Oriental Weavers aims to invest about $10m in its planned expansion for 2020, which includes adding 3 looms, a dyeing machine, and 2 industrial grass machines, along with 2 packing machines.
Yasmin El Gohary, manager of Investor Relations at Oriental Weavers, said that the new expansions will contribute to increasing the targeted sales volume in 2020, whether domestic or export sales, noting that her company is adopting a plan to expand its export markets to enter more Arab and African markets.
She noted that the new machines and looms will reflect positively on the company’s business results by the end of 2020, as the company aims to enhance the volume of its production and sales through these expansions to meet the negative effects that the company is exposed to while the value of the pound increases against the dollar.
Oriental Weavers revenues for fiscal year (FY) 2019 came in at EGP 10.1bn (-2.6% year over year (YoY)) owing to the -5.0% YoY decline in EGP-denominated prices and 2.5% expansion in volumes. On a quarterly-basis, topline amounted to EGP 2.5bn up 8.7% quarter over quarter (QoQ) but down 9.1% YoY, largely reflecting the sequential decline and annual expansion in export sales for the quarter.
Local Sales came in at EGP 930m in the fourth quarter (4Q) 2019, up 1.1% QoQ and 4.8% YoY. Pharos research finds that annual local sales grew despite a -1.1% volume drop due to higher demand for grade A and B woven carpets where local ASP hiked by +5.9% YoY. Quarterly, local revenues expanded slightly on the back of 1) more traffic in local showrooms as a result of the “buy one get one free” offer introduced in November 2019, 2) a bigger retail outlet footprint (58% of local sales) through the addition of 12 new showrooms in 2019, and 3) a general shift towards more premium grade A and B woven carpets and tufted pieces.
Export revenues recorded EGP 1,620m in 4Q19, up 13.5% QoQ, but down 15.5% YoY. Annual exports declined on flat volumes and -15.5% lower ASP in EGP-terms owing to EGP/USD appreciation (-10.5% YoY in 2019) and in light of the existing pressure on global prices. Quarterly exports recorded growth on the account of a +20.9% QoQ volume growth across all segments with more tilt towards the high-volume woven grade C product and a +c.16% QoQ increase in sales value in USD-terms.