Lecico Egypt Sae · EGX:LCSW
Lecico Egypt Sae — FY2006 Earnings Presentation
25 slides from Lecico Egypt Sae's earnings presentation, March 2007
Slide 1: An Egyptian Exporter
An Egyptian Exporter Taher Gargour Colin Sykes Business Development Group CFO FY 2006 results presentation March 2007
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 by Established 1959 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 45 years of history • Sanitary ware market leader in •Targeting growth in typically higher • Economies of scale Egypt and Lebanon margin exports • Low labour and energy costs
Slide 6: Strong management & over 45 years brand history
Strong management & over 45 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 7% • Leading sanitary 23% 25% Cleopatra • Competitive pricing to 7% Lecico Cleopatra ware market share Pharaos support distributors’ 8% 38% Gravena Lecico sanitary ware sales
Slide 8: Growing exports
Growing exports Growth in group’s exports Lecico’s total export volumes (sanitary ware) Egypt’s leading sanitary ware exporter 60.0% 3,000 56.0% 80% • Lecico exports c50% of its sales vs. 20% for local peers 59.0% 51.0% 50.0% 60% 2,000 46.0% 42.0% • Lecico sells to over 50 countries (including OEM s
Slide 9: Significant cost advantage
Significant cost advantage International cost advantage Lecico produces sanitary ware at an all-in average cost of US$10.6 / piece – In Egypt, manufacturing cost averages US$7.4 / piece of sanitary ware – The difference reflects higher packing costs for EU-destined exports and significantly higher i
Slide 10: Growth strategy
Growth strategy
Slide 11: Long-term sanitary ware growth strategy…
Long-term sanitary ware growth strategy… Expand regional and international exports • Aim to increase market growth − UK, Ireland, France • Potential future markets − Germany, Algeria, Saudi Arabia, Iraq, Syria • New and expanded OEM contracts – Sanitec, IKEA, SFA, Setma Expand production capacity •
Slide 12: …translates into concrete actions
…translates into concrete actions Strategy Action Expand regional and international exports Expand regional and international exports ● Aim to increase market growth ● Started unbranded sales to UK builders merchants − UK, Ireland, France ● Started unbranded sales to DIY market in the UK ● Expand in
Slide 13: Sarreguemines
Sarreguemines
Slide 14: Who is Sarreguemines?
Who is ? • Sarreguemines Sanitaire (www.sarreguemines-sanitaire.com) is a long established French sanitary ware producer with a history dating back to the late 1700s • Sarreguemines has sales of around 460 thousand pieces of sanitary ware per annum • Sarreguemines’ main customers include: • Sarregue
Slide 15: Why buy Sarreguemines?
Why buy ? • Lecico believes Sarreguemines can be made profitable from 2007 onward by: – Outsourcing the majority of production (330k pieces of vitreous china) – Reducing workforce to 143 members from 253 in 2005 (a net saving of around EUR 2.0 million) • Over the coming years, Sarreguemines’ vitreou
Slide 16: Financial overview
Financial overview ate —
Slide 17: 4Q 2006 – Continued recovery in a difficult period
4Q 2006 – Continued recovery in a difficult period Revenue-led sequential recovery in operations… • Sanitary ware recovery drives 4Q revenues up 27% Y-o-Y (vs. 16% drop in 4Q 2005) – New DIY contracts in the UK and France help drive a 41% increase in sanitary ware export volumes to an all-time high
Slide 18: Continued recovery in a difficult period
Continued recovery in a difficult period Sanitary ware volume growth at highest level in 8 quarters Sanitary ware gross profit growth at highest level in 8 quarters 000 pieces Y-o-Y (%) LE million Y-o-Y (%) 1,400 31.4% 40% 22.4% 25.0% 55 10.4% 20% 18.5% -6.0% -3.0% 20% 0% 1,200 5.0% -27.0% -29.0% -6
Slide 19: Profit and loss
Profit and loss Net sales Cost of sales breakdown (2006) LE million Exports (%) 800 52.7% 64% Raw materials (37%) 49.6% 49.2% 44.1% 600 39.1% 36.3% 48% Other materials (18%) 32% Energy (11%) 400 16% Salaries and wages (13%) 200 0% Depreciation (8%) 265 382 559 697 652 720 0 -16% 2001 2002 2003 2004
Slide 20: Segmental analysis
Segmental analysis Sanitary ware – sales volumes and revenue Sanitary ware – selling price and cost per piece Sanitary ware – gross profit and margin 500 4.6 5.0 120 4.3 250 50% 60% 4.0 3.9 3.4 100 46% 44% 46% 50% Volumes (000's pcs) 400 4.0 200 42% Gross margin (%) 36% Gross profit (LE m) Revenues
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 99 159 254 122 135 171 0 2000 2001 2002 2003 2004 2005 2006 Inventory days (Inventory/cost of sales) Receivables days (Receivables/net sales) Paya
Slide 22: Revenues and margins
Revenues and margins Segmental sales breakdown (2005 vs. 2006) Sanitary ware sales volume by geography Sanitary ware export volumes by geography 2005 2006 2005 2006 2005 2006 Egypt (36%) Egypt (34%) Europe (80%) Europe (84%) Sanitary w are (60%) Sanitary w are (62%) Lebanon (5%) Lebanon (5%) Middle
Slide 23: Share performance and data
Share performance and data ey = hs) \ A. a Re . eed | aM 3 = CSN eh, eae Bo
Slide 24: Share structure and history
Share structure and history • Lecico listed in November 2004 and is currently valued at a market cap of US$ 160 million with a 48% free float – Trading history: GDR trades an average of US$ 0.15 million in trading a day Shareholding structure and trades on 31% of market trading days (2006) Sanitec –
Slide 25: Thank you
Thank you For additional information, please contact: Taher G. Gargour Telephone: +203 518 0011 Fax: +203 518 0029 Mobile: +2012 104 1047 E-mail: [email protected] Visit our website at: www.lecico.com.eg Forward-looking statements: This presentation may contain certain “forward-looking statemen