Oriental Weavers Carpet · EGX:ORWE
Oriental Weavers Carpet — Oriental Weavers — Q1 2019 Earnings Presentation
25 slides from Oriental Weavers Carpet's earnings presentation, May 2019
Slide 1: Earnings Presentation 1Q2019
Earnings Presentation 1Q2019
Slide 2: Oriental Weavers in Numbers
Oriental Weavers in Numbers No. 1 EGP 10.4 bn 62% World Largest Record Turnover in Export contribution producer by volumes 2018 in 1Q2019 85% c. 80% EGP 528 mn Market share in Backlog of export Utilization rate Egypt incentives 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: Positive triggers for OW
Positive triggers for OW 1. The US Tit for Tat tariffs on imports from China should open more room for growth. 2. Reversed amounts related to free zone fees. 3. Pending export subsidy collection (EGP 528 million). Slide 5
Slide 6: Global Macro Fundamentals
Global Macro Fundamentals US Market Europe Asia & Africa • US economy continues to move forward, albeit at a slower Slower path of growth in Europe Strong potential in African rate in the second half of 2019. beside East Asian markets. • Expected slower growth in new home sales. • Slower growth in r
Slide 7: 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 8: Demand Drivers in Egypt
Demand Drivers in Egypt Growing economy GDP is expected to grow by 5-6% annually up to 2020 as Sizeable youth bracket per the IMF. Sizeable youth 50% of the Egyptian population are near the marriage with population around one million marriages taking place annually. Housing gap Housing gap is about
Slide 9: 1Q 2019 Revenue summary
1Q 2019 Revenue summary Value (EGP million) Volume (sqm) 1Q 2019 1Q 2018 % Change 1Q 2019 1Q 2018 % Change Woven- Egypt based 1,409 1,464 -4% 13.2 13.9 -5% OW USA 606 521 16% 3.7 2.9 28% OW China 15 16 -6% 0.2 0.2 -9% Tufted 437 428 2% 8.0 7.4 8% Non-woven Felt 94 73 29% 4.3 4.0 8% Other 40.4 6 583%
Slide 10: Export Market development
Export Market development Revenue contribution & performance by region in 1Q 2019 Local sales 38% ▲ 3% Russia & China Africa , 2% ▼18% Arab Cntr., 2% US ▲ 10% Asia & 38% North & South Russia , 3% ▲11% Asia America Europe ▲22% ▲49% 17% ▲6% Africa Arab Countries Slide 10
Slide 11: Export Market Development in 1Q 2019
Export Market Development in 1Q 2019 Volume Value Contribution to Percentage ∆ Average Price Export Revenues 1Q 1Q 1Q 1Q 2019 1Q2018 Woven ▼4% ▼2% ▲2% 77% 78% Tufted ▲13% 0% ▼11% 20% 20% Non-woven Felt ▲111% ▲66% ▼21% 3% 2% Total ▲9% 0% ▼9% 100% 100% Slide11
Slide 12: Export performance overview
Export performance overview Export revenues (EGPbn) Export vs. Local Revenue volume % Export volumes (mn sqm) 6.8 6.7 68 68 34% 35% 40% 45% 65 63 3.4 3.5 3.7 60 66% 65% 60% 55% 2014 2015 2016 2017 2018 2015 2016 2017 2018 2014 2015 2016 2017 2018 Slide 12
Slide 13: Local Market Development in 1Q 2019
Local Market Development in 1Q 2019 Average Contribution to Percentage ∆ Volume Value Price Local Revenues 1Q 2019 1Q 2018 Woven ▲6% ▲8% ▲2% 81% 82% Tufted ▼6% ▲9% ▲15% 12% 12% Non-woven Felt ▼26% ▲3% ▲39% 4% 5% Others (yarn sales) ▲552% 3% 1% Total ▼4% ▲11% 100% 100% Slide13
Slide 14: Local market overview
Local market overview Growing local revenues (EGPbn) Export vs. Local revenues% Local sales volumes (mn sqm) 3.5 3.7 Export Local 54 3.0 34% 35% 40% 51 45% 2.3 2.3 48 47 46 66% 65% 60% 55% 2014 2015 2016 2017 2018 2015 2016 2017 2018 2014 2015 2016 2017 2018 Slide 14
Slide 15: Revenue progress
Revenue progress Revenues (EGPbn) Sales volumes (mn sqm) Export Local mn sqm Export Local EGPbn 10.2 10.4 111 117 115 114 3.5 3.7 6.8 54 47 46 51 5.8 3.0 2.3 6.8 6.7 60 63 68 68 3.5 3.7 2015 2016 2017 2018 2015 2016 2017 2018 Slide 15
Slide 16: Diversified Product Mix
Diversified Product Mix 1Q 2019 Revenue Mix (by volume) 1Q 2019 Revenue Mix (by value) Other Non-woven 1% Woven- Non-woven Felt Egypt Felt 4% Woven- based 15% Egypt 45% Tufted based 17% 54% OW China 1% Tufted 27% OW USA OW USA OW China 12% 23% 1% Woven-Grade A EGP300/sqm Tufted wall-to-wall EGP51/sq
Slide 17: 1Q 2019 Cost Breakdown
1Q 2019 Cost Breakdown PP Prices (USD/ton) 1,800 USD /ton 1,629 1,585 1,584 1,600 1,456 1,363 1,400 1,218 1,275 1,130 1,147 1,200 990 993 1,000 800 600 400 200 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Company Almost 63% of costs are dollar based. Slide 17
Slide 18: Recent Expansions
Recent Expansions 2015 2016 2017 2018 2019 Woven 13 looms added 4 new goblin Establishing a new 9 new looms 3 looms (confirmed) increasing production looms factory Seven yarn Packing machines capacity by 6% 9 new looms 10 new looms machines Yarn machines 2 yarn One Heatset yarn production li
Slide 19: Financial Summary
Financial Summary EBITDA Performance (EGPbn) Net Income Performance Net Debt (EGPbn) EGPmn EBITDA EBITDA margin Net income Net margin Net debt (EGP billion) Net debt/EBITDA 1,600 14.9% EGPmn 1.5 16% 700 8% 1.2x 1.1x 16.5% 7.1% 0.7x 2 10.8% 14% 1,100 6.7% 1.0 500 12% 1,523 4.8% 6% 1 1,116 10% 0.5 600
Slide 20: 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 21: Export Incentive Program
Export Incentive Program: Export cash Documents proceeds submitted to Export EGP528 mn delayed Subsidy Fund disbursement till April 2019 OW collected EGP 61 mn in 1Q 2019 Export subsidies Exports (% of exports in EGP) Sources: Company Slide 21
Slide 22: The Government to launch a new Export Incentive Program on July 1st
The Government to launch a new Export Incentive Program on July 1st •Currently, the Ministry of Trade & Industry is preparing a new export incentive program for implementation on July 1st, 2019, replacing the current program. •The Egyptian Prime Minister meets separately the export councils to discu
Slide 23: Share Data
Share Data EPS Payout ratio o 443.4 mn shares at par value of EGP 1 per share. 2.00 92% 1.81 100% 1.68 o Issued and Paid-in Capital EGP 443.4 mn. 81% 1.46 81% 76% 80% 1.50 o Listed in EGX since September 1997. 60% 1.00 o 3 Month average daily value EGP8.3mn. 40% 0.55 o Market Cap USD 240 mn (as of M
Slide 24: 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 25: For More Information, please contact
For More Information, please contact Ingy El-Diwany, CFA Investor Relations Manager +202-22685166 [email protected] www.orientalweavers.com Slide 25