Ecopetrol SA Net Income dropped on 243% in 2015 and EBITDA Margin dropped on 14.5 pp from 32.6% to 18.1%
22.02.2016 • About Ecopetrol SA (
$ECP) • By InTwits
Ecopetrol SA reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 18.1% in 2015 vs. 32.6% in 2014 vs. 47.5% in 2011
- Ecopetrol SA has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.9%.
- The company has potentially unprofitable business model: ROIC is at 3.0%
- It operates with high leverage: Net Debt/EBITDA is 4.9x while industry average is 3.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Ecopetrol SA ($ECP) key annual financial indicators
| mln. COP | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 65,967,514 | 68,852,002 | 70,428,715 | 65,971,888 | 52,347,271 | -20.7% |
| Gross Profit | 29,262,930 | 28,316,494 | 27,874,433 | 22,996,760 | 15,352,755 | -33.2% |
| SG&A | 3,389,950 | 4,973,590 | 6,039,703 | 6,551,360 | 5,735,253 | -12.5% |
| EBITDA | 31,328,060 | 28,657,653 | 27,352,819 | 21,500,330 | 9,486,755 | -55.9% |
| Net Income | 15,452,300 | 14,778,900 | 13,106,500 | 5,046,520 | -7,193,860 | -242.6% |
Balance Sheet
|
|---|
| Cash | 6,779,937 | 7,940,690 | 8,841,438 | 7,618,178 | 6,550,450 | -14.0% |
| Short Term Debt | 831,594 | 2,359,488 | 774,559 | 3,517,522 | 4,573,620 | 30.0% |
| Long Term Debt | 10,754,291 | 11,346,337 | 21,423,992 | 31,524,106 | 48,649,718 | 54.3% |
Cash flow
|
|---|
| Capex | 14,500,671 | 15,467,862 | 14,227,777 | 8,923,568 | 8,548,933 | -4.2% |
Ratios
|
|---|
| Revenue growth | 57.2% | 4.4% | 2.3% | -6.3% | -20.7% | |
| EBITDA growth | 82.3% | -8.5% | -4.6% | -21.4% | -55.9% | |
| Gross Margin | 44.4% | 41.1% | 39.6% | 34.9% | 29.3% | -5.5% |
| EBITDA Margin | 47.5% | 41.6% | 38.8% | 32.6% | 18.1% | -14.5% |
| Net Income Margin | 23.4% | 21.5% | 18.6% | 7.6% | -13.7% | -21.4% |
| SG&A, % of revenue | 5.1% | 7.2% | 8.6% | 9.9% | 11.0% | 1.0% |
| CAPEX, % of revenue | 22.0% | 22.5% | 20.2% | 13.5% | 16.3% | 2.8% |
| ROIC | 39.1% | 29.3% | 24.4% | 16.5% | 3.0% | -13.5% |
| ROE | 32.2% | 24.7% | 19.3% | 8.5% | -16.3% | -24.8% |
| Net Debt/EBITDA | 0.2x | 0.2x | 0.5x | 1.3x | 4.9x | 3.6x |
Revenue and profitability
Ecopetrol SA's Revenue dropped on 20.7% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 14.5 pp from 32.6% to 18.1% in 2015.
Gross Margin decreased on 5.5 pp from 34.9% to 29.3% in 2015. SG&A as a % of Revenue increased slightly on 1.0 pp from 9.9% to 11.0% in 2015.
Net Income marign dropped on 21.4 pp from 7.6% to -13.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 16.3% in 2015. Ecopetrol SA's CAPEX/Revenue decreased on 6.1 pp from 22.5% in 2012 to 16.3% in 2015. Average CAPEX/Revenue for the last three years was 16.7%.Battling declining revenue the company invested a large share of EBITDA (90.1%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low but positive ROIC (2.98%) and negative ROE (-16.30%). ROIC dropped on 13.5 pp from 16.5% to 3.0% in 2015. ROE dropped on 24.8 pp from 8.5% to -16.3% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.9x and Debt / EBITDA is 5.6x. Net Debt / EBITDA surged on 3.6x from 1.3x to 4.9x in 2015. Debt jumped on 51.9% in 2015 while cash dropped on 14.0% in 2015.
Management team
Ecopetrol SA's CEO Juan Carlos Echeverry has spent 3 years at the company. The company's CFO is Maria Fernanda Suarez. Maria Fernanda Suarez has 3 years tenure at the company.
Appendix 1: Peers in Energy
Below you can find Ecopetrol SA benchmarking vs. other companies in Energy industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
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 ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 38.0% | 10.4% | 17.1% | 18.5% | -24.5% |
|---|
| Ecopetrol SA ($ECP) | | 4.4% | 2.3% | -6.3% | -20.7% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TransAlta Renewables Inc ($RNW) | | | 94.4% | 94.5% | 94.5% |
| Advantage Oil & Gas Ltd ($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% | 84.1% |
| NXT Energy Solutions Inc ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.5% | 29.6% | 46.5% |
|---|
| Ecopetrol SA ($ECP) | 44.4% | 41.1% | 39.6% | 34.9% | 29.3% |
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 ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 24.7% | 25.0% | 30.5% | 28.9% | 12.3% |
|---|
| Ecopetrol SA ($ECP) | 47.5% | 41.6% | 38.8% | 32.6% | 18.1% |
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 ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 43.3% | 50.0% | 39.2% | 48.8% | 26.2% |
|---|
| Ecopetrol SA ($ECP) | 22.0% | 22.5% | 20.2% | 13.5% | 16.3% |
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 ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.0% | -4.2% |
|---|
| Ecopetrol SA ($ECP) | 39.1% | 29.3% | 24.4% | 16.5% | 3.0% |
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 ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.6x | 1.5x | 1.4x | 4.0x |
|---|
| Ecopetrol SA ($ECP) | 0.2x | 0.2x | 0.5x | 1.3x | 4.9x |
