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Analyst Conference Meeting

Financial Reports

FY 2015

Avgol Industries 1953 Ltd.

Confidential, March 17th

2016

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Analyst Conference I Capital Markets Analysts Conference

:משפטיתהבהרה

הצגתבמהלךשיימסראחרמידעוכלבמצגתהכלולהמידע."(החברה"–להלן)מ"בע1953תעשיותאבגולחברתי"עהוכנהזומצגת

לשיקולתחליףמהווהלאוכן,דעתחוותאוהמלצהמהווהואינו,השקעההחלטתלקבלתבסיסמהווהאינו"(המידע"–להלן)המצגת

.לעדכנםאו/והנתוניםאתלתתלהמשיךחייבתאינהוהחברההנתוניםבהצגתהנוחותלצורךניתןהמידע.פוטנציאלימשקיעשלדעת

ושלהחברהפעילותשלמלאהתמונהלקבלמנתועל,בלבדתמציתהינוהחברהשלהפעילותלניתוחהקשורבכלבמצגתהאמור

.ולבורסהע"לנילרשותהחברהשלהמלאיםבדיווחיםלעייןיש,החברהמתמודדתעימםהסיכונים

העלוליםכלשהםהפסדיםאו/ולנזקיםבאחריותתישאלאוהיא,זובמצגתהנכללהמידעלדיוקאולשלמותאחראיתאינההחברה

.גובר,רשמייםבפרסומיםאו/והחברהבספריהאמור,מקרהבכל.זהבמידעמהשימושכתוצאהלהיגרם

אולאירועיםהמתייחסיםואומדניםהערכות,מטרות,תחזיותשל,ערךניירותבחוקכהגדרתו,עתידפניצופהמידעכוללתהמצגת

.החברהשלהסובייקטיביתהערכתהעלרקמבוססוהוא,החברהבשליטתואינהודאיתאינההתממשותםאשר,עתידייםענייניםבשליטתמצוייםאינםוהםמראשלהעריכםניתןלאאשרמגורמיםתושפעעתידפניהצופההמידעשלהתממשותואיאו/והתממשותו

שלבפועלתוצאותיהכיוודאותכלשאיןהרי,סבירותהינן,במצגתכמוצג,שציפיותיהמאמינהשהחברהאףעלולפיכךהחברה

.עתידפניצופהבמידעשהוצגומאלושונותלהיותעשויותוהןאלהלציפיותבהתאםתהיינהבעתידהחברה

This presentation is based on the Company financial reports.

There is no data in this presentation that isn’t presented in the public financial reports.

If there is any discrepancy between this presentation and the data in the financial report that

was issued to the Israeli SEC and the TASE, the valid data is the one which appears in the

formal reports.

This presentation is provided for information and as a matter of record only. It does not

constitute an offer to sell or a solicitation of an offer to buy or sell securities or other financial

instruments in any jurisdiction or any advice or recommendation with respect to such

securities or other financial instruments of the company.

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Analyst Conference I Contents

4. Financial highlights

6. Balance Sheet

2. The Hygiene Market

3. Key highlights

5. Cash Flow

1. Company Overview

7. Our Strengths

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Analyst Conference I Presentation Team

CEO

Mr. David Meldram

Deputy CEO & CFO

Mr. Shachar RachimChief Operating

Officer

Mr. David Hodgetts

VP Finance

Mr. Lior Giladi

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Avgol

A Leading Global Manufacturer Focused On Spunmelt Nonwoven Fabrics, Primarily for The Hygiene Industry

Analyst Conference I Avgol

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HFH BV 51%

Avgol Industries (1953) Ltd.

LeumiPartners

20%

Public29%

Analyst Conference I Shareholders Structure

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1953 Company founded (producing industrial gases)

1988 Began production of Spunbond Nonwovens in Israel

2001 Acquired USA (North Carolina) Mocksville plant

2004 Bought a 50% interest in a local Nonwovens manufacturing plant in China

(gradually increasing our stake to 97% as of today)

2007 Listed on the Israeli Stock Exchange (Tel – Aviv 100)

2008 Started greenfield production plant in Russia, Tula region.

2012 Acquired land in Nagpur India.

2012 Ethemba Capital acquired a controlling stake from IPE and the founders May

2015 Russia second line (R4) began commissioning in May 2015.

2015-2016 Line 5 (R4) project in USA plan to begin commissioning in Q4-16.

2016- 2017 New plant in Dimona (Israel) with new line (R4) in H1-17

We have grown our business through Investments and Acquisitions

Analyst Conference I Milestones in Avgol’s Growth

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Analyst Conference I An Extremely Focused Strategy

Primarily targeting the Hygiene market, covering the Baby, Femcare and

the fast growing Adult Incontinence market

A single technology – Spunmelt

One main raw material, PP, with increasing addition of PE in Soft solutions

A single Line Equipment vendor – Reicofil

A Pioneering company, with a strategy of Global Presence,

Cost Leadership and Technology Superiority

Deployed globally, both in developed and undeveloped markets

The benefit to our global customers - we develop once, deploy in multiple locations simultaneously and uniformly

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Analyst Conference I The Hygiene Market - The Players

Around 50 manufacturers in the market with 173 lines

Graph below presents the available footprint in K Metric Ton of the Top 15

players:

* in Q3-2015 PGI was acquired by Berry plastics )“BERY”( .

** Avgol - not including new lines that will be added from 2015 and on

Source: Price Hana 2014

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Analyst Conference I The Hygiene Market - NW Manufacturers

Presence

-

100

200

300

400

500

600

Africa Asia -Pacific

China MiddeEast

Northamerica

SouthAmerica

SouthernAsia

West, East& Central

Europe

Other PGI Fitesa Avgol Toray Fibertex Gulsan

Pegas Mitsui Asahi-Kasei CHTC Jiahua SAAF Global NW

Source: Price Hana 2014

In K Metric Ton

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Analyst Conference I Market Opportunities

11,951 11,006

7,522

23,782

16,414

11,376

8,384

28,836

Asia-Pacific North America South and CentralAmerica

EMEA

Baby Care Market (MSQM)

2015 2019

9,394

4,823

2,052

9,958

13,327

5,763

2,908

12,341

Asia-Pacific North America South and CentralAmerica

EMEA

Adult Incontinence-Fem Care Market (MSQM )

2015 2019

Highlights:

Growth market driven by 2 factors:

1. The expected economic developments of the

undeveloped markets and the increase in GDP

per capita especially in: South – America, Africa

and Asia-Pacific (countries like China and India).

2. The expectation of longer life for the world

population, that will affect positively the Adult

incontinence market.

Its important to note that this market research was

published before the permission for the second child

in China.

RegionHygiene Market

2015 - MSQM

Hygiene Market

2019 - MSQM

Avg Yearly

Growth

Asia-Pacific 21,345 29,741 9.8%

North America 15,829 17,140 2.1%

South and Central America 9,574 11,292 4.5%

EMEA 33,740 41,177 5.5%

Total Hygiene market 80,488 99,349 5.9%

Source: Price Hana 2014

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Analyst Conference I Our Mission

To Be the Hygiene Market’s Preferred Supplier

High Quality Focus

Uncompromising Reliability

High level of Flexibility

Competitiveness

Today

Identify & Develop the Next Generations

of Solutions & Products that will allow

our customers to lead their markets

Tomorrow

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Value Engineered Fabrics

Lowest gauge basis weight, lightweight fabrics with maximum performance

Focused on Softness

A leading portfolio of soft fabric solutions for the hygiene market

Cost Effective Converting

Lowest weight fabrics to maximize converting performance

Enhanced Fabric Performance

A wide variety of treatment options for superior product performance

Fluid Management Design

Customized product configurations and treatment packages to meet specific customer needs

Analyst Conference I Avgol’s Advantages

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The global baby diaper market is today worth an estimated $53 Billion* growing at CAGR of 5.5%

to 2022 with emerging regional consumer trends driving baby diaper innovation.

* According to P&S Market Research

Analyst Conference I Baby Care Market

Why is the baby diaper market booming?

A growing global population despite birthrates dropping and the rise of the middle class in developing

countries is fueling baby product sales

Parents want the very best for their children and there is increased awareness of the need for personal

hygiene

An increasing number of working women who are more likely to use disposable diapers

Delayed toilet training of children in developed countries is growing online purchase of baby diapers – in

1957, approximately 92% of children were toilet trained by 18 months of age, compared to 2015 in which

only 65% of children were reported to be toilet trained by the age of 36 months

On an average, a baby undergoes diaper change 5 or more times a day

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Analyst Conference I Adult Incontinence Market

Today, the adult incontinence products market is estimated at $7 billion with a projected growth

rate of 7-9% per annum to 2020.

* According to P&S Market Research

Why is the adult incontinence products market growing?

Rapid expansion owing to the aging population, economic affluence and improvement of

healthcare systems

Consumers today expect to maintain an active lifestyle, despite bladder and bowel concerns

Women currently comprise about 86% of the market, but men are rapidly becoming a more

important demographic

Consumers are becoming more comfortable with talking about the topic and therefore seeking out

new product solutions

Rise of key brands in the adult incontinence area promoting via television and editorial – including

light incontinence products, male products and new odour control solutions

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Analyst Conference I Global Footprint

80%100%100%

Global company with 14 production lines, located in 4 sites.

Employs ~700 employees around the world.

* New line in Russia began producing commercially in May 2015.

** New 5TH line in USA will add 18,000MT as from Q4-2016

*** New line in Israel (Dimona) will add 18,000MT as from H1-2017

ChinaMarket: Local & Asia

Capacity 39,000 ton

3 Lines

RussiaMarket: East Europe

Capacity 28,000 ton

2 Lines*IsraelMarket: EMEA

Capacity 28,000 ton

5 Lines

Dimona***

Capacity: 18,000 ton

1 Line

USAMarket: North America

Capacity 60,000 ton

4 Lines **

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Analyst Conference I Global Capacity Footprint – Thousands Metric Ton

28 33 33 33 33 33 33 31 31 31 28 28 28 28

15

3045 45 45 45 45 45 45

60 60 60 6078

9 9 9 924 24

39 39 39 39

39

10 10

11 11

11 11 1129

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

EU-IL NA-US APAC-CH E.EU-RU

Line 2 in Israel is inactive since 2012 and is fully depreciated

Russia 2nd line adds 18,000MT from Q2-2015

USA 5TH line adds 18,000MT from Q4-2016

New line in Israel (Dimona) will add 18,000MT as from H1-2017

Analyst Conference – North America new production line

Floor laid

Pits completed

Contractors on site

Plan ontime

Analyst Conference – Dimona new plant

Foundations begun

Fencing completed

Timing on plan

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Analyst Conference I Key Highlights

Financials 2015 Volumes sold in 2015 increased by 5.7% compared to 2014.

Revenue in 2015 reached $341 million, a decrease of 7.7% compared to revenue of $369

million in 2014.Although the volume sold in 2015 was 5.7% higher than in 2014, the

revenue decreased mainly due to the raw material price adjustment mechanism for

customers which reflects changes in the raw material prices which were lower during the

year. Starting in the fourth quarter of 2014 and continuing in 2015, the average resin price

decreased and therefore the sales price in the fourth quarter decreased, which caused the

revenue to decrease.

Gross Profit was $76.7 million in 2015 (22.5% of the total revenue), an increase of 23.1%

compared to the gross profit of $62.3 in 2014 (16.9% of the total revenue). The increase

in gross profit was largely driven by the higher volumes sold and produced, 5.7% and

7.3% respectively, and efficient cost control.

Operating Profit reached $48.5 million in 2015, an increase of 41% compared to $34.5

million in 2014.

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Analyst Conference I Key Highlights

Financials 2015 EBITDA for 2015 increased to $67.8 million (19.9% of revenue) compared to $53.4 million

(14.5% of revenue) in 2014. The increase in EBITDA was largely driven by the increase in

volumes sold and produced, 5.7% and 7.3% respectively and operational efficiency

improvements plus a raw material price benefit. Excluding the lag in the raw material price

adjustment between the years, underlying EBITDA improved by approximately $11.6

Net Financing Expenses in 2015 totaled approximately $11.4 million, compared to $7.6

million in 2014. The increase is mainly attributed to exchange rate gains in 2014 linked to

the unhedged hedged portion of Bonds C

Cash Flow from operations showed a significant improvement reaching $42.4 million,

compared to $15.7 million in 2014. The increase in cash flow from operations is mainly

attributed to an increase in EBITDA together with a decrease in working capital which

declined, mainly due to the lower RM prices in 2015 compared to 2014.

Net income in 2015 reached $27 million, an increase of 37% compared to the net income

in 2014.

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Analyst Conference I Sales (M$)

7090

105123

164

229 237254

211

278

330315

343369

341

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Our Revenue is driven by volume sold but also affected by changes of the

selling prices flowing from the changes in raw material prices

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Analyst Conference I Multi Yearly Overview

% Profit Development 2007 - 2015

22.4%

18.4%

23.2%21.7%

20.9%20.0%

16.5% 16.9%

22.5%

18.5%

14.6%

20.0%18.8%

17.9% 18.1%

16.0%14.5%

19.9%

14.3%

10.2%

13.8%12.8% 12.5%

11.5%

9.5% 9.4%

14.2%

7.7%

3.9%

7.4% 7.6% 7.5% 7.0%4.6%

5.4%

7.9%

200 2008 2009 2010 2011 2012 2013 201 2015

% Gross % EBITDA % EBIT % Net

2015 EBITDA/Sales is 19.9%, 5.4% higher than 2014 EBITDA (14.5%), driven mainly due to:

More volume sold and produced

Ongoing efficiency improvements Vs the previous period

Raw material price benefits

Lag in the adjustment of selling prices

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Analyst Conference I Financials Highlights

Q4 2015 % Q4 2014 2015 % 2014

89.7 -6.8% 96.3 340.8 -7.7% 369.3

21.2 19.6% 17.7 76.7 23.1% 62.3

23.6% 18.4% 22.5% 16.9%

14.0 31.8% 10.6 48.4 40.1% 34.5

15.6% 11.1% 14.2% 9.3%

8.7 36.7% 6.3 27.0 35.4% 20.0

9.7% 6.6% 7.9% 5.4%

18.8 21.5% 15.5 67.8 26.9% 53.4

21.0% 16.1% 19.9% 14.5%

Net Profit

EBITDA

Q4 YearlyUSD Million

Gross Profit

EBIT

Revenue, net

2015 Highlights:

Avgol's nameplate production capacity in 2015 was 157,000 tons

Record EBITDA of $67.8 million for the year, an increase of 27% compared to 2014 EBITDA

Cash Flow from operations showed a significant improvement reaching $42.4 million, compared to $15.7

million in 2014

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Analyst Conference I Financials Highlights

31-12-15 31-12-14

Total Assets 401.0 -10.0% 445.3

Net Debt 182.0 2.2% 178.1

% Net Debt/ Total Assets 45.4% 40.0%

Net Debt/EBITDA 2.68 3.33

Net Debt to EBITDA improved from 3.33 at Dec 31, 2014 to 2.68 at Dec 31, 2015

Distributed Dividend of $12 million related to 2015 profits compared to $11 million related to 2014

profits

Shareholders Equity as of December 31, 2015 totaled $108.3 million, compared to $112.9 million as

of December 31, 2014. The decrease in equity is mainly attributed to the dividend distribution of $11

million, buy-backs of shares of $4.9 million, and changes in a capital reserve in respect of

translation differences related to financial statements of subsidiaries whose functional currency is

other than the dollar of $19 million. These translation differences, which resulted from

implementation of accounting standards, do not have an impact on our Profit and Loss and Cash

Flows.

The decrease of our Shareholders Equity was partially offset by the 2015 net income of $27 million.

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Analyst Conference I Investments & Net Debt

Net Debt/ EBITDA improved from 3.33 in 2014 to 2.68 in

2015 and expected to increase during 2016 due to the

investments in Dimona and MV5

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

0

20

40

60

80

100

120

140

160

180

200

2011 2012 2013 2014 2015

Net Debt Net debt/EBITDA

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Analyst Conference I Cash Flow

2015 2014 2013

USD thousands USD thousands USD thousands

Cash flows – operating activities

Net cash provided by operating activities 42,393 15,675 34,184

Net cash used for investing activities -30,407 -28,702 -29,611

Net cash, provided by (used for) financing activities -40,892 42,930 -10,995

Increase (decrease) in cash and cash equivalents -28,905 29,903 -6,422

Balance of cash and cash equivalents at the end of the year 47,004 77,333 48,051

Significant improvement reaching $42.4 million, compared to $15.7

million in 2014. The increase in cash flow from operations is mainly

attributed to an increase in EBITDA together with a decrease in working

capital which declined, mainly due to the lower RM prices in 2015

compared to 2014

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Analyst Conference I Balance Sheet Highlights

2015 2014

USD thousands USD thousands

CURRENT ASSETSCash and cash equivalents 47,004 77,333

Restricted cash - 181

Trade receivables 61,067 64,389

Other receivables and debit balances 4,574 6,397

Current tax assets 25 2,408

Derivatives 652 476

Inventories 43,051 47,280

Total current assets 156,374 198,464

NONCURRENT ASSETSProperty, plant and equipment, net 234,967 237,683

Derivatives 825 1,284

Deferred tax assets 5,000 4,671

Intangible assets 2,095 613

Long-term debit balances 1,720 2,597

Total noncurrent assets 244,607 246,848

Total assets 400,981 445,312

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2015 2014

USD thousands USD thousands

CURRENT LIABILITIESShort-term credit from banking corporations 3,525 4,508

Liabilities in respect of derivatives 337 355

Current maturities of long-term bonds 24,184 24,435

Trade payables 24,683 35,916

Current tax liabilities 3,865 7,711

Other payables and credit balances 11,450 9030

Total current liabilities 68,045 81,955

NONCURRENT LIABILITIESLong-term loans from banking corporations 25,609 23,919

Bonds 176,052 200,843

Liabilities in respect of derivatives 755 2,990

Employee benefit liabilities 83 71

Deferred tax liabilities 22,074 22,621

Total noncurrent liabilities 224,573 250,444

EQUITY Equity attributable to shareholders of the parent company 106,413 111,185

Noncontrolling interests 1950.176154 1728

Total equity 108,364 112,913

Total liabilities and equity 400,981 445,312

As on December 31

Analyst Conference I Balance Sheet Highlights

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Courage and

Pioneering Spirit

Analyst Conference I Our Strengths

Able to

“Genetically Reproduce”

Our Model, Products and Service

Globally, Even in Tough Geographies

Global Presence Customer Focus

Technology Mastery

& Innovation

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Any Questions?

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