United Utilities Group Net Income dropped on 63.3% in 2015 while Revenue increased slightly on 1.9%
21 May 2015 • About United Utilities Group (
$UU.) • By InTwits
United Utilities Group reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 58.5% in FY2015 vs. 57.3% in FY2014 vs. 57.5% in FY2011
- United Utilities Group has high CAPEX intensity: 5 year average CAPEX/Revenue was 35.9%. At the same time it's a lot of higher than industry average of 23.0%.
- CAPEX is quite volatile: 84 in FY2015, 0 in FY2014, 47 in FY2013, 154 in FY2012, 387 in FY2011
- The company has potentially unprofitable business model: ROIC is at 6.7%
- It operates with high leverage: Net Debt/EBITDA is 6.4x while industry average is 4.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
United Utilities Group ($UU.) key annual financial indicators
| mln. £ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,513 | 1,565 | 1,636 | 1,689 | 1,720 | 1.9% |
| EBITDA | 871 | 889 | 931 | 967 | 1,006 | 4.0% |
| Net Income | 458 | 317 | 302 | 739 | 271 | -63.3% |
Balance Sheet
|
|---|
| Cash | 255 | 321 | 202 | 116 | 244 | 110.7% |
| Short Term Debt | 110 | 127 | 166 | 112 | 578 | 414.8% |
| Long Term Debt | 5,204 | 5,728 | 6,007 | 5,929 | 6,067 | 2.3% |
Cash flow
|
|---|
| Capex | 475 | 502 | 626 | 662 | 666 | 0.6% |
Ratios
|
|---|
| Revenue growth | -3.8% | 3.4% | 4.5% | 3.2% | 1.9% | |
| EBITDA growth | -16.9% | 2.1% | 4.7% | 3.9% | 4.0% | |
| EBITDA Margin | 57.5% | 56.8% | 56.9% | 57.3% | 58.5% | 1.2% |
| Net Income Margin | 30.3% | 20.2% | 18.5% | 43.8% | 15.8% | -28.0% |
| CAPEX, % of revenue | 31.4% | 32.1% | 38.2% | 39.2% | 38.7% | -0.5% |
| ROIC | 7.0% | 6.9% | 6.6% | 6.8% | 6.7% | -0.1% |
| ROE | 28.8% | 18.4% | 16.6% | 36.2% | 11.7% | -24.5% |
| Net Debt/EBITDA | 5.8x | 6.2x | 6.4x | 6.1x | 6.4x | 0.2x |
Revenue and profitability
The company's Revenue increased slightly on 1.9% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 6.3 pp from 28.0% to 21.7% in FY2015.
Net Income marign dropped on 28.0 pp from 43.8% to 15.8% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 United Utilities Group had CAPEX/Revenue of 38.7%. United Utilities Group's CAPEX/Revenue increased on 6.6 pp from 32.1% in FY2012 to 38.7% in FY2015. It's average level of CAPEX/Revenue for the last three years was 38.7%.United Utilities Group maintained rich investment policy and has spent a big chunk of EBITDA (66.2%) to CAPEX.
Return on investment
The company operates at low ROIC (6.70%) and ROE (11.66%). ROIC showed almost no change in FY2015. ROE dropped on 24.5 pp from 36.2% to 11.7% in FY2015.
Leverage (Debt)
Debt level is 6.4x Net Debt / EBITDA and 6.6x Debt / EBITDA. Net Debt / EBITDA surged on 0.2x from 6.1x to 6.4x in FY2015. Debt increased on 10.0% in FY2015 while cash jumped on 111% in FY2015.
Appendix 1: Peers in Gas, Water & Multiutilities
Below we provide United Utilities Group benchmarking against other companies in Gas, Water & Multiutilities 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 | 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% | |
| National Grid ($NG.) | | -3.6% | 3.8% | 3.1% | 2.6% |
| |
|---|
| Median (3 companies) | 9.0% | 3.5% | 3.8% | 4.3% | 2.6% |
|---|
| United Utilities Group ($UU.) | | 3.4% | 4.5% | 3.2% | 1.9% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dee Valley Group ($DVW) | 96.9% | 97.0% | 96.9% | 97.0% | |
| |
|---|
| Median (1 company) | 96.9% | 97.0% | 96.9% | 97.0% | |
|---|
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dee Valley Group ($DVW) | 53.7% | 56.4% | 53.5% | 50.5% | |
| National Grid ($NG.) | 34.8% | 34.9% | 35.6% | 34.8% | 34.7% |
| Inter RAO JSC ($IRAO) | 1.6% | -2.7% | 0.8% | 5.6% | |
| |
|---|
| Median (3 companies) | 34.8% | 34.9% | 35.6% | 34.8% | 34.7% |
|---|
| United Utilities Group ($UU.) | 57.5% | 56.8% | 56.9% | 57.3% | 58.5% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dee Valley Group ($DVW) | 11.9% | 32.0% | 66.9% | 28.1% | |
| National Grid ($NG.) | 20.6% | 22.8% | 22.4% | 19.9% | 20.2% |
| Inter RAO JSC ($IRAO) | 4.9% | 8.8% | 6.2% | 4.9% | |
| |
|---|
| Median (3 companies) | 11.9% | 22.8% | 22.4% | 19.9% | 20.2% |
|---|
| United Utilities Group ($UU.) | 31.4% | 32.1% | 38.2% | 39.2% | 38.7% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| National Grid ($NG.) | 10.9% | 9.8% | 9.6% | 8.9% | 9.0% |
| Dee Valley Group ($DVW) | 9.4% | 8.2% | 7.9% | 7.5% | |
| Inter RAO JSC ($IRAO) | -1.4% | -6.9% | -4.3% | 4.4% | |
| |
|---|
| Median (3 companies) | 9.4% | 8.2% | 7.9% | 7.5% | 9.0% |
|---|
| United Utilities Group ($UU.) | 7.0% | 6.9% | 6.6% | 6.8% | 6.7% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| National Grid ($NG.) | 4.6x | 4.7x | 5.4x | 5.0x | 4.9x |
| 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 | 3.9x | 4.0x | 4.2x | 4.9x |
|---|
| United Utilities Group ($UU.) | 5.8x | 6.2x | 6.4x | 6.1x | 6.4x |
