Expanding Our Reach - Oriental Weavers€¦ · 14% growth year-on-year in 2013 to EGP 3,163 million . Local Sales Growth: 11% year-on-year in 2013 to EGP 2,358 million . Scale . Our

INVESTOR PRESENTATION | THIRD QUARTER 2014

Expanding Our Reach

INVESTOR PRESENTATION - ORIENTAL WEAVERS 2

Oriental Weavers: Global Market Leader

116 mn sqm produced

in 2013

1981 Established in

1981

We export our products to 130 countries worldwide

130 240 Showrooms and wholesale

outlets spread all over Egypt

Manufacturing facilities in Egypt, China and the US.

10

803,500 m2 of warehouses across 3 continents

3


Key Milestones

OW & MAC were established

EFCO was established

OW opened the first showroom in the USA

US retail arm was launched

•OW Fibers was established

•US manufacturing facility

was established •Founding of OWI, the group's export arm

OW USA obtained patent rights for 100% acrylic rug production, which emulates the look and feel of silk •Establishment of the new yarn

plant, King Tut •OW Hospitality is established in London

•Opening of a showroom in New York City

•OW was named as best in the Design and Service categories in the US Floor Focus .

•Partnering with Pantone & Tommy Bahama

1979-1981 1987-1988

2013-2014 2011-2012


Group Structure

Oriental Weavers Carpets

OW USA OW International

OW China

MAC Carpet “Fiber Factory”

New MAC

EFCO

Modern EFCO

100% 100%

100%

79% 58.3%

100% 69%


A Vertically Integrated Business Model – A Pillar for Global Competitiveness

From sourcing polypropylene granules, converting them into fibers, spinning and dyeing yarn, to weaving, distributing and delivering the end product. Our domestic retail outlets, our dedicated distribution arm, OW USA (Sphinx), and our worldwide warehousing facilities in the US, Germany , and Canada support our local and international leadership.

Raw Materials Production Distribution

Oriental Weavers USA

Oriental Weavers International


Oriental Weavers China

MAC Carpet


Oriental Weavers USA

Modern EFCO 50% polypropylene fibers

EPPC* 80-90% of polypropylene

King Tut 90-100% nylon yarn

Oriental Weavers International

50% of polypropylene fibers

* The founder of OW established EPPC in 2006. It is not a part of OW.

Controlling supply chain enables greater cost control and production flexibility.


Our Growth Strategy Stems From Our Unique Business Model

Full integration – backward and forward – smoothes

and minimizes costs.

Economies of scale and scope.

Global experience and presence ensures unmatched global market intelligence.

A global, low-cost producer using efficiency, technology and geography to deliver strong profitability.

A vertically integrated producer

A large diversified

supplier

A local and global leader

An innovative manufacturer


Product Mix Covers Different Segments with Various Price Points

9M 2014 Revenue Mix (by volume)

9M 2014 Revenue Mix (by value)

Woven Grade A, 2%

Woven Grade B,

22%

Woven Grade C,

28% Tufted Wall-

Wall, 4%

Tufted Pieces, 30%

Non-woven felt, 14%

Woven Grade A

8%

Woven Grade B

33%

Woven Grade C

27%

Tufted Wall-Wall 1%

Tufted Pieces 16%

Non-woven felt 4%

Fibers 11%


Product Mix Covers Different Segments with Various Price Points

Ave

rage

pr

ice

Non

-w

oven

fe

lt

Wal

l-W

all

Tuft

ed

Piec

es

wov

en:

Gra

de C

wov

en:

Gra

de B

wov

en:

Gra

de A

41

16 21 28 34

71

183

55

27

16

41

-

10

20

30

40

50

60

Woven Tufted Non-woven Average price

Local Export Average

9M2014 Average selling prices (EGP/sqm)


A Prominent Leader in the Local and Export Markets

“The Pharaoh of Egyptian exporters”

– Time Magazine

Dominant position in the Egyptian market with an 85% market share.

An export oriented company with c 60% export contribution.

A global renowned player with strong position in the US and European markets.

9M2014 Revenue Mix (by destination)

2013 Export Performance (EGP mn)

1,401 1,360

145 87 76 46 46

Eur

ope

Am

eric

a &

Can

ada

Ara

b C

ount

ries

Asi

a

Rus

sia

& C

hina

Afr

ica

Oth

er

Local Sales, 39%

Europe, 27%

America & Canada, 23%

Other, 4%

Arab Countries, 3%

Russia & Asia, 3%

Africa, 1%


International Premier Partners

Relationships count – Oriental Weavers’ enduring relationships with the world’s best retailers, clients, resorts and other lifestyle centers ensure continued market leadership.

> 1% of Group Sales ≈ 1% of Group Sales 2-6% of Group Sales ≈ 20% of Group Sales ≈ 26% of Group Sales ≈ 42% of Group Sales


American & Canadian Premier Partners: Retail Segment

Oriental Weavers covered 38% of Canadian rug imports in 2013

http://www.bedbathandbeyond.com/default.asp?order_num=-1�

http://www.sears.com/sr/javasr/home.do?BV_UseBVCookie=Yes&vertical=SEARS�


Premier Partners: Commercial Segment

OW Hospitality, the London-based hospitality carpeting arm of Oriental Weavers Group — which manufactures broadloom carpets for luxury hotels worldwide — is the preferred supplier for Four Seasons and several other major players in the hospitality sector.

Huge Potential for the Hospitality Industry : 5,365 Projects Worldwide

Projects by region

Projects by status

Americas 1,091 projects

Africa 328 projects

Europe 1,953 projects

APAC 1,993 projects

40 projects in the pipeline till May 2014

A boom in the Gulf region


0

1,000

2,000

3,000

4,000

5,000

Progress Delayed Cancelled Opened Vision

2014 FLOOR FOCUS RETAILER SURVEY


Expansion plan

Oriental Weavers International Industrial zone, 10th of Ramadan City


Future Capacity Expansions

Target to add 11 new looms till March 2015 which will add 12% to the woven capacity

Subsequently, OW plans to add 4-5 looms annually till 2020


Recent Expansions: Establishment of the fiber plant

King Tut: Increasing control of the supply chain, in 2011 the

Group launched the trial phase of a new yarn production facility (King Tut) with an annual capacity of 150 tons daily. Actual production started in late 2012

The new factory produces nylon, which is the primary

raw material used by MAC printed and tufted carpets. Oriental Weavers is targeting to export excess

capacities. Total Capex spent on the first phase was EGP435mn.


Financial and Operational Performance

OW launched an exclusive partnership agreement with Pantone, most well known in the world of interior designs. OW has 2014

Pantone color of the year rug ready to ship.


Consistent Growth in a Cyclical Industry

2013 Total Sales Growth: 13% year-on-year in 2013 to EGP 5,521 million Export Sales Growth: 14% growth year-on-year in 2013 to EGP 3,163 million Local Sales Growth: 11% year-on-year in 2013 to EGP 2,358 million

Scale Our scale and efficiency advantages support our position as a cost-efficient competitive producer.

New Products & New Markets Oriental Weavers’ broad international footprint allows it to shift its focus to markets that are growing. Furthermore, with 33 full-time designers living in Egypt, the UK, China and the US, Oriental Weavers produces, on average, a unique, new product every two weeks.

Market Driven We only manufacture on confirmed orders — Oriental Weavers’ costs are naturally hedged in challenging economic climates.

Flexible Oriental Weavers produces at all price points and can quickly respond to market trends. Our technology allows unparalleled flexibility — each machine can produce any number of product types and we produce what the market demands with very short lead time.

The Group showed a CAGR of 10% between 2007 and 2013

9M 2014 Total Sales Growth: 8% year-on-year to EGP 4,349 million Export Sales Growth: 6% growth year-on-year to EGP2,641million Local Sales Growth: 11% year-on-year to EGP1,708 million


Financial Summary

Top Line Performance (EGPbn) Sales Volumes (mn sqm) Export vs. Local Revenue Contribution

EBITDA (EGPmn) Net Income (EGPmn) Net Debt (EGPbn)

2.4 2.8 2.8 3.2 2.5 2.6

1.6 1.8 2.1

2.4

1.5 1.7

4.1 4.6

4.9 5.5

4.0 4.3

-

1.0

2.0

3.0

4.0

5.0

2010 2011 2012 2013 9M 2013 9M2014

EGPbn Export Local

70 69 69 68 51 47

45 44 46 48

35 35

115 113 115 116

85 82

-

25

50

75

100

125

2010 2011 2012 2013 9M 2013 9M2014

mn sqm Export Local

60%

60%

56%

57%

62%

61%

40%

40%

44%

43%

38%

39%

0%

25%

50%

75%

100%

2010 2011 2012 2013 9M 2013 9M2014

Export Local

591

448

553

694

538

653

15%

10% 11%

13%

13%

15%

8%

10%

12%

14%

16%

- 100 200 300 400 500 600 700 800

2010 2011 2012 2013 9M 2013

9M2014

EGPmn EBITDA EBITDA margin

342

243

273

347

275

309

8%

5% 6%

6%

7% 7%

2%

4%

6%

8%

10%

- 50

100 150 200 250 300 350 400

2010 2011 2012 2013 9M 2013

9M2014

EGPmn Net income Net margin

1.6

2.0

1.8

1.4

1.6

1.2

2.7

4.4

3.2 2.0

3.0

1.8

0

1

2

3

4

5

0.0

0.5

1.0

1.5

2.0

2.5

2010 2011 2012 2013 9M 2013 9M2014

EGPbn Net debt Net debt/EBITDA


Cost Structure: Polypropylene

Polypropylene is the main raw material for Oriental Weavers with its prices having seen a y-o-y of 9% in 2013.

Oriental Weavers sources internally 70-80% of its polypropylene granule needs through EPPC — a local supplier. This helps in achieving the following: • Reducing stocking period from 4 months to only 1-2 months • Lowering transportation expenses • Lowering finance charges • Guaranteeing supply The model offers significant competitive strength in the global carpet and rugs industry.

Sources: Company

1H2014 COGS breakdown

Polypropylene — used in synthetic and blended rugs and carpets — is an oil derivative and is particularly significant cost variable, representing around 33% of total costs incurred in 1Q 2014. Polypropylene prices are driven in large part by: • Petroleum prices • Market demand for

polypropylene Average PP Costs (in Metric Tons $)

1,217 1,348

1,521

990

1,363

1,629 1,456

1,585 1,596

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2006 2007 2008 2009 2010 2011 2012 2013 2014

USD

/ton

Polypropylene

, 33%

Other raw materials,

21%

Industrial expenses, 19%

Wages, 8%

Selling, 19%


Shareholders’ Value

Oriental Weavers’ solid balance sheet and steady cash flow growth have provided investors with steady dividends.

•EPS based on separate statements Source: Company

Earnings Per Share & Dividends (in EGP)

2.28

2.75

1.62

1.76

1.88

3.00 2.00

1.50 1.50

2.00

0

0.5

1

1.5

2

2.5

3

3.5

2009 2010 2011 2012 2013

EPS DPS


Recent increase in energy cost

Sources: Company

Energy cost Old prices New prices % increase OW costs (EGP000) and % % ∆

US$/mmbtu before increase after increase

Natural gas 2.25 5 122% 17,342 38,538 122.2%

0.45% 0.78%

EGP/KW

Electricity 0.28 0.365 30% 77,852 101,486 30.4%

1.6% 2.0%

Diesel/litres

Transportation costs 110 180 64% 55,000 72,000 30.9%

1.1% 1.4%

Total energy costs 150,194 212,023 41.2%

% of costs 3.0% 4.2%

Total costs In 2013 4,953,549 5,015,378 1.2%


Share Fact Sheet

Stock Data 90 (mn )at par value of 5 EGP per share Listed on EGX September 1997 6 Month average daily value USD0.55mn 52 week- high / low EGP 53/ 29.3 Market Cap USD652mn (as of Nov 23 , 2014) Last Div. / Ex. Date EGP2 on 5 May 2014 Issued and Paid up Capital 450 MEGP Reuters; Bloomberg ORWE.CA; ORWE EY

Share Price Performance

57%

38%

5%

Khamis Family Institutions Retail

0

10

20

30

40

50

60

Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14

EGP/share

ORWE EGX 30-rebased

OW has become the largest exhibitor to date at Domotex Fair in Hannover.

Domotex Hannover is the floor coverings industry’s most

important annual trade fair, attended by top global industry players on both the buy- and sell-side.

Global Environment


Oriental Weavers’ Long Standing Position in the US

OW entered the US market in 1988 and

established the US manufacturing facility in 1994.

Sells to big boxes and home furnishing

stores.

Secured partnership agreements with Tommy Bahama, Pantone and Roger Thomas.

America’s most magnificent rug award in

Atlanta Floor covering exhibition.

Opened corporate showrooms in 2012 in

Fifth Avenue, New York and Las Vegas

US producers 78%

OWC 2%

Other importers 20%

Imports 22%

961 871

1,039 1,146

1,225 1,360

2008 2009 2010 2011 2012 2013

Where does OW stand in the US market? By market players OW exports to the US (EGPmn)

US producers 78%

OWC 2%

Other importers 20%

Imports 22%

961 871

1,039 1,146

1,225 1,360

2008 2009 2010 2011 2012 2013


Favorable Demographics

Population in Egypt

Sizeable population with annual

marriages of 600,000. Annual housing units supplied hovers

around 150,000.

Delivery of housing units related to projects that were put on hold.

Ministry of Housing will build 224k

housing units till end of 2015

By market size

Source: OW

By demand type

Source: Jones Lang LaSalle, Industry analysts

Egypt: A Buoyant Market Stimulated by Demand for Housing

0.0 0.5 1.0 1.5 2.0 2.5 3.0

2007 2008 2009 2010 2011 2012

EGPb

n

Woven Non-woven Tufted

Egyptian Carpets Market (2012)

Supply of new residential units in Egypt

- 50 100 150 200

2012

2013

2014e

2015e

000 units

Luxury Upper middle Middle

Source: IMF

Residential replacement

20%

Residential new

construction 80%

Source: OW

62 64 65 67 68 69 71

18 19 19 19 20 20 21

- 10 20 30 40 50 60 70 80 90

100

2011 2012 2013 2014e 2015e 2016e 2017e

Rest of Population Addressable market


Oriental Weavers: A Dominant Player in the Local Market

Number of showrooms and wholesaler in Egypt OW local sales (EGPmn)

Sells directly through a network of 175 showrooms and 64 wholesalers all over Egypt

A plan to open small retail concept in 2014/ 2015 targeting mid to low income segments in Egypt

Source: OW

150 165 176 183 184 182 175

33 36 38 42 49 59 64

0

50

100

150

200

250

2007 2008 2009 2010 2011 2012 2013

Showrooms Wholesale

1,072

1,381 1,570 1,630

1,846 2,132

2,358

0

500

1,000

1,500

2,000

2,500

2007 2008 2009 2010 2011 2012 2013

EG

Pmn

THIRD QUARTER 2013 - INVESTOR PRESENTATION - ORIENTAL WEAVERS 29

With Local Showrooms Spanning the Egyptian Governorates

OW has a large network of showrooms in each of the Egyptian governorates.


Oriental Weavers’ Brands

Our brands cater to a wide spectrum of customers ranging from big box retailers to five star hotels.

La Boutique is a division of Oriental Weavers, catering to higher-end and top-niche markets. Developed around the simple concept of customer involvement, La Boutique allows customers to commission custom rugs and carpets by matching a swatch of fabric or sketch, which are then transformed into an exquisite rug or carpet.

OW Life Style is the Group’s line of contemporary rugs that includes a large variety of shag carpeting in various textures, styles and colors. Designed around today’s life style, the company offers only the finest materials combined with the highest production standards. The OW Life Style name has come to be synonymous with quality and value, bringing a unique and truly distinguishable touch to any decor. Like La Boutique and OW Classics, Life Style provides a brand outlet for Oriental Weavers to market products with specific themes, in this case the ultra modern and abstract. The company sells its increasingly popular products locally through its own retail outlets and also exports to countries around the globe.

OW Hospitality caters to the hospitality and entertainment industries, producing high-quality woven Axminster carpets using a blend of wool and nylon for optimum performance, luxury and comfort, and has established markets in the US and Europe, with offices in London, Dubai, Dalton, Atlanta, New York and Las Vegas. The company aims to manufacture Axminster carpets on three continents by 2015 as it adds three new high-speed looms to its Cairo manufacturing facility, three high-speed Axminster machines to the Tianjin, China, plant, and two looms in the US manufacturing facility to better serve that marketplace.


Appendix & Profiles

OW opened an automated warehouse in 1H2013 with storage capacity of 3mn sqm. Total capex spent

on the warehouse reached c. EGP80mn.


Case Study: Woven Grade A

Raw materials for our Woven Grade A products consist of 100% wool, or 80% wool and 20% polypropylene. The wool is sourced from suppliers in Egypt, New Zealand Libya and UK; the PP is sourced locally or imported from GCC. These are woven into yarn at our facilities in Egypt, US and China and sent to the looms.

Raw Materials 1

The carpets are woven at one of our facilities in Egypt, China or the US, depending on the end user. The designs are determined by the customer needs; we offer more than 4 million copyrighted designs to choose from.

Weaving 2

Once the carpet has been woven, it is moved to a warehousing facility to await shipping to one of our main distribution points. These are on four continents—Africa, Asia, North America.

Distribution 3 The carpet is then sent to the customer, either an Oriental Weavers retail outlet or showroom—such as the one pictured above—or to one of our customers for retail at their establishments.

End User 4 Uncompromising vertical integration and constant innovation are pillars of Oriental Weavers’ global

competitiveness.


Profiles – The Oriental Weavers Group

Oriental Weavers Carpet Company was founded in 1980 by industrialist and entrepreneur Mohammed Farid Khamis and today is the holding company for a fully vertically integrated producer of rugs, mats and carpets. As a manufacturer, Oriental Weavers produces three grades (A, B and C) of machine woven carpets and rugs for the Egyptian market, with annual capacity for the group presently reaching 115 million m2. Oriental Weavers has been traded on the Egyptian Exchange since 1997 and today its shares represent the consolidated earnings of the company’s holding companies.

Oriental Weavers International (OWI) was established in 1999 as an export-oriented free trade zone company in 10th of Ramadan City. The company’s vertically integrated facilities encompass the scope of extrusion of synthetic fibers, dyeing and spinning wool as well as the weaving and finishing of products. The majority of the Group’s diversified products related to home textiles are produced within this facility (carpets, rugs, Axminster, Gobelin, gun-tuft and fibers). The total annual capacity of the plant reached 34 million m2 in 2012 and targets mainly export markets. OWI increased its total sales by 15% to over EGP 1.97 billion, two-thirds of which constituted exports to OWI’s main export markets including North America, Europe, and the Middle East, while the company also delivers to more than 60 countries worldwide. Specifically, OWI fully owns OW China with an eye on developing its market share in the emerging Asian market.

ORIENTAL WEAVERS INTERNATIONAL

36% Contribution to Total Group Sales

15% 2012-2013 Sales Growth

EGP 1.97 billion 2013 Sales Value

ORIENTAL WEAVERS CARPET

28% Contribution to Group Sales


EGP 1.6 bn 2013 Sales Value



Oriental Weavers China was established in 2006 in anticipation of China’s growing importance in the global economic scene. OW China occupies 170,000 m2 in the Tianjin industrial zone, 80 km south of Beijing. The producer is a vertically integrated facility with fiber extrusion capacities as well as rug and carpet manufacturing facilities. As domestic demand continues to drive the growth of China’s economy, Oriental Weavers intends to capitalize on the rise of the country’s large middle class by leveraging relationships with global retail customers such as IKEA and Wal-Mart, which have seen notable growth in China in recent years. Following the events in Egypt in early 2011, group management quickly responded by ramping up production at OW China’s facilities, growing total annual capacity to 3.2 million m2. OW China’s production is intended to supply both the local Chinese market as well as neighboring export markets.

Oriental Weavers USA manufactures in the company’s plant in Dalton, Georgia, and also markets and distributes products it imports from the company’s Egyptian plants. Oriental Weavers USA sells to mass merchants and big-box retailers such as Home Depot, Lowes, Bed Bath & Beyond, Nebraska Furniture Mart, among others, as well as to independent retailers, furniture retailers, catalogues and department stores such as Macy’s and JCPenny. In recent years the company has been awarded America’s Most Magnificent Rug award through its high-end brand, Sphinx.

ORIENTAL WEAVERS USA



EGP 608.9million distribution arm 2013 Sales Value

ORIENTAL WEAVERS (TIANJIN)


16% 2012-2013 Sales Reduction



MAC Carpets is Oriental Weavers’ foothold in the wall-to-wall tufted carpeting segment, a key division that further diversifies the Group’s product mix beyond the rugs and mats categories. MAC operates out of four sites in Egypt including three production plants and an electricity facility, all in 10th of Ramadan City. Since its establishment in 1980, MAC’s output hovered around 43 million m2 of carpeting worth EGP 1 billion in 2013. Today MAC represents roughly 19% of total group sales. A leading Egyptian exporter, MAC’s products are delivered to more than 107 countries, supplying some of the world’s largest retailers such as Wal-Mart and IKEA. In addition to wall-to-wall carpeting, MAC’s diversified product offerings include, door and kitchen rugs, rubber backed bathroom mats, multilevel textured mats for outdoor applications, car mats, children’s rugs and mats, scatter rugs and club rugs. MAC also manufactures three-dimensional advertising floor panels, runners and artificial turf for indoor and outdoor applications.

Egyptian Fibers Company (EFCO) is the Group’s polypropylene business and engages in the manufacture of polypropylene fibers and polyester threads. It also manufactures and exports different types of non-woven plastic rugs and carpets and other related polypropylene and plastic products. EFCO has a 69% interest in Modern EFCO Fibers Company, which produces polypropylene, polyester and silk products, as well as non-woven carpets.

EGYPTIAN FIBERS COMPANY



EGP 247 million 2013 Sales Value

16 million m2 2013 Production Capacity

MAC CARPETS


EGP 1 billion 2013 Sales Value



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 achievements of the Company to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including worldwide economic trends, the economic and political

climate of Egypt and the Middle East and changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in such forward-looking statements. Recipients of this document are cautioned not to place any reliance on these forward-looking statements. The Company undertakes no obligation to republish revised forward-looking statements to reflect changed events or circumstances.

For More Information:

Ingy Eldiwany Investor Relations Manager

+202-22685166

[email protected] www.orientalweavers.com

Documents

Expanding Our Reach - Oriental Weavers€¦ · 14% growth year-on-year in 2013 to EGP 3,163 million . Local Sales Growth: 11% year-on-year in 2013 to EGP 2,358 million . Scale . Our