Oriental Weavers expects sales of EGP 10.1bn in 2021

Company aims to increase prices by 3% in 2021, capex expected to reach $17m-$20m

Oriental Weavers has announced that it is expecting sales to grow 7% year-on-year (y-o-y) in 2021, translating into EGP 10.1bn with volumes 4% y-o-y.

The company is aiming to increase prices by 3% overall in 2021, with capex expected to be in the range of $17m-$20m.

Oriental Weavers’s management is expecting to open eight new showrooms during 2021, with a huge showroom to open at the New Administrative Capital (NAC).

The new NAC showroom will span over 3,300 sqm, with EGP 150m invested in the construction and decoration. The value paid by the company for the land will be around EGP50m.

Oriental Weavers has a current product planning inventory spanning three months, with price in the range of $1,080/tonne.

Concerning working capital expectations, accounts payables days are expected to be 40-45 days, whilst receivables days are expected to be 60-70 days, and inventory days are in the range of 150-160 days.

Regarding Export Updates, most markets experienced problems in the second quarter (Q2) of 2020, before witnessing the start of a rebound in Q3 and Q4 of 2020. Despite the second wave of the novel coronavirus (COVID-19) pandemic, the company has yet to report any order cancellations or shipment delays.

Orders received in Q3 and Q4 of 2020 have secured utilisation rates that have now reached 92% of Oriental Weavers’ machines. Almost 85% of the machines are being fully utilised until July 2021, which indicates that the company has a secured start for 2021.

The US market witnessed a decrease in Q2 of 2020, with the closure of most major retailer markets. However, the loss of sales in US markets was balanced out by the increase in the online business.

The surge in online business also extended to a lesser extent to other markets such as Germany, Japan, and Australia. Online business is still booming, even after the reopening of major retailers, and will continue in 2021 as well. The only region that has not rebounded yet due to the pandemic is South East Asia.

Saudi Arabia, Morocco, Germany, Brazil, and Canada are going to be critical markets for Oriental Weavers, and are expected to see an increase in the double digits in 2021.

The flow of orders from major retailers increased significantly starting from June 2020. The COVID-19 pandemic created an unprecedented demand for orders and capacity, with this pickup in demand expected to continue in 2021 before possibly normalising.