RAK Ceramics PJSC · ADX:RAKCEC
RAK Ceramics PJSC — The 14th Annual One on One Conference Frontier Emerging Markets - Dubai 2018
33 slides from RAK Ceramics PJSC's conference presentation, March 2018
Slide 1: Investor Presentation - 14th Annual One on One Conference, Dubai
INVESTOR PRESENTATION THE 14TH ANNUAL ONE ON ONE CONFERENCE FRONTIER EMERGING MARKETS - DUBAI MARCH 2018 RAK Ceramics PJSC © 2017. All rights reserved 1
Slide 2: Attendees
INVESTOR PRESENTATION Attendees Abdallah Massaad PK Chand Wassim Moukahhal Group Chief Executive Officer Group Chief Financial Officer Executive Board Member Abdallah Massaad is Group CEO of RAK Ceramics. and has Pramod Kumar Chand is the Group Chief Financial Officer Wassim Moukahhal is a member of
Slide 3: Disclaimer
INVESTOR PRESENTATION Disclaimer This information contained in the enclosed presentation summarises preliminary and and past performance is not indicative of future results. The Company undertakes no introductory information on RAK Ceramics PJSC (the Company). This presentation obligation to publicl
Slide 4: Company Overview
INVESTOR PRESENTATION Company Overview Overview Industry Strategy Results RAK Ceramics PJSC © 2017. All rights reserved 4
Slide 5: RAK Ceramics at a Glance
INVESTOR PRESENTATION RAK Ceramics at a Glance + 25YEARS Ceramic expertise One of the largest ceramic brands in the world. 15,000 Global workforce 150 1 OWNERSHIP + + BILLION SQM 27.2% 31.5% Countries exported Tiles supplied worldwide 5.0% 5.3% 7.2% 731MN ~$1BILLION 11.5% 6.7% 5.7% US$ Samena Capita
Slide 6: Brief History
INVESTOR PRESENTATION Brief History 1989 1991 1993 2000 2004 Founded by H.H. Sheikh First tile plant began in First sanitaryware plant Opening of First overseas RAK Porcelain was Saud Bin Saqr Al Qasimi the UAE began in the UAE tile plant in Bangladesh established No.1 2006 2007 2010 2014 2016 India
Slide 7: Core Business Lines
INVESTOR PRESENTATION Core Business Lines TILES SANITARYWARE We offer 6,000+ models, Complete solutions one of the largest provider offering products collections of ceramic wall designed to suit all budgets and floor tiles, gres and tastes with accessories porcelain and super-sized and bathroom furn
Slide 8: Manufacturing Footprint
INVESTOR PRESENTATION Manufacturing Footprint 2017 GLOBAL PRODUCTION • 22 plants worldwide • 16 Tiles Plants in UAE (10), India (3), Bangladesh (1), Iran (1) and China (1). • 4 Sanitaryware Plants in UAE (2), India (1), and Bangladesh (1) • Tableware - UAE (1) • Faucets - UAE (1) CHINA 1 IRAN 1 116M
Slide 9: Production Capacity by Location
INVESTOR PRESENTATION Production Capacity by Location TILES SANITARYWARE 5% 5% 13% 9% 10% 29% 59% 71% UAE (82mn sqm) Bangladesh (11.6mn sqm) India (11mn sqm) UAE (2.7mn pieces) Iran (6mn sqm) Bangladesh (1.6mn pieces) China (5.5m sqm) India (0.7mn pieces) FAUCETS TABLEWARE 100% of Faucets produced i
Slide 10: Vision and Key Strengths
INVESTOR PRESENTATION Vision and Key Strengths The world’s leading ceramics lifestyle solutions provider. EXPERIENCE WIDE RANGE INNOVATION QUALITY We have helped to create We are known for our wide Innovation is at the heart of We are able to consistently some of the world’s most product range and o
Slide 11: Competitive Landscape
INVESTOR PRESENTATION Competitive Landscape Overview Industry Strategy Results RAK Ceramics PJSC © 2017. All rights reserved 11
Slide 12: World Production and Consumption - Tiles
INVESTOR PRESENTATION World Production and Consumption - Tiles WORLD PRODUCTION (MILLION SQM & CONTRIBUTION %) WORLD CONSUMPTION (MILLION SQM & CONTRIBUTION %) Asia 9,331 71.5% Asia 8,818 69.0% Europe Union 1,304 10.0% Central S America 1,180 9.2% Central S America 1,086 8.3% Europe Union 964 7.5% O
Slide 13: Market Position - Tiles
INVESTOR PRESENTATION Market Position - Tiles PRODUCTION (MILLION SQM) In 2016 RAK Ceramics retained it position as the 4th largest tile producer globally. MOHAWK INDUSTRIES, INC 250 SIAM GROUP 201 GRUPO LAMOSA 150 RAK CERAMICS PJSC 83 PT MULIAKERAMIK 78 CERAMICA CARMELO FIOR 77 PAMESA 70 GRUPO FRAG
Slide 14: Market Position, Focus Markets - Tiles
INVESTOR PRESENTATION Market Position, Focus Markets - Tiles UNITED ARAB EMIRATES BANGLADESH The Middle East flooring market is growing due to the high volume of construction activities in the region. The # 1 # 1 three largest ceramics Market Size* 86 (MN SQM) Market Size* 59 (MN SQM) producers in t
Slide 15: Business Strategy Update
INVESTOR PRESENTATION Business Strategy Update Overview Industry Strategy Results RAK Ceramics PJSC © 2017. All rights reserved 15
Slide 16: Summary of Key Achievements of VCP
INVESTOR PRESENTATION Summary of Key Achievements of VCP Core Business Growth Non-Core Disposals New Brand Launched Cost Efficiencies The RAK Ceramics’ Value Creation Plan (VCP) Europe/KSA Acquisitions was designed to strengthen Margin Improvements core business and unlock Increase UAE Market shareh
Slide 17: Non-Core Divestments
INVESTOR PRESENTATION Non-Core Divestments Non-core revenue 12 >US$ 130MN GROUP REVENUE SPLIT (AED MN) contribution to total revenues 8.4% has steadily declined to an all Exits since Q2 14 Divestment proceeds 14.7% 16.0% 13.0% 18.7% time low of 8.4%. In 2017, Electro RAK and RAK Warehouse Leasing we
Slide 18: Core Business Rebounding
INVESTOR PRESENTATION Core Business Rebounding CORE NET PROFIT (AED MN) Core net profit has grown Oil price collapse Cost savings Gas price increases Production despite unfavourable efficiencies Geopolitical headwinds economic conditions. Regional economic slowdown Capacity expansions Continued inve
Slide 19: Value and Growth in India & Bangladesh
INVESTOR PRESENTATION Value and Growth in India & Bangladesh BANGLADESH INDIA $ 202MN 28% 25% Only multinational ceramics producer in India Market Cap. Ownership of Market Cap. Revenue Growth 68% 15% 12MN SQM 18MN SQM 15% Ownership of Group Net Tile Production Cap. with new Ownership Income. Tile Pr
Slide 20: Restructure/Turnaround of Europe & Saudi Arabia
INVESTOR PRESENTATION Restructure/Turnaround of Europe & Saudi Arabia EUROPE SAUDI ARABIA Strategy to take distribution JVs into full ownership to give greater control and access into key markets AED 369mn of Tiles and Sanitaryware sales in 2017 AED 225mn of Tiles and Sanitaryware sales in 2017 Rest
Slide 21: Tableware Performance Overview
INVESTOR PRESENTATION Tableware Performance Overview REVENUE (AED BN) GROSS PROFIT MARGIN (%) The tableware business continues to show growth with revenues increasing by 35.9% YoY to AED 237.8m driven by the consolidation of Restofair 237.8 61.4% 61.0% 50.1% 52.0% (a catering supplies company) 145.8
Slide 22: New Brand Identity
INVESTOR PRESENTATION New Brand Identity RAK Ceramics PJSC © 2017. All rights reserved 22
Slide 23: Dividend Highlights
INVESTOR PRESENTATION Dividend Highlights DIVIDEND PAYOUT (%/SHARE) Extract from company dividend policy in 2014 40% 10.0 5.0 30% 30.0 5.0 “Payout ratio in excess 60% of 10.0 25.0 25.0 consolidated net income subject to 20% 20.0 consideration factors such as the 15.0 15.0 * business outlook, capital
Slide 24: 2017 Financial Results
INVESTOR PRESENTATION 2017 Financial Results Overview Industry Strategy Results RAK Ceramics PJSC © 2017. All rights reserved 24
Slide 25: 2017 Financial highlights
INVESTOR PRESENTATION 2017 Financial highlights Core revenue of AED2,615m, Total revenue of AED2,855m, Core gross profit margin of +7.6% compared to 2016 as a +2.2% compared to 2016. 32.5%, +200bps compared to result of strong growth in the Non core revenue of 2016 United Arab Emirates, Bangladesh A
Slide 26: Financial Highlights
INVESTOR PRESENTATION Financial Highlights REVENUE (AED BN) GROSS PROFIT (%) Total revenue increased by 27.4 26.0 28.2 30.5 31.6 2.2% in 2017 as a result of 3.5 3.3 3.1 32.5 strong growth in core revenue 0.7 0.5 2.8 2.9 28.7 28.2 29.3 30.5 30.3 0.5 0.2 driven by the UAE, India and 0.4 18.6 22.6 21.2
Slide 27: Core Net Profit and Shareholder Return
INVESTOR PRESENTATION Core Net Profit and Shareholder Return CORE NET PROFIT (AED MN) Enhanced shareholder returns driven by a rebound in the 100% 80.0 73.1 65.8 70.2 67.9 core business, coupled with 52.2 39.3 50.7 48.2 42.1 41.7 39.5 44.4 27.3 exits from non-core and 1.9 underperforming operations.
Slide 28: Segment Performance
INVESTOR PRESENTATION Segment Performance REVENUE BY SEGMENT (AED MN) Core revenue in 2017 increased by +7.6% due to 2016 2017 strong performance in all segments. Amount Amount Growth Tiles 1798.3 1871.3 4.1% REVENUE BY SEGMENT 2017 (%) Sanitaryware 456.2 505.9 10.9% Tableware 175.0 237.8 35.9% 8.4%
Slide 29: Tiles & Sanitaryware Regional Performance
INVESTOR PRESENTATION Tiles & Sanitaryware Regional Performance REVENUE BY REGION (AED MN) UAE, India and Bangladesh 2016 2017 markets are key drivers of growth year on year. Amount Amount Growth UAE 628.4 754.5 20.1% Saudi Arabia, decreased by -4.4% due to weak demand in the project Saudi Arabia 23
Slide 30: Gross Profit Margins
INVESTOR PRESENTATION Gross Profit Margins GROSS PROFIT (%) TILES GROSS PROFIT (%) Total gross profit margin of 27.4 26.0 28.2 30.5 31.6 31.6%, +110bps compared to 32.5 28.0 2016, and all-time high. 28.7 28.2 29.3 30.5 30.3 26.4 24.4 24.6 24.8 22.6 21.2 Core gross margins increased +200bps 18.6 16.7
Slide 31: Balance Sheet Evolution
INVESTOR PRESENTATION Balance Sheet Evolution MANAGEMENT COMMENTS RETURN ON EQUITY (%) OPERATING CYCLE (DAYS) 11.4 281 Return on equity reached an 11.1 10.4 218 225 262 192 all-time high of 11.4% in 2017. 9.0 227 * 180 188 214 166 Operating Cycle increased compared 7.1 to 2016 due to an increase in
Slide 32: Market Valuation
INVESTOR PRESENTATION Market Valuation AED SHARE PRICE PERFORMANCE (AED) VWAP 2.50 CURRENT VALUATION (AED M) 52 week high 3.25 14 Jun 2014 26 April 2015 25/02/18 31/12/16 Samena Capital AED 0.35/share dividend 52 week low 2.08 investment announcement Amount Amount As of 25th Feb 2018 4.0 Share price
Slide 33: Investor Presentation
INVESTOR PRESENTATION RAK Ceramics PJSC © 2017. All rights reserved 33