Cathay Pacific Airways Ltd reports 110% Net Income decline and 9.4% Revenue decline
15/03/2017 • About Cathay Pacific Airways Ltd (
$293) • By InTwits
Cathay Pacific Airways Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Cathay Pacific Airways Ltd doesn't have a profitable business model yet: 2016 ROIC is -0.2%
- Cathay Pacific Airways Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.9%. At the same time it's in pair with industry average of 16.0%.
- CAPEX is quite volatile: 9,905 in 2016, 8,485 in 2015, 4,319 in 2014, 4,881 in 2013, 3,970 in 2012
- The company has unprofitable business model: ROIC is at -0.2%
- It operates with medium-size leverage: Net Debt/EBITDA is 6.7x while industry average is 6.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Cathay Pacific Airways Ltd ($293) key annual financial indicators
| mln. HKD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 99,376 | 100,484 | 105,991 | 102,342 | 92,751 | -9.4% |
| EBITDA | 8,117 | 11,252 | 13,070 | 15,354 | 8,308 | -45.9% |
| Net Income | 862 | 2,620 | 3,150 | 6,000 | -575 | -109.6% |
Balance Sheet
|
|---|
| Cash | 24,175 | 21,387 | 18,922 | 12,932 | 14,734 | 13.9% |
| Short Term Debt | 8,157 | 10,218 | 9,781 | 13,238 | 11,263 | -14.9% |
| Long Term Debt | 51,389 | 56,834 | 55,315 | 49,867 | 58,906 | 18.1% |
Cash flow
|
|---|
| Capex | 20,975 | 20,534 | 14,818 | 13,179 | 14,886 | 13.0% |
Ratios
|
|---|
| Revenue growth | 1.0% | 1.1% | 5.5% | -3.4% | -9.4% | |
| EBITDA growth | -27.6% | 38.6% | 16.2% | 17.5% | -45.9% | |
| EBITDA Margin | 8.2% | 11.2% | 12.3% | 15.0% | 9.0% | -6.0% |
| Net Income Margin | 0.9% | 2.6% | 3.0% | 5.9% | -0.6% | -6.5% |
| CAPEX, % of revenue | 21.1% | 20.4% | 14.0% | 12.9% | 16.0% | 3.2% |
| ROIC | 1.2% | 2.9% | 3.5% | 5.3% | -0.2% | -5.4% |
| ROE | 1.5% | 4.4% | 5.5% | 12.0% | -1.1% | -13.2% |
| Net Debt/EBITDA | 4.4x | 4.1x | 3.5x | 3.3x | 6.7x | 3.4x |
Revenue and profitability
Cathay Pacific Airways Ltd's Revenue decreased on 9.4%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.1 pp from 31.4% to 33.5% in 2016.
Net Income marign decreased on 6.5 pp from 5.9% to -0.62% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Cathay Pacific Airways Ltd had CAPEX/Revenue of 16.0%. CAPEX/Revenue decreased on 4.4 pp from 20.4% in 2013 to 16.0% in 2016. It's average CAPEX/Revenue for the last three years was 14.3%.Battling declining revenue the company made large investments to CAPEX (179% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-0.19%) and ROE (-1.11%). ROIC decreased on 5.4 pp from 5.3% to -0.19% in 2016. ROE dropped on 13.2 pp from 12.0% to -1.1% in 2016.
Leverage (Debt)
Debt level is 6.7x Net Debt / EBITDA and 8.4x Debt / EBITDA. Net Debt / EBITDA surged on 3.4x from 3.3x to 6.7x in 2016. Debt jumped on 11.2% while cash surged on 13.9%.
Management team
Chu Kwok Leung "Ivan" is a Cathay Pacific Airways Ltd's CEO. Chu Kwok Leung "Ivan" has spent 4 years at the company.
Appendix 1: Peers in Airlines
Below you can find Cathay Pacific Airways Ltd benchmarking vs. other companies in Airlines 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.
