Lecico Egypt Sae · EGX:LCSW
Lecico Egypt Sae — FY2005 Earnings Presentation
26 slides from Lecico Egypt Sae's earnings presentation, March 2006
Slide 1: An Egyptian Exporter
An Egyptian Exporter Taher G. Gargour Business Development FY 2005 results presentation March 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: • The company has a
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 40 years of history • Market leader in production of •Targeting growth in typically higher • Economies of scale sanitary ware in Egypt and Lebanon margin exports • Low labour
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: Domestic market leadership
Domestic market leadership Market leadership in Egypt Sanitary ware market (4.5 million pieces)1 Tile market (80 million m2)1 6% 7% • Leading sanitary 22% 24% Cleopatra • Competitive pricing to 38% Lecico ware market share support sanitary ware 8% Cleopatra Pharaohs sales through Gravena • 8% Lecico
Slide 8: Growing exports
Growing exports Growth in group’s exports Lecico’s total export volumes (sanitary ware) Export breakdown (by volume) Pieces (000) Exports/total UK (39%) 4,000 80% Sanitec (18%) 56% 59% France (16%) 3,000 50% 60% 46% 41% 42% Other Europe (10%) 2,000 40% Middle East (3%) 1,000 20% South Africa (2%) 1,
Slide 9: Significant cost advantage
Significant cost advantage International cost advantage Lecico produces sanitary ware at an all-in average cost of US$10.1 / piece – In Egypt, manufacturing cost averages US$7.0 / piece of sanitary ware – The difference reflects lower production volumes in 2005, accessories added in Europe, deprecia
Slide 10: Sanitec and other business relationships
Sanitec and other business relationships Knowledge transfer • Quality and production control • Product development • Personnel secondments/exchanges Expansion Commercial • Design facilities • Revenue visibility • Product expansion • Margin protection • Capacity expansion • Lecico manufactures produc
Slide 11: Growth strategy
Growth strategy
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, Italy, Algeria, Saudi Arabia, Iraq, Syria • Build on leading domestic pos
Slide 13: 2005: A challenging year
2005: A challenging year A confluence of negative events hurt performance in 2005 • Sharp slowdown in UK market – Sanitary ware market size down 20-30% as part of overall slow down in consumer spending – Impact on Lecico: Over 50% of Lecico exports go to UK market (direct and OEM combined). In addit
Slide 14: Difficult environment likely to continue in 2006
Difficult environment likely to continue in 2006… Exchange rate pressure and sluggish markets to continue in 2006 • Outlook for UK market growth remains negative – Government cuts 2006 growth forecast by 50bps, brokers are forecasting record lows in real household consumption growth (Lehman Brothers
Slide 15: …but new sales efforts should still deliver growth
…but new sales efforts should still deliver growth Lecico is aggressively pursuing new opportunities to return to growth • Building a presence in new markets – Recently hired sales representatives for Germany and Latin Europe (France, Italy, Spain) to build/expand direct sales in those markets (firs
Slide 16: Outlook for 2006
Outlook for 2006 2006: Expected volume growth but continued FX and business mix pressure • Expecting healthy increase in volumes of both sanitary ware and tiles in the second half – Initial indicators remain lacklustre for 2006, but entry into new markets, improved market penetration and a hoped-for
Slide 17: Financial overview
¥ Financial overview
Slide 18: Profit and loss
Profit and loss Net sales Cost of sales breakdown (9m 2005) LE million Exports (%) 1,000 60% 49.6% 49.2% Raw materials (38%) 800 43.9% 44.1% 50% 39.1% 36.3% Other materials (16%) 40% 600 Energy (11%) 30% 400 Salaries and wages (12%) 20% Depreciation (6%) 200 10% Other costs (16%) 202 265 382 559 697
Slide 19: Revenues shift towards tiles and Middle East
Revenues shift of towards tiles and Middle East Segmental sales breakdown (2004 vs. 2005) Sanitary ware sales volume by geography Sanitary ware export volumes by geography 2004 2005 2004 2005 2004 2005 Egypt (38%) Egypt (36%) Europe (84%) Europe (80%) Sanitary ware (67%) Sanitary ware (60%) Lebanon
Slide 20: Margin growth switch from sanitary ware to tiles
Margin growth switch from sanitary ware to tiles Sanitary ware – sales volumes and revenue Sanitary ware – selling price and cost per piece Sanitary ware – gross profit and margin 600 5.0 120 350 60% 4.3 500 4.0 3.9 300 100 50% Revenues (LE m) 4.0 Volumes (pcs m) Gross margin (%) Gross profit (LE m)
Slide 21: Balance sheet and cash flow
Balance sheet and cash flow Working capital Days 300 250 200 150 100 50 204 216 98 271 266 208 126 226 217 129 99 99 192 96 103 105 209 78 126 73 242 110 99 159 0 2000 2001 2002 2003 2004 2005 Inventory days (Inventory/cost of sales) Receivables days (Receivables/net sales) Payables days (Payables/C
Slide 22: Summary financials (1)
Summary financials (1) Sanitary ware segmental analysis 4Q % FY % (LE m) 2005 2004 05/04 2005 2004 05/04 Sanitary ware volumes (000 pcs) Egypt (000 pcs) 284 351 81% 1,383 1,600 86% Lebanon (000 pcs) 55 90 60% 211 276 77% Export (000 pcs) 542 556 97% 2,267 2,389 95% Total sanitary ware volumes (000 p
Slide 23: Summary financials (2)
Summary financials (2) Income statement 4Q % FY % (LE m) 2005 2004 05/04 2005 2004 05/04 Net sales 151.7 180.8 84% 652.4 696.8 94% Cost of sales (100.5) (106.0) 95% (410.0) (396.7) 103% Gross profit 51.2 74.7 69% 242.4 300.1 81% Gross margin (%) 33.8% 41.3% (7.6%) 37.2% 43.1% (5.9%) Distribution exp
Slide 24: Summary financials (3)
Summary financials (3) Balance Sheet (LE m) 31-Dec-05 31-Dec-04 9m 05/FY04 (%) 31-Dec-05 31-Dec-04 9m 05/FY04 (%) Cash, equivalents and short-term investments 319.4 264.2 121% Banks overdraft 416.8 113.4 368% Current investment 0.0 0.0 - Current portion of long-term liabilities 28.1 29.2 96% Invento
Slide 25: Share performance and data
Share performance and data 258 bad BS oy ai ily m a ‘ ‘a i iy? is Pry - = song ot gil Maka
Slide 26: Share structure and history
Share structure and history • Lecico listed in November 2004 and is currently valued at a market cap of US$ 200 million with a 53% free float – Trading history: GDR trades an average of US$ 0.20 million in trading a day Shareholding structure and trades on 40% of market trading days (Feb 2005-Feb 20