Oriental Weavers Carpets Company (S.A.E) (ORWE) Q4 FY2025 Earnings Call Transcript & Summary

Hello, everyone. This is Nada Abouzeid from Beltone Holding. I'd like to welcome you all to Oriental Weavers' Fourth Quarter 2025 Results Conference Call. I'm pleased to have on the line Mr. Hazem Al Zifzaf, Group CEO and Managing Director; Mr. Tarek Hayaly, Group CIO; Mr. Shehta Farouk, Group CFO; and Mr. Hatem Gamal, Investment Analyst and IR Officer. I'll now hand over the call to Mr. Hazem, who will start with a brief update, and then we'll move on to Q&A session. Mr. Hazem, please go ahead.

Thank you, Nada, and thanks to Beltone for hosting the conference call. I would like to welcome all of you to the 2025 Oriental Weavers Earnings Call and Ramadan Kareem to all those who are fasting today. I'm joined with a small group of my management team, and we'll all be very happy to share with you our results and take your questions. I will start off by reading the disclaimer statement. This is our customary disclosure statement. This earnings call is intended for analysts and investors only. If any media accidentally gained access to this call, kindly hang up now. Certain information disclosed during this earnings call 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. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may materially vary from those described in such forward-looking statements. The company undertakes no obligation to republish, revise forward-looking statements to reflect changed events or circumstances. Now looking at 2025, 2025 was a challenging year, observing the tax erratic events, continued higher mortgage interest rates, global uncertainties and at home pressure purchasing power leading consumers to prioritize spending towards essentials and lower price alternatives. Despite that, we managed to continue to grow our business, both top line and bottom line when adjusted for one-offs and subsidies. We even managed to grow share in our flagship business, the Woven segment on a global basis. This is a testament of the resilience of our business, diversification of our portfolio and markets in addition to the depth of our team. The journey of the new management, which started in 2024 are progressing well as well. We have made great strides in governance in attracting top talents, making progress on our operation, processes, systems and restructuring of businesses suffering from legacy issues. Already, our North America business starting to show significant improvement in gross profit margin and turned profitable in the second half of 2025, following 6 years of losses. Our tufted business is the next business to go through restructuring, as it has been lagging our other segments in performance in the last few years, if you exclude the valuation upside. Moving to 2025 financials. Revenues reached EGP 26.6 billion, it's a record number, up 10% year-on-year supported by higher volumes in multiple international markets across all product lines, except for the tufted segment. Gross profit margin came in at 12.6%, EBITDA margin 13.4%, and net attributable to profit margin of 8.2%. Some adjustments to make just to highlight the results, if you adjust for provisions, the net attributable profit will be up 5.4%, with a margin of 8.7%. If you adjust for rebates since this year, we got less rebates than the year before, NAP will be up 8.6% and adjusted for both NAP would be up 22%. If we look at sales, international business remained the main growth engine continued from last year. Revenue was up 12% year-on-year to EGP 17.9 billion, driven by the Woven business. We gained 1 point in global market share by smartly managing our geographical portfolio, relying more on non-western territories like Africa, Asia and GCC to compensate for the softness in Western markets. Generally, we are facing a recurring cycle of housing market with a positive future outlook due to the pent up demand. At home, Egypt revenue came in at EGP 8.7 billion, 8% up year-on-year, affected by pressure on purchasing power and customer trading down to lower alternatives to carpets. This impacted our volumes, especially in the wholesale sector. To try to compensate for that, we focused on the 200 showrooms that we have to capture more of the higher-margin segments and this particular segment grew for our business. We continue to develop new products to adjust for the market as well as making the best we can of our tufted and Non-Woven business to capture more of the lower-priced segments. In short, challenging markets, but we continue to leverage our portfolio, our diversity and the positive drivers that we're putting into the business to manage to steer us through these challenging times. Outlook, pre-war, our guidance for the revenue is EGP 28 billion and for net profit to be maintained at the 2020 levels between 8% to 8.5% net margin. We will continue our effort to restructure MAC to make it more agile, make it more profitable and to capture more of the market opportunities in the tufted segment. While the added capacity that we put into EFCO in the last year, should prove to be very handy to grow more of our lower end of the market business. That concludes the end of our statement, and we're happy to take your questions.

Thank you, Mr. Hazem. We're now opening the floor for a Q&A session. [Operator Instructions] Mr. Hazem, can you please repeat the guidance once more?

So we're looking at the top line of EGP 28 billion, while maintaining net profit margin at 2025 levels of 8% to 8.5%.

[Operator Instructions] Since there is no question, Mr. Hazem, can you shed more light on the export rebates for 2026, your expectations?

Okay. We expect the total rebate that we should collect in 2026 from 3 different programs to amount to EGP 650 million.

We don't have further questions. I'll now hand over the call to management for final comments.

All I can say thank you. We're looking forward to another eventful year, but we have been through this before. And with our history, our size, our diversity, we should be able to navigate that. So looking forward for a good year in 2026, despite everything that's happening. Our Jan and Feb start of the year were very positive. Now I'm sure the war will have some impact. But hopefully, we can navigate March without the impact of the war. So for us, it's a good start in 2026 as well. So looking forward to the next call for Q1 and thank you, again, Nada and the Beltone team.

Thank you, everyone. Thank you, management, for your time and effort. Thank you, everyone, for attending our call. Have a good day, everyone. Good bye.

Thank you. Have a good day. Bye.