National Grid reports 18.5% Net Income decline while 2.6% Revenue growth
21 May 2015 • About National Grid (
$NG.) • By InTwits
National Grid reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 34.7% in FY2015 vs. 34.8% in FY2014 vs. 34.8% in FY2011
- National Grid has high CAPEX intensity: 5 year average CAPEX/Revenue was 21.2%. At the same time it's in pair with industry average of 23.0%.
- CAPEX is quite volatile: 252 in 2015, 735 in 2014, 1,528 in 2013, 457 in 2012, 296 in 2011
- The company has business model with low profitability: ROIC is at 9.0%
- It operates with high leverage: Net Debt/EBITDA is 4.9x while industry average is 4.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
National Grid ($NG.) key annual financial indicators
| mln. £ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 14,343 | 13,832 | 14,359 | 14,809 | 15,201 | 2.6% |
| EBITDA | 4,990 | 4,821 | 5,110 | 5,152 | 5,274 | 2.4% |
| Net Income | 2,159 | 2,036 | 2,153 | 2,476 | 2,019 | -18.5% |
Balance Sheet
|
|---|
| Cash | 384 | 332 | 671 | 354 | 119 | -66.4% |
| Short Term Debt | 2,952 | 2,492 | 3,448 | 3,511 | 3,028 | -13.8% |
| Long Term Debt | 20,246 | 20,533 | 24,647 | 22,439 | 22,882 | 2.0% |
Cash flow
|
|---|
| Capex | 2,958 | 3,147 | 3,214 | 2,944 | 3,076 | 4.5% |
Ratios
|
|---|
| Revenue growth | 2.4% | -3.6% | 3.8% | 3.1% | 2.6% | |
| EBITDA growth | 11.4% | -3.4% | 6.0% | 0.8% | 2.4% | |
| EBITDA Margin | 34.8% | 34.9% | 35.6% | 34.8% | 34.7% | -0.1% |
| Net Income Margin | 15.1% | 14.7% | 15.0% | 16.7% | 13.3% | -3.4% |
| CAPEX, % of revenue | 20.6% | 22.8% | 22.4% | 19.9% | 20.2% | 0.4% |
| ROIC | 10.9% | 9.8% | 9.6% | 8.9% | 9.0% | 0.1% |
| ROE | 32.6% | 22.3% | 22.1% | 22.4% | 16.9% | -5.5% |
| Net Debt/EBITDA | 4.6x | 4.7x | 5.4x | 5.0x | 4.9x | -0.1x |
Revenue and profitability
The company's Revenue increased on 2.6% in FY2015. EBITDA Margin showed almost no change in FY2015.
Net Income marign decreased on 3.4 pp from 16.7% to 13.3% in FY2015.
Capital expenditures (CAPEX) and working capital investments
National Grid's CAPEX/Revenue was 20.2% in FY2015. National Grid's CAPEX/Revenue decreased on 2.5 pp from 22.8% in FY2012 to 20.2% in FY2015. Average CAPEX/Revenue for the last three years was 20.8%.The company invested a large share of EBITDA (58.3%) to CAPEX.
Return on investment
The company operates at good ROE (16.91%) while ROIC is low (8.99%). ROIC showed almost no change in FY2015. ROE decreased on 5.5 pp from 22.4% to 16.9% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.9x and Debt / EBITDA is 4.9x. Net Debt / EBITDA decreased on 0.1x from 5.0x to 4.9x in FY2015. Debt showed almost no change in FY2015 while cash dropped on 66.4% in FY2015.
Valuation
National Grid's trades at EV/EBITDA 5.0x and P/E 0.3x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 12.0x with the industry average at 4.7x.
Appendix 1: Peers in Gas, Water & Multiutilities
Below you can find National Grid benchmarking vs. other companies in Gas, Water & Multiutilities 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Inter RAO JSC ($IRAO) | 15.5% | 3.7% | 19.1% | 11.9% | |
| Dee Valley Group ($DVW) | 2.5% | 3.5% | 3.2% | 4.3% | |
| United Utilities Group ($UU.) | | 3.4% | 4.5% | 3.2% | 1.9% |
| |
|---|
| Median (3 companies) | 9.0% | 3.5% | 4.5% | 4.3% | 1.9% |
|---|
| National Grid ($NG.) | | -3.6% | 3.8% | 3.1% | 2.6% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dee Valley Group ($DVW) | 96.9% | 97.0% | 96.9% | 97.0% | |
| |
|---|
| Median (1 company) | 96.9% | 97.0% | 96.9% | 97.0% | |
|---|
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| United Utilities Group ($UU.) | 57.5% | 56.8% | 56.9% | 57.3% | 58.5% |
| Dee Valley Group ($DVW) | 53.7% | 56.4% | 53.5% | 50.5% | |
| Inter RAO JSC ($IRAO) | 1.6% | -2.7% | 0.8% | 5.6% | |
| |
|---|
| Median (3 companies) | 53.7% | 56.4% | 53.5% | 50.5% | 58.5% |
|---|
| National Grid ($NG.) | 34.8% | 34.9% | 35.6% | 34.8% | 34.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| United Utilities Group ($UU.) | 31.4% | 32.1% | 38.2% | 39.2% | 38.7% |
| Dee Valley Group ($DVW) | 11.9% | 32.0% | 66.9% | 28.1% | |
| Inter RAO JSC ($IRAO) | 4.9% | 8.8% | 6.2% | 4.9% | |
| |
|---|
| Median (3 companies) | 11.9% | 32.0% | 38.2% | 28.1% | 38.7% |
|---|
| National Grid ($NG.) | 20.6% | 22.8% | 22.4% | 19.9% | 20.2% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dee Valley Group ($DVW) | 9.4% | 8.2% | 7.9% | 7.5% | |
| United Utilities Group ($UU.) | 7.0% | 6.9% | 6.6% | 6.8% | 6.7% |
| Inter RAO JSC ($IRAO) | -1.4% | -6.9% | -4.3% | 4.4% | |
| |
|---|
| Median (3 companies) | 7.0% | 6.9% | 6.6% | 6.8% | 6.7% |
|---|
| National Grid ($NG.) | 10.9% | 9.8% | 9.6% | 8.9% | 9.0% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| United Utilities Group ($UU.) | 5.8x | 6.2x | 6.4x | 6.1x | 6.4x |
| Dee Valley Group ($DVW) | 3.3x | 3.2x | 4.0x | 4.2x | |
| Inter RAO JSC ($IRAO) | 0.5x | | 2.4x | 0.7x | |
| |
|---|
| Median (3 companies) | 3.3x | 4.7x | 4.0x | 4.2x | 6.4x |
|---|
| National Grid ($NG.) | 4.6x | 4.7x | 5.4x | 5.0x | 4.9x |
