transformation Officer Azzam Almudaiheem Hossam Al Akkad Mohammed Abunayyan Azzam was previously Purchasing Hossam has over 30 years of experience in Prior to his current role, Mohammed has Senior Manager, Acting GM and GM at Masdar, having been Re
Slide 25: Corporate milestones
Corporate milestones A history of success stories and key milestones Launched Launch of the Breakthrough KSA Part acquisition Capital increase Air Conditioners Transformation Manufacturing of Energy from SAR 350 (Sole Program (2019) Arm - Joint Management million to SAR Distribution Venture signed S
Slide 26: Shareholding structure & information
Shareholding structure & information Shareholding structure Share information Market Tadawul, Saudi Arabia 12% Currency SAR Lafana Holding Listing date May 2010 Tawazon Arabia Co 31% 10% Financial year-end 31 December Lama Holding Authorized capital (SAR) 630,000,000 6% Other Corporates / Investment
Slide 27: Appendix II: Financials
APPENDIX II: FINANCIALS Page 27
Slide 28: Income statement
Income statement SAR ‘000 2016 2017 2018 2019 H1 2019 H1 2020 Sales 1,654,405 1,038,563 774,025 882, 822 450,864 488,748 Cost of sales (1,265,479) (862,615) (675,307) (717,176) (369,559) (387,268) Gross profit 388,926 175,948 98,718 165,646 81,305 101,480 S&D expenses (181,536) (162,530) (140,336) (
Slide 29: Cash flow statement
Cash flow statement SAR ‘000 2016 2017 2018 2019 H1 2019 H1 2020 Cash flows from operating activities Profit/(loss) for the year 45,308 (176,745) (202,181) (50,860) (38,678) 1,794 Adjustments: 83,296 (69,357) (103,841) (5,480) (3,952) 36,169 Changes in operating assets & liabilities (18,128) 67,967
Slide 30: Balance sheet
Balance sheet SAR ‘000 2015 2016 2017 2018 2019 H1 2019 H1 2020 ASSETS Non-current assets 840,349 860,595 818,770 754,766 709,647 773,628 716,939 Current assets 1,578,631 1,525,842 1,267,065 879,935 757,624 834,454 823,542 Total assets 2,418,980 2,386,437 2,085,835 1,634,701 1,467,271 1,608,082 1,54
Slide 31: Appendix III: About Breakthrough Program
APPENDIX III: ABOUT BREAKTHROUGH PROGRAM Page 31
Slide 32: Core Business Turnaround (CBT)
Core Business Turnaround (CBT) Profitable & responsible sales Cost excellence B2C, B2B and Aftersales Cost efficiencies and working capital excellence 1. Recover sales from top key accounts and inactive 1. Reduce costs of FTEs accounts in LG AC market 2. Cost-cut of rent and leasing expenses 2. Acti
Slide 33: Performance Infrastructure (PI)
Performance Infrastructure (PI) Infrastructure Reporting Built for transformation Measure progress 1. Set-up cadence, tools to drive the Breakthrough Program 1. Measure progress of the Breakthrough Program 2. Establish reporting templates for • Transformation Office meetings • Sales war-rooms • Tran
Slide 34: Talent Upgrade Plan (TUP)
Talent Upgrade Plan (TUP) Organization Talent Re-structure Completely upgrade 1. Restructure the sales organization to channel-wise basis 1. Hire and/or replace the necessary talents needed to rather than regional basis, shifting from regional focused implement the Breakthrough Program to customer f
Slide 35: Strategic Moves (STR)
Strategic Moves (STR) Principal relationships Strategic choices Restructure relationships Objectives 1. Restructure relationships with principals and commercial 1. Explore strategic choices beyond fixing the core partners – especially to address: business (i.e. entering new segments, developing new
Slide 36: Disclaimer
Disclaimer This presentation has been prepared solely for use as an investor presentation for Shaker Group (the “Company”). By attending or by reading this presentation, you agree to be bound by the following limitations. The information contained in this presentation is for background purposes only
Slide 37: Contact
CONTACT MR. HOSSAM AKKAD VICE PRESIDENT FINANCE HOSSAM_AKKAD@SHAKER.COM.SA +966-11-2638900 Page 37