Oriental weavers carpet [ORWE]
Higher rebates and cheaper polypropylene failed to offset lower demand
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Egypt/ consumer discretionary/ Q2 2020 results
●Country-wide lockdowns in main destinations pressured revenues and margins: Revenues were squeezed in Q2 2020 to EGP1.81bn by lower average blended price of EGP79/sqm “excluding fibers & others revenues” (-10.8% y/y, +1.2% q/q) and slimmer volumes of 22.9mn sqm (-23% y/y, -21% q/q). Also, gross profit dropped to EGP161mn in Q2 2020 (-45% y/y, -43% q/q). Exports declined to EGP1.15bn (-30% y/y, -19% q/q) on lower volumes (-15% y/y, -22% q/q) and lower average blended price of USD4.9/sqm “excluding fibers & others revenues” (-12% y/y, +3% q/q). Exports were hit by (1) country-wide lockdowns and the closure of several big retailers in ORWE’s main destinations and (2) the drop in shipments to a key European customer due to the temporary closure of 95% of its stores worldwide. Locally, volumes weakened (-34% y/y, -20% q/q), while prices remained almost flat at EGP77.8/sqm “excluding fibers & others revenues” (+0.6% y/y, -3.8% q/q). Local volumes fell across the three segments (woven: -34% y/y, tufted: -42% y/y, and non-woven:
-29%y/y) as demand was hurt by COVID-19, which began to hit hard especially in April and May hurting sales and shortening working hours.
Nada Wagdy
Equity Analyst
Tel.: +202 3300 5726