Suncor Energy Inc reports 174% Net Income decline and 26.7% Revenue decline
03.02.2016 • About Suncor Energy Inc (
$SU) • By InTwits
Suncor Energy Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Suncor Energy Inc doesn't have a profitable business model yet: 2015 ROIC is 0.1%
- Suncor Energy Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.7%. At the same time it's in pair with industry average of 4.9%.
- CAPEX is quite volatile: 7,273 in 2015, 10,524 in 2014, 8,235 in 2013, 5,194 in 2012, 3,508 in 2011
- The company has potentially unprofitable business model: ROIC is at 0.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Suncor Energy Inc ($SU) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 38,339 | 38,107 | 39,593 | 39,862 | 29,208 | -26.7% |
| Gross Profit | 19,878 | 20,375 | 21,455 | 21,349 | 16,533 | -22.6% |
| SG&A | 8,424 | 8,897 | 9,447 | 9,541 | 8,607 | -9.8% |
| EBITDA | 11,039 | 11,153 | 11,726 | 11,531 | 7,558 | -34.5% |
| Net Income | 4,304 | 2,740 | 3,911 | 2,699 | -1,995 | -173.9% |
Balance Sheet
|
|---|
| Cash | 3,803 | 4,385 | 5,202 | 5,495 | 4,049 | -26.3% |
| Short Term Debt | 775 | 1,086 | 1,255 | 840 | 817 | -2.7% |
| Long Term Debt | 10,004 | 9,938 | 10,203 | 12,489 | 14,486 | 16.0% |
Cash flow
|
|---|
| Capex | 6,850 | 6,957 | 6,777 | 6,961 | 6,667 | -4.2% |
Ratios
|
|---|
| Revenue growth | 19.8% | -0.6% | 3.9% | 0.7% | -26.7% | |
| EBITDA growth | 20.4% | 1.0% | 5.1% | -1.7% | -34.5% | |
| Gross Margin | 51.8% | 53.5% | 54.2% | 53.6% | 56.6% | 3.0% |
| EBITDA Margin | 28.8% | 29.3% | 29.6% | 28.9% | 25.9% | -3.1% |
| Net Income Margin | 11.2% | 7.2% | 9.9% | 6.8% | -6.8% | -13.6% |
| SG&A, % of revenue | 22.0% | 23.3% | 23.9% | 23.9% | 29.5% | 5.5% |
| CAPEX, % of revenue | 17.9% | 18.3% | 17.1% | 17.5% | 22.8% | 5.4% |
| ROIC | 12.2% | 7.7% | 10.8% | 8.2% | 0.1% | -8.1% |
| ROE | 11.7% | 7.1% | 9.7% | 6.5% | -4.9% | -11.5% |
| Net Debt/EBITDA | 0.6x | 0.6x | 0.5x | 0.7x | 1.5x | 0.8x |
Revenue and profitability
Suncor Energy Inc's Revenue dropped on 26.7% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.1 pp from 28.9% to 25.9% in 2015.
Gross Margin increased on 3.0 pp from 53.6% to 56.6% in 2015. SG&A as a % of Revenue increased on 5.5 pp from 23.9% to 29.5% in 2015.
Net Income marign dropped on 13.6 pp from 6.8% to -6.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Suncor Energy Inc had CAPEX/Revenue of 22.8%. Suncor Energy Inc's CAPEX/Revenue increased on 4.6 pp from 18.3% in 2012 to 22.8% in 2015. Average CAPEX/Revenue for the last three years was 19.1%.The company invested a big chunk of EBITDA (88.2%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low but positive ROIC (0.09%) and negative ROE (-4.95%). ROIC decreased on 8.1 pp from 8.2% to 0.089% in 2015. ROE dropped on 11.5 pp from 6.5% to -4.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.5x and Debt / EBITDA is 2.0x. Net Debt / EBITDA surged on 0.8x from 0.7x to 1.5x in 2015. Debt jumped on 14.8% in 2015 while cash dropped on 26.3% in 2015.
Management team
Suncor Energy Inc's CEO Steven W Williams "Steve" has spent 6 years at the company. Suncor Energy Inc's CFO Alister Cowan has spent 4 years at the company.
Appendix 1: Peers in Energy
Below we provide Suncor Energy Inc benchmarking against other companies in Energy industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Petro Rio SA ($PRJ) | -36.3% | -32.1% | -34.9% | 10,977.1% | |
| ONEnergy Inc ($OEG) | | | | 6,002.6% | |
| Sterling Resources Ltd ($SLG) | | -94.8% | 4,514.9% | 2,244.4% | |
| Ikkuma Resources Corp ($IKM) | 22.5% | 17.0% | -4.5% | 1,231.1% | |
| Spartan Energy Corp ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 37.7% | 10.4% | 17.1% | 18.5% | -19.0% |
|---|
| Suncor Energy Inc ($SU) | | -0.6% | 3.9% | 0.7% | -26.7% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TransAlta Renewables Inc ($RNW) | | | 94.4% | 94.5% | |
| Advantage Oil & Gas Ltd ($AAV) | 70.5% | 62.0% | 84.5% | 92.5% | |
| Freehold Royalties Ltd ($FRU) | 91.7% | 90.4% | 89.0% | 90.2% | |
| MEG Energy Corp ($MEG) | 85.5% | 86.8% | 87.4% | 87.6% | |
| NXT Energy Solutions Inc ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.5% | 29.6% | 44.3% |
|---|
| Suncor Energy Inc ($SU) | 51.8% | 53.5% | 54.2% | 53.6% | 56.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Seven Generations Energy Ltd ($VII) | | 56.9% | 54.0% | 106.0% | |
| Tourmaline Oil Corp ($TOU) | 67.4% | 67.9% | 80.0% | 97.6% | |
| Bonavista Energy Corp ($BNP) | 63.8% | 64.6% | 62.6% | 91.6% | |
| Bellatrix Exploration Ltd ($BXE) | 42.7% | 58.6% | 83.6% | 89.6% | |
| Advantage Oil & Gas Ltd ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 24.7% | 25.0% | 31.1% | 29.6% | -15.9% |
|---|
| Suncor Energy Inc ($SU) | 28.8% | 29.3% | 29.6% | 28.9% | 25.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | 1,997.8% | |
| Petroshale Inc ($PSH) | 30.6% | | 346.6% | 865.9% | |
| Toro Oil & Gas Ltd ($TOO) | 192.4% | 139.0% | 39.2% | 808.7% | |
| Athabasca Oil Corp ($ATH) | 176.2% | 2,426.4% | 596.6% | 504.7% | |
| BNK Petroleum Inc ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 43.3% | 50.0% | 39.2% | 48.8% | 49.6% |
|---|
| Suncor Energy Inc ($SU) | 17.9% | 18.3% | 17.1% | 17.5% | 22.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pason Systems Inc ($PSI) | 33.5% | 30.0% | 29.7% | 41.0% | |
| Sea Dragon Energy Inc ($SDX) | -10.1% | 8.1% | 21.8% | 32.9% | |
| Raging River Exploration Inc ($RRX) | | | | 29.1% | |
| High Arctic Energy Services Inc ($HWO) | 27.0% | 31.4% | 26.3% | 24.9% | |
| Rooster Energy Ltd ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.0% | -13.6% |
|---|
| Suncor Energy Inc ($SU) | 12.2% | 7.7% | 10.8% | 8.2% | 0.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Veresen Inc ($VSN) | 22.3x | 16.2x | 14.7x | 30.3x | |
| Lightstream Resources Ltd ($LTS) | | 2.0x | | 27.8x | |
| Petroshale Inc ($PSH) | 0.1x | | | 21.7x | |
| Connacher Oil and Gas Ltd ($CLC) | 9.7x | 16.7x | 8.8x | 17.1x | |
| Pengrowth Energy Corp ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.6x | 1.5x | 1.4x | 2.5x |
|---|
| Suncor Energy Inc ($SU) | 0.6x | 0.6x | 0.5x | 0.7x | 1.5x |
