Oriental Weavers has recorded net profit for the second quarter (Q2) of 2020 amounting to EGP 53m, reflecting a 69% drop quarter-on-quarter (q-o-q) and a 75% fall year-on-year (y-o-y).
The company also reported gross profit amounted to EGP161m, reflecting a 43% decline q-o-q and 45% slump y-o-y.
The first half (H1) of 2020 mirrored the same results, with Oriental Weavers reporting a decline in its top line by 22% y-o-y to EGP4,075m. The company attributed this to the novel coronavirus (COVID-19) slowdown in demand since February 2020, and the y-o-y appreciation in the Egyptian pound (EGP).
Export revenues, which accounted for 63% of the topline for Q2 of 2020 came in at EGP1,147m, recording a decline of 19% q-o-q and 30% y-o-y . The company attributed about 7% of the annual decrease to the appreciation in the Egyptian pound compared to Q2 of 2019.
The remainder of the decrease can be traced back to weak demand amidst the lockdowns in major markets, and the closure of several big retailers. This is in addition to weaker pricing as the company implemented discounts to boost sales.
Local revenues came in at EGP664m, a drop of 22% q-o-q and 33% y-o-y, on the back of a 20% q-o-q and 34% y-o-y decline in sales volume. The usual weak performance in Ramadan was more pronounced by the partial-lockdown and weaker purchasing power.
Revenues from the local hospitality segment remained resilient, recording an increase of 4% y-o-y, on account of the refurbishment of a number of hotels and military/government projects.
The company’s management believes that Q2 of 2020 will be the lowest point of the year, and expects better figures in H2 of the year as consumer confidence and access to markets normalise.
The company also disclosed positive updates in key markets, of which the Saudi market has seen a rise due to more flexible terms of credit made available, and a more competitive pricing strategy and focused product development. There has also been an increase in custom fees on Turkish carpets from 12% to 15%.