General Electric Co. reports 140% Net Income decline and 1.1% Revenue decline
22 Jan 2016 • About General Electric Co. (
$GEC) • By InTwits
General Electric Co. reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 10.4% in 2015 vs. 13.3% in 2014 vs. 17.6% in 2011
- General Electric Co. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.3%. At the same time it's a lot of higher than industry average of 4.2%.
- CAPEX is quite volatile: 2,516 in 2015, 4,103 in 2014, 9,997 in 2013, 14,978 in 2012, 20,502 in 2011
- The company has potentially unprofitable business model: ROIC is at 2.0%
- It operates with high leverage: Net Debt/EBITDA is 10.6x while industry average is 2.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
General Electric Co. ($GEC) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 142,224 | 144,121 | 142,937 | 116,406 | 115,158 | -1.1% |
| Gross Profit | 57,168 | 55,358 | 53,853 | 28,534 | 27,559 | -3.4% |
| SG&A | | | | 16,848 | 17,831 | 5.8% |
| EBITDA | 25,040 | 24,821 | 23,654 | 15,524 | 11,967 | -22.9% |
| Net Income | 14,151 | 13,641 | 13,057 | 15,233 | -6,126 | -140.2% |
Balance Sheet
|
|---|
| Cash | 84,501 | 77,268 | 88,555 | 70,025 | 70,483 | 0.7% |
| Short Term Debt | 137,611 | 101,392 | 77,890 | 70,425 | 49,860 | -29.2% |
| Long Term Debt | 243,459 | 236,084 | 221,665 | 186,596 | 147,742 | -20.8% |
Cash flow
|
|---|
| Capex | 12,650 | 15,119 | 13,458 | 7,134 | 7,309 | 2.5% |
Ratios
|
|---|
| Revenue growth | -4.2% | 1.3% | -0.8% | -18.6% | -1.1% | |
| EBITDA growth | 5.4% | -0.9% | -4.7% | -34.4% | -22.9% | |
| Gross Margin | 40.2% | 38.4% | 37.7% | 24.5% | 23.9% | -0.6% |
| EBITDA Margin | 17.6% | 17.2% | 16.5% | 13.3% | 10.4% | -2.9% |
| Net Income Margin | 9.9% | 9.5% | 9.1% | 13.1% | -5.3% | -18.4% |
| SG&A, % of revenue | | | | 14.5% | 15.5% | 1.0% |
| CAPEX, % of revenue | 8.9% | 10.5% | 9.4% | 6.1% | 6.3% | 0.2% |
| ROIC | 3.1% | 3.2% | 3.1% | 2.5% | 2.0% | -0.5% |
| ROE | 11.1% | 11.4% | 10.3% | 11.8% | -5.4% | -17.2% |
| Net Debt/EBITDA | 11.8x | 10.5x | 8.9x | 12.0x | 10.6x | -1.4x |
Revenue and profitability
General Electric Co.'s Revenue decreased slightly on 1.1% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.9 pp from 13.3% to 10.4% in 2015.
Gross Margin decreased slightly on 0.58 pp from 24.5% to 23.9% in 2015. SG&A as a % of Revenue increased slightly on 1.0 pp from 14.5% to 15.5% in 2015.
Net Income marign dropped on 18.4 pp from 13.1% to -5.3% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 6.3% in 2015. CAPEX/Revenue decreased on 4.1 pp from 10.5% in 2012 to 6.3% in 2015. It's average CAPEX/Revenue for the last three years was 7.3%.Battling declining revenue General Electric Co. invested a large share of EBITDA (61.1%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low but positive ROIC (2.05%) and negative ROE (-5.43%). ROIC showed almost no change in 2015. ROE dropped on 17.2 pp from 11.8% to -5.4% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 10.6x and Debt / EBITDA is 16.5x. Net Debt / EBITDA dropped on 1.4x from 12.0x to 10.6x in 2015. Debt dropped on 23.1% in 2015 while cash increased slightly on 0.65% in 2015.
Appendix 1: Peers in General Industrials
Below you can find General Electric Co. benchmarking vs. other companies in General Industrials 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 |
|---|
| Robinson ($RBN) | 10.3% | -1.6% | 10.2% | 20.3% | |
| Press Corp ($PESD) | -40.5% | 111.1% | 52.6% | 20.3% | |
| Thyssenkrupp Ag ($0O1C) | | -2.8% | -7.2% | 6.9% | 3.8% |
| Macfarlane Group ($MACF) | 6.7% | -1.9% | 1.4% | 6.9% | |
| Barloworld ($BWO) | | 17.5% | 1.6% | 4.4% | 1.0% |
| |
|---|
| Median (9 companies) | 10.2% | 3.1% | 1.6% | 4.4% | 1.2% |
|---|
| General Electric Co. ($GEC) | | 1.3% | -0.8% | -18.6% | -1.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Press Corp ($PESD) | 75.4% | 58.9% | 54.4% | 56.0% | |
| Macfarlane Group ($MACF) | 30.2% | 32.0% | 31.2% | 30.9% | |
| Smurfit Kappa Group ($SKG) | 27.9% | 28.6% | 28.9% | 29.5% | |
| Honeywell International Inc ($HON) | 21.8% | 24.9% | 27.4% | 28.2% | |
| Jardine Strategic Hldgs ($88EI) | 24.7% | 24.0% | 24.0% | 25.4% | |
| |
|---|
| Median (9 companies) | 22.2% | 24.0% | 24.6% | 25.4% | 21.8% |
|---|
| General Electric Co. ($GEC) | 40.2% | 38.4% | 37.7% | 24.5% | 23.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Press Corp ($PESD) | 37.1% | 29.5% | 29.6% | 29.2% | |
| Honeywell International Inc ($HON) | 9.7% | 13.5% | 16.6% | 16.8% | |
| Robinson ($RBN) | 14.4% | 16.0% | 14.1% | 15.1% | |
| Jardine Strategic Hldgs ($88EI) | 28.8% | 15.0% | 13.3% | 13.5% | |
| Smurfit Kappa Group ($SKG) | 13.1% | 13.4% | 12.8% | 12.7% | |
| |
|---|
| Median (9 companies) | 9.7% | 13.4% | 12.8% | 12.7% | 8.5% |
|---|
| General Electric Co. ($GEC) | 17.6% | 17.2% | 16.5% | 13.3% | 10.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Press Corp ($PESD) | 22.7% | 21.3% | 8.5% | 12.1% | |
| Smurfit Kappa Group ($SKG) | 3.8% | 4.3% | 4.4% | 5.3% | |
| Jardine Strategic Hldgs ($88EI) | 4.4% | 5.8% | 5.2% | 4.1% | |
| Robinson ($RBN) | 4.9% | 4.3% | 6.0% | 3.5% | |
| Thyssenkrupp Ag ($0O1C) | 2.2% | 3.8% | 2.9% | 2.9% | 2.7% |
| |
|---|
| Median (9 companies) | 3.8% | 4.3% | 4.4% | 2.9% | 2.5% |
|---|
| General Electric Co. ($GEC) | 8.9% | 10.5% | 9.4% | 6.1% | 6.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Press Corp ($PESD) | 12.1% | 21.6% | 27.1% | 24.7% | |
| Honeywell International Inc ($HON) | 14.4% | 21.8% | 23.0% | 21.3% | |
| Macfarlane Group ($MACF) | 15.1% | 17.9% | 22.2% | 19.0% | |
| Barloworld ($BWO) | 12.4% | 14.0% | 13.5% | 14.1% | 12.9% |
| Smurfit Kappa Group ($SKG) | 10.2% | 10.8% | 11.2% | 11.8% | |
| |
|---|
| Median (9 companies) | 12.4% | 10.8% | 11.2% | 11.8% | 9.5% |
|---|
| General Electric Co. ($GEC) | 3.1% | 3.2% | 3.1% | 2.5% | 2.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Coral Products ($CRU) | 1.5x | 1.5x | 2.9x | 3.4x | 2.7x |
| Smurfit Kappa Group ($SKG) | 2.9x | 2.9x | 2.6x | 2.7x | |
| Thyssenkrupp Ag ($0O1C) | 1.1x | 3.4x | 4.5x | 2.0x | 1.8x |
| Jardine Strategic Hldgs ($88EI) | 0.6x | 1.4x | 1.3x | 1.3x | |
| Macfarlane Group ($MACF) | 1.3x | 1.0x | 0.8x | 1.3x | |
| |
|---|
| Median (9 companies) | 1.1x | 1.4x | 1.3x | 1.3x | 1.8x |
|---|
| General Electric Co. ($GEC) | 11.8x | 10.5x | 8.9x | 12.0x | 10.6x |
