Oriental Weavers Carpets E : ORWE 2Q 2023 Earnings Release 1

2Q 2023 Earnings Release

Cairo 15th August 2023

OW records solid top and bottom line figures, despite softer volumes

Oriental Weavers Carpet Company [ORWE EY; ORWE.CA], reported another solid quarter with revenues up 31% y-o-y, with GP margins reaching 14% and an EBITDA Margin of 15.5%. On 1H basis, the figures continue to be exceptional, with revenues up 29% y-o-y and GP margins of 13.8%

Key Highlights of 2Q 2023

EGP 4,256 mn	EGP 594 mn
in Revenues	in Gross Profit
▲31% y-o-y	▲55% y-o-y
	14% GP margin

▲25%	EGP 673 mn
local Revenues	EBITDA
▲34%	▲66% y-o-y
Export Revenues	15.8% margin

EGP 290 mn

in Attributable Net Income

▲26% y-o-y

Key Highlights of 1H 2023

EGP 8,399 mn	EGP 1,156 mn
in Revenues	in Gross Profit
▲29% y-o-y	▲56% y-o-y
	13.8% GP margin

▲32%	EGP 1,277 mn
local Revenues	EBITDA
▲28%	▲64% y-o-y
Export Revenues	15.2% margin

EGP 700 mn

in Attributable Net Income ▲56% y-o-y

2Q 2023 Financial Highlights

• Consolidated Revenues grew by 31% y-o-y (3% q-o-q) in 2Q 2023 reaching EGP 4,256 million. Export revenue, 68% of total revenues, increased by 34% y-o-y (10% q-o-q). While local sales increased by 25% y-o-y(-10%q-o-q). Top line results benefited from higher average selling prices and devaluation impact.

2Q 2023 Earnings Release

Cairo 15th August 2023

• Gross Profit recorded EGP 594 million, an increase of 55% y-o-y (+6% q-o-q) with an associated margin of 14.0% versus 11.8% in 2Q 2022. Improvement in gross profit margin was due to an increase in average selling prices, that surpassed the increase in raw materials in EGP terms. As COGS/Sales ratio reached 86% in 2Q 2023 compared to 88% in 2Q 2022.
• EBITDA (1) recorded EGP 658 million in 2Q 2023, representing an increase of 62% y-o-y, with EBITDA margin of 15.5% compared to EBITDA margin of 12.5% in 2Q 2022. The year-on-year improvement comes on the back of higher gross profitability trickling down impact.
• Net Attributable Profit increased by 37% y-o-y to EGP 290 million compared to EGP 211 million in 2Q 2022.
• Export Rebates collected in July 2023, as per the government's latest export initiative, will be recorded in 3Q 2023.
• OW opened 3 new local showrooms in 2Q 2023, bringing the total to 4 new showrooms since the beginning of 2023, and total 268 Showrooms across Egypt.

Revenue Contribution by Market 2Q 2023 Vs 2Q 2022

Figure 1: Revenue contribution 2Q 2023

Figure 2: Revenue contribution 2Q 2022

2Q 2023 Earnings Release | Page 2

(1) EBITDA is calculated as operating profit plus deprecation

2Q 2023 Earnings Release

Cairo 15th August 2023

Table 1: Net Sales (Volume and Value) in 2Q 2023 vs. 2Q 2022

		Value (EGP million)		Volume (mn sqm)
						%
	2Q 2023	2Q 2022	% Change	2Q 2023	2Q 2022	Change
Woven- Egypt				12.42	15.27
based	2,512.3	1,972.1	27.4%	-18.7%
Woven- US based	709.1	562.4	26.1%	2.57	3.74	-31.3%
Tufted	825.1	528.3	56.2%	9.46	8.85	6.9%
Non-woven Felt	154.2	150.7	2.4%	3.30	4.24	-22.1%
Other	55.7	33.0	68.9%
Total	4,256	3,246	31.11%	27.8	32.1	-14%

Table 2: Net Sales (Volume and Value) in 1H 2023 vs. 1H 2022

		Value (EGP million)			Volume (mn sqm)
	1H 2023	1H 2022	% Change	1H 2023	1H 2022	% Change
Woven- Egypt				25.74	32.74
based	4,997.7	4,033.5	23.9%	-21.4%
Woven- US based	1501.524	1,084.0	38.5%	5.88	7.62	-22.8%
Tufted	1,492.1	1,051.7	41.9%	16.12	17.94	-10.2%
Non-woven Felt	322.3	286.4	12.5%	7.46	9.15	-18.5%
Other	85.3	54.7	55.9%
Total	8,398.8	6,510.3	29.0%	55.2	67.5	-18.2%

Revenue Breakdown 2Q 2023

Sales Volume Breakdown (sqm) 2Q 2023

2Q 2023 Earnings Release | Page 3

(1) EBITDA is calculated as operating profit plus deprecation

2Q 2023 Earnings Release

Cairo 15th August 2023

Segment Reporting

Local Sales (32% of Revenues)

OW local revenues reported a 25% increase in 2Q 2023 to EGP 1,382 million, compared to EGP 1,106 million in 2Q 2022, (-10%q-o-q), driven primarily by higher average selling prices in the local market. Meanwhile, local volumes contracted by 10% y-o-y basis (-18%q-o-q).

In the Second quarter, woven products increased by 26% y-o-y in revenues, driven by local price increases. Additionally, Tufted products showed sales recovery of 22% y-o-y, with strong figures from the wall-to-wall segments in particular.

Showroom sales, which constitute 53% of local sales in 2Q 2023, showed a 31% y-o-y increase (-15%q-o-q), driven by price increases and OW's marketing campaigns and expansive showroom strategy. Meanwhile, wholesale revenues reported a 16% y-o-y increase (-5%q-o- q). OW inaugurated 3 new showrooms during 2Q 2023, in selected/underpenetrated areas, to expand our customer reach.

Export & Overseas Operations (68% of revenues)

Export revenues increased by 34% y-o-y (10% q-o-q) in 2Q 2023 reaching EGP 2,874 million, with volumes declining by 15% (+15 q-o-q). This improvement was supported by local currency devaluation and pick up in sales from the tufted segement in specific. The OW export team managed to secure 19 new active clients in 2Q 2023 primarily in France, Germany, and Brazil, indicating a gradual recovery heading into second half of 2023.

2Q 2023 Revenue Performance by Region

		▼94%
		Russia & China
North & South	Europe
▲50%
America
	▲36%
▲35%
Egypt	Asia
	▲25% ▼26%
	▲123%	Arab
	Countries
	Africa

* The three key markets are Egypt, the US & Canada, and Europe.

2Q 2023 Earnings Release | Page 4

(1) EBITDA is calculated as operating profit plus deprecation

2Q 2023 Earnings Release

Cairo 15th August 2023

In 2Q 2023, European sales grew by 50% y-o-y (+17% q-o-q), benefiting from a weaker EGP in addition to a pick-up in sales in the tufted segment in specific.

In 2Q 2023, the US region experienced a 35% y-o-y increase in sales (+14% q-o-q), benefiting from a weaker EGP. Despite the challenging economic conditions in the US market, there is a gradual recovery in the market that will continue to the 2H of 2023

The GCC region sales declined by 26% (-48%q-o-q) due to new Saudi regulations that were imposed in 2Q 2023 and caused a delay in shipments. This anomaly is not expected to continue in the 2H of 2023. OW export team is also experiencing significant demand from Africa, particularly Libya, Kenya and Tanzania, with sales increasing by 123% y-o-y in 2Q 2023, with demand focused on high margin products.

OW USA

OW U.S. based subsidiary recorded sales increase by 26% y-o-y in 2Q 2023 in local currency (11% q-o-q), while volumes decline by 31% y-o-y(-22%q-o-q).

OW Hospitality

Oriental Weavers hospitality segment caters to several prominent global names, in addition to its local presence. In the local segment, sales are up around 52% y-o-y in 2Q 2023, as OW installed several projects, including Hotels, Mosques, Universities. In the export segment, sales increased 80% y-o-y in 2Q 2023, mainly in global chain hotels, particularly in the United States, United Kingdom, and Saudi Arabia. Oriental Weavers Hospitality Arm was awarded "Best Producer of Hotel Carpets & Rugs 2023" Award from LuxLife Magazine, a prominent magazine in the UK.

Cost of Goods Sold

OW's COGS increased by 28% y-o-y to EGP 3,663 million in 2Q 2023, rising at a slower pace than the group's top line figure. Polypropylene prices per ton declined by 30% y-o-y in USD in 1H 2023. Additionally, freight cost per meter declined dramatically by 40% in 1H 2023 compared to 1H 2022. This resulted in gross profit for 2Q 2023 increase by 55% y-o-y (+6% q- o-q), with associated margins of 14.0% versus 11.7% in 2Q 20222.

2Q 2023 Earnings Release | Page 5

(1) EBITDA is calculated as operating profit plus deprecation