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Arab Finance: HC Brokerage expects Oriental Weavers to see a gradual normalization in performance, supported by EGP stability and lower oil and polypropylene prices over the medium term, according to a recent research report.
Pakinam El-Etriby, consumers analyst at HC Brokerage, said the company has historically benefited from periods of EGP devaluation, as exports account for more than c50% of total sales.
In 2024, total revenues rose by c38% year on year (YoY) to EGP24.3bn, driven by a c41% YoY increase in export prices to EGP 227 per square meter following the March 6th EGP devaluation, alongside a c28% YoY rise in local prices to EGP 191 per square meter.
Excluding inventory write-downs of cEGP 271 million in the second quarter (Q2) of 2024 and cEGP 500 million in Q4 2024, adjusted gross profit margin would have reached c16%, compared to a reported margin of c13%.
The company continued to benefit from the residual impact of the EGP devaluation in Q1 2025, with export and local prices rising by c39% YoY and c27% YoY, respectively, pushing total revenues up by c27% YoY to EGP 6.40 billion.
Revenue growth moderated in Q2 2025 and Q3 2025, increasing by c7% YoY to EGP 6.17 billion and EGP 6.90 billion, respectively, as prices began to normalize.
As a result, HC Brokerage expects gross profit margin to stand at c12% in 2025.
For 2026, the brokerage expects gross profit margin to improve to c13%, mainly due to an anticipated decline in oil prices, which is expected to reduce polypropylene costs.
The outlook also reflects softer petrochemical pricing linked to global oversupply and additional capacity expected to come online in China.
According to Bloomberg, oil prices are forecast to decline to $61.3 per barrel in 2026 from an average of $68.1 in 2025 and $79.9 in 2024.
HC Brokerage forecasts Oriental Weavers’ revenues to grow at a 2025–30e CAGR of c7%, driven by higher average selling prices and limited volume growth.
Revenues in 2025 are expected to increase by c7% YoY to EGP 26 billion, supported by an c11% rise in average selling prices to EGP 238 per square meter, despite a c4% decline in volumes to 110 million square meters. Export revenues are forecast to account for c67% of total sales.
In 2026, revenues are projected to grow by c3% YoY to EGP26.9 billion, driven by an c8% increase in average selling prices to EGP 239 per square meter and a c3% increase in volumes to 113 million square meters, assuming easing inflation and relatively stable foreign exchange rates. Export contribution is expected to represent c64% of total revenues.
Over 2027–30e, revenues are forecast to grow at a c8% CAGR, supported by a c6% increase in average selling prices and c2% growth in volumes.
Gross profit margin is expected to average c12% over the period, gradually easing to c11% by the end of the forecast horizon.
HC Brokerage expects EBIT margin to narrow by 1.90 percentage points YoY to 8.99% in 2025, reflecting margin pressure and a c29% decline in export rebates to EGP 421 million following the reduction of export rebates to c4% of total exports from c7%.
In 2026, EBIT margin is forecast to expand by 2.46 percentage points to c11%, supported by margin improvement and an c87% increase in export rebates to EGP 786 million, including EGP 100 million from government backlog payments, as well as higher exports following the shutdown of the company’s US factory.
Over 2027–30e, EBIT margin is expected to average c10%, with export rebates growing at a c3% CAGR to reach EGP 892 million by the end of the forecast period.
The brokerage also expects a capital gain of cEGP482 million in 2026 from the sale of US machinery and two buildings.
Net profit margin is forecast at c8% in 2025, c11% in 2026, and an average of c8% over 2027–30e.
