Oriental Weavers Reports Revenue and Net Profit Growth, Strong Margins in Q1 2013

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Oriental Weavers Carpets First Quarter 2013 Results 88 Oriental Weavers Reports Revenue and Net Profit Growth, Strong Margins in Q1 2013 CAIRO, May 15, 2013 Oriental Weavers Carpets Company, Inc.

1 Oriental Weavers Carpets First Quarter 2013 Results 88 Oriental Weavers Reports Revenue and Net Profit Growth, Strong Margins in Q CAIRO, May 15, 2013 Oriental Weavers Carpets Company, Inc. (RIC: ORWE.CA) the world's largest machine-made rug and carpet manufacturer, reported today its financial results for the quarter ending March 31, Highlights of First Quarter 2013 Sales rose 14% over Q to EGP 1.4 billion, while a number of successful management initiatives saw gross profit rise 38% year-on-year to EGP million and gross profit margin climb 2 percentage points to 13%. Net Income after Minority rose 29% to EGP million from EGP 90.7 million in the same period of last year. EBITDA was EGP million in Q1 2013, a 34% increase over Q1 2012; EBITDA Margin rose 2 percentage points to 15%. Adjusted EBITDA (1) rose 27% over Q to EGP million. Adjusted EBITDA Margin was up 2 percentage points y-o-y to 18%. EPS was EGP 1.26, up 30% from EGP 0.97 in Q (1) Adjusted EBITDA to include other revenues (export subsidies) amounting to EGP 38 million in 1Q Mr. Mohamed Farid Khamis, Founder, said: The first quarter of the year tends to set the tone for the months to come and, knowing this, I am pleased to report that Oriental Weavers performed above expectations in Q Indeed, we returned top and bottom line growth in the quarter despite market conditions that were, at best, challenging. This was the clear result of our management team s effort to identify what I will call the formula for success. This formula involved delivering the right mix of product, the right operational improvements, the right moves in our distribution channel, and not least in any way the right cost control measures in a tough operating environment. Last year, we were focused on organic, sustainable growth, and these efforts will continue as the direction for the group. For the balance of 2012, our aim is three-fold: As our results this quarter clearly show, we are actively working towards consistent healthy top-line growth, with strong margins, stemming from a diverse, value-added product mix. We aim to see this backed by steady improvements in our cost control efforts which will, in turn, lead to strong bottom-line growth, driven by improvements in all line items on the income statement. I look forward to updating my fellow shareholders and stakeholders alike on the results of our efforts in the months ahead. I have no doubt that as we progress through this coming year, we will continue to adapt our strategy to the demands of the market and generate value across the board. 1

2 Sales & Markets: The first quarter of the year saw total sales of EGP 1.4 billion, a 14% increase year-on-year. This solid top-line growth was balanced, stemming from management s effort to maximize sales by keeping products at a consumer-friendly price point even as we diversify our products, encouraging horizontal growth of sales. This two-pronged strategy has clearly paid off, with 5% overall growth in volumes. Local Sales: Sales in Egypt were up 12% in Q over the same period of last year, representing 44% of total group sales. Growth was driven by the company s restructuring of local distribution channels, which reduced overheads by expanding wholesale volumes. Looking forward, we expect domestic growth to be somewhat muted during the second quarter as families turn their attention to the annual exams season. That said, we anticipate particularly strong sales this year beginning early in the third quarter, which kicks off with the Holy Month of Ramadan and finishes with the high-season for marriage preparations. Export Sales: Export sales were up 16% year-on-year over Q1 2012, to EGP million, driven by a 47% increase in sales to Europe, where the group gained market share and secured new partnerships with key distributors. A 45% increase in sales to African nations pushed sales growth to all emerging markets up by a full 19% group-wide. Sales to America and Canada, which between them account for approximately 45% of the group s total non-egyptian sales and 26% of group sales overall were up by 14% year-on-year. The sharp anticipated and planned for devaluation of the Egyptian pound against key foreign currencies has been another strong contributor to the growth in export values. This, together with a noted improvement of the US market, accelerated by positive signs in the housing market and CPI in 1Q 2013, offset a troubled eurozone. As noted, despite Europe s economic difficulties, the group has grown market share and sales on the continent significantly. Table 1: Sales by Destination (EGP '000) 1Q Q 2012 Change Local Sales - Egypt 596, ,276 12% Exports 772, ,980 16% Total 1,368,845 1,197,256 14% Segment Analysis: Woven sales continue to represent the lion s share of group revenues, at 63.8% of total sales. A strong product mix saw volumes of this key segment rise 9% year-on-year in Q1 2013, leading to a 16% increase in sales to EGP million. 21% growth in sales volumes for the Non-Woven Felt segment was driven by additional capacities recently installed to expand the export base of this segment. These efforts paid off with a 33% increase in sales revenues to EGP 52.5 million. 2

3 Revenue growth in the Tufted segment came in at 13%, primarily driven by value-added products and better synergies in mid- to low-range products between Oriental Weavers and MAC in local showrooms and outlets. Table 2: Product Mix in Terms of Value (EGP '000) 1Q Q 2012 Change Woven 872, ,633 16% Tufted 277, ,828 13% Non-woven felt 52,456 39,483 33% Other 165, ,816 7% Total 1,368,845 1,195,760 14% Table 3: Product Mix in Terms of Volume (SQM '000) 1Q Q 2012 Change Woven 14,733 13, % Tufted 11,161 11, % Non-woven felt 4,201 3, % Total 30,095 28,551 5% Margins & Profitability: Management s efficiency measures and enhancements to product mix are reflected positively in gross profits and margins, both of which rose despite a slight uptick in COGS year-on-year. In absolute value, gross profits were up 38% to EGP million, while GPM was up 2 percentage points to 13% compared to 11% in Q EBITDA grew 34% year-on-year to reach EGP million in Q1 2013, a strong recovery that is backed by a normalized EBITDA margin of 15%. Adjusted EBITDA, meanwhile, came in at EGP million with a margin of 18% in Q1. Table 4: COGS (EGP '000) 1Q Q 2012 Change Raw Materials 663, ,209 8% Industrial Exp. 129, ,539 8% Selling Exp. 210, ,229 6% Other 189, ,633 41% Total 1,192,597 1,069,610 11% Net Profit after Minority Interest: Net profit after minority was up 29% to EGP 111 million, with a net profit margin of 8%, attributable to the group s move to higher returns and successful management initiatives. Net profit was pressured by non-operational (balance-sheet related) FX losses. Amid prevailing economic conditions, the group continues to position itself to strike an optimal balance between the downside risk of devaluation and the exceptionally low interest rates on short-term USD debt. Oriental Weavers has pursued since a policy of seeking short-term debt in USD, where the interestrate benefits outweigh the downside risk of devaluation. That strategy began delivering substantial 3

4 results in 1Q13 with the drift-down in finance expenses in the quarter, a trend we expect to continue through the balance of the year on the back of our ongoing efforts to refinance short-term facilities into USD. With a rising portion of our CPLT accordingly forecast to be repayable in USD, the group is working with its bankers to strike the right match between the denomination of debt facilities at select subsidiaries with the individual subsidiary s primary revenue stream. Cash and Capital Management Cash flow improvements for Q stemmed from an EGP 158 million improvement in receivables collections and a decrease in financing expenses, which together served to enhance our Net Cash from Operating Activities to EGP 225 million in Q1 2013, up from EGP 137 million in Q In the meantime, we have as planned dialed back our expansion plans and increased CAPEX at current facilities as we work to simultaneously strengthen cash flows and maximize utilization of current capacity across the board. Recent Developments: On March 25, 2013, Oriental Weavers USA subsidiary company Sphinx by Oriental Weavers announced a new color partnership with Pantone, LLC. Pantone is the global authority on all things color and the leading provider of professional color standards for the design community. Together, Sphinx and Pantone will embark on a multi-year venture to deliver fashion-forward color trends and innovative style and design to the home fashion industry through the PANTONE UNIVERSE brand. Outlook: As discussed last quarter, analysts (and Oriental Weavers management) expect 2013 to be a difficult year for the Egyptian market as a whole, implies downside risk to margins if domestic sales were to be impacted. That said, management remains cautiously optimistic about 2013 in light of: Solid performance in January 2013 at the Hannover DOMOTEX Fair, at which we retuned the highest number of confirmed orders in Oriental Weavers participation there. Steady recovery in the US housing market, which continues to post regular growth figures. As previously noted, a full recovery of the US housing market is likely a few years off, but it goes without saying that any improvement in housing sales in the US will boost the floor coverings industry. Our proven ability to grow international sales in challenging market, as made clear this quarter in the United States, Canada and the Eurozone. Although the second quarter in Egypt may show muted growth, we are approaching the traditional high-season in our domestic market, with the Holy Month of Ramadan and peak marriage season coinciding in the third quarter, and management anticipates that Q will show strong results. The ongoing devaluation of the Egyptian pound will also boost margins, as Oriental Weavers is positioned as a net exporter with substantial US-dollar-denominated revenues. Also boosting margins will be the recent improvements in our ability to source locally produced raw materials. 4

5 Income Statement (EGP '000) Three Months Ended 31 March Change Net Sales 1,368,846 1,197,256 14% Less: COGS 1,192,597 1,069,612 11% Gross Profit 176, ,644 38% Gross Profit Margin 13% 11% 21% Less: Selling & Distribution Expenses 10,165 9,124 11% General & Administrative Expenses 25,763 23,593 9% 35,928 32,717 10% Net Income from Operation Activities 140,321 94,927 48% Operation Activities Margin 10% 8% 29% Add / Less: Interest Income 1,469 2,328-37% Other Revenues 38,455 39,130-2% Financing Expenses (29,913) (35,163) -15% Foreign Exchange Differences (22,122) (942) 2250% (12,111) 5, % Net Profit for the Period before Income Tax 128, ,279 28% EBT Margin 9% 8% 12% Add / Less: Current Income Tax (14,839) (10,563) 40% Deferred Tax 819 1,024-20% Income Tax for the Period (14,020) (9,539) 47% Net Profit for the Period 114,190 90,741 26% Net Profit Margin 8.3% 7.6% 10% Attributable to: Equity Holders of the Parent 111,545 86,434 29% Minority Interest 2,644 4,307-39% Diluted Earnings per Share for the Period % 5

6 Balance Sheet (EGP '000) 31-Mar Dec-12 Change Long Term Assets Fixed Assets (Net) 2,281,040 1,752, % Projects in Progress 67, , % Investments - Available for Sale 102, , % Goodwill 696, , % Total Long Term Assets 3,147,861 3,053, % Current Assets Inventory 1,631,390 1,590, % Trades & Notes Receivable 1,053, , % Debtors and Other Debit Accounts 246, , % Cash on Hand & at Banks 339, , % Total Current Assets 3,270,940 2,962, % Current Liabilities Provisions 25,861 26, % Banks - Credit Accounts 1,492,297 1,600, % Long Term Liabilities - Current Portion 108, , % Suppliers & Notes Payable 840, , % Dividends Payable 190,248 2, % Creditors & Other Credit Accounts 186, , % Total Current Liabilities 2,843,860 2,528, % Working Capital 427, , % Total Investment 3,574,941 3,487, % Financed as Follows: Shareholder's Equity Issued and Paid Capital 450, , % Reserves 1,457,285 1,446, % Unrealized Profits from Available for Sale Investment % Retained Earnings 664, , % Net Profit for the Period 111, , % Exchange Differences Arising on Translation of Foreign Currency 408, , % Treasury Stocks (14,597) (14,597) 0.0% Total Equity Attributable to Equity Holders of the Parent 3,078,096 3,000, % Minority Interest 213, , % Total Equity 3,291,544 3,212, % Long - Term Liabilities long Term loans 278, , % Housing and Development Bank Loan % Creditors - Purchase of Fixed Assets % Deferred Taxes Liabilities 4, % Total Long Term Liabilities 283, , % Total Shareholder's Equity & Long Term Liabilities 3,574,941 3,487, % 6

7 Statement of Cash Flows (EGP '000) Three Months Ended 31 March Cash flows from Operating Activities: Change Net Profit for the Period before Income Tax 128, ,279 28% Adjustments to Reconcile Net Profit to Net Cash Provided by Operating Activities Fixed Assets Depreciation 62,540 56,451 11% Financing Expenses 29,913 35,163-15% Operating Profits before Changes in Working Capital 220, ,893 15% Change in Working Capital (Increase) in Inventory (41,155) 11, % Decrease (Increase) in Trades & Notes Receivable and other Debit Accounts (158,498) (17,425) 810% Decrease (Increase) in Suppliers & Notes Payable and other Credit Accounts 235,848 (14,204) -1760% Cash Flows Provided by Operating Activities 256, ,011 49% Paid Financing Expenses (31,327) (35,163) -11% Net Cash Flows Provided by Operating Activities 225, ,848 65% Cash Flows from Investing Activities Payments for Purchase of Fixed Assets and Projects in Progress (9,451) (58,291) -84% Net Cash Flows (used in) Investing Activities (9,451) (58,291) -84% Cash Flows from Financing Activities: Proceeds (Payment) from Banks-Credit Accounts (108,407) (66,111) 64% (Payment) Proceeds in Long Term Liabilities (3) (56,695) -100% Net Cash Flows (used in) Provided by Financing Activities (108,409) (122,806) -12% Net Change in Cash and Cash Equivalents During the Period 107,671 (44,250) -343% Cash and cash equivalents at beginning of the period 230, ,669-13% Exchange Differences Arising on Translation of Financial Statements 1,168 (2,052) -157% Cash and Cash Equivalents at End of the Period 339, ,367 56% 7

8 About Oriental Weavers Carpet Company: Oriental Weavers is a global player in machine-woven rugs and carpets; the company is renowned for superior product design and quality, as well as technological innovation. Today, the company is the largest producer of machine-made woven rugs in the world; and through its MAC subsidiary, the largest producer of printed/tufted rugs. It is management s vision to build a state-of-the-art, internationally-competitive carpet and home textile company characterized by a sharp focus on its customers, and driven by marketing- and export-oriented strategies. ( Capital: Issued and paid-in capital: 450 MEGP Number of shares: 90 million shares Par value of 5 EGP per share Shareholders Structure: The Khamis Family 57% Institutions 37% Retail 6% Investor Relations Contacts: For further information, please contact: Farida Khamis Vice President Corporate Finance & Investor Relations Oriental Weavers Carpet Company Tel (Direct) : +2 (02) Fax : +2 (02) fkhamis@orientalweavers.com Website: Forward-Looking Statements Haitham M.A.Moneim Investor Relations Manager Corporate Finance & Investor Relations Oriental Weavers Carpet Company Tel (Direct) : +2 (02) Fax : +2 (02) hmoneim@orientalweavers.com Website: Certain information contained in this document 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. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including worldwide economic trends, the economic and political climate of Egypt and the Middle East and changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in such forward-looking statements. Recipients of this document are cautioned not to place any reliance on these forward-looking statements. The Company undertakes no obligation to republish revised forward-looking statements to reflect changed events or circumstances. # # # 8

Oriental Weavers Reports Strong Sales and Income Performance, Margin Growth in 9M2013

Oriental Weavers Carpets Third Quarter 2013 Results Oriental Weavers Reports Strong Sales and Income Performance, Margin Growth in 9M2013 CAIRO, November 14, 2013 Oriental Weavers Carpets Company, Inc.