Lg Electronics Inc EBITDA dropped on 17.9% in 2015 and Revenue decreased on 4.3%
26 Jan 2016 • About Lg Electronics Inc (
$39IB) • By InTwits
Lg Electronics Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Lg Electronics Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's in pair with industry average of 10.7%.
- CAPEX is quite volatile: 2,560,244 in 2015, 3,505,549 in 2014, 6,569,613 in 2013, 7,054,543 in 2012, 5,330,968 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.8%
- It operates with high leverage: Net Debt/EBITDA is 2.0x while industry average is 0.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lg Electronics Inc ($39IB) key annual financial indicators
| mln. KRW | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 54,256,585 | 55,122,623 | 58,140,376 | 59,040,767 | 56,509,008 | -4.3% |
| Gross Profit | 12,198,990 | 12,870,439 | 13,419,707 | 13,741,645 | 12,873,945 | -6.3% |
| SG&A | 11,093,303 | 10,605,063 | 11,258,419 | 11,086,238 | 10,787,544 | -2.7% |
| EBITDA | 1,545,536 | 2,998,910 | 3,212,834 | 3,806,759 | 3,125,012 | -17.9% |
| Net Income | -469,624 | 92,382 | 176,768 | 399,350 | 124,394 | -68.9% |
Balance Sheet
|
|---|
| Cash | 2,345,465 | 2,185,000 | 2,645,270 | 2,244,406 | 2,710,156 | 20.8% |
| Short Term Debt | 3,178,212 | 2,715,041 | 3,022,723 | 2,575,550 | 2,326,128 | -9.7% |
| Long Term Debt | 4,257,406 | 5,923,346 | 6,188,306 | 6,426,881 | 6,501,122 | 1.2% |
Cash flow
|
|---|
| Capex | 1,830,008 | 1,770,222 | 2,117,161 | 2,165,948 | 1,747,253 | -19.3% |
Ratios
|
|---|
| Revenue growth | -2.7% | 1.6% | 5.5% | 1.5% | -4.3% | |
| EBITDA growth | 12.2% | 94.0% | 7.1% | 18.5% | -17.9% | |
| Gross Margin | 22.5% | 23.3% | 23.1% | 23.3% | 22.8% | -0.5% |
| EBITDA Margin | 2.8% | 5.4% | 5.5% | 6.4% | 5.5% | -0.9% |
| Net Income Margin | -0.9% | 0.2% | 0.3% | 0.7% | 0.2% | -0.5% |
| SG&A, % of revenue | 20.4% | 19.2% | 19.4% | 18.8% | 19.1% | 0.3% |
| CAPEX, % of revenue | 3.4% | 3.2% | 3.6% | 3.7% | 3.1% | -0.6% |
| ROIC | 1.8% | 6.1% | 6.3% | 8.9% | 5.8% | -3.1% |
| ROE | -3.4% | 0.7% | 1.4% | 3.1% | 1.0% | -2.1% |
| Net Debt/EBITDA | 3.3x | 2.2x | 2.0x | 1.8x | 2.0x | 0.2x |
Revenue and profitability
The company's Revenue decreased on 4.3% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.7 pp from 20.9% to 23.6% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign showed almost no change in 2015.
Capital expenditures (CAPEX) and working capital investments
Lg Electronics Inc's CAPEX/Revenue was 3.1% in 2015. Lg Electronics Inc showed almost no change in CAPEX/Revenue from 2012 to 2015. It's average level of CAPEX/Revenue for the last three years was 3.5%.Battling declining revenue the company invested a large share of EBITDA (55.9%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (5.81%) and ROE (0.96%). ROIC decreased on 3.1 pp from 8.9% to 5.8% in 2015. ROE decreased on 2.1 pp from 3.1% to 0.96% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.0x and Debt / EBITDA is 2.8x. Net Debt / EBITDA surged on 0.2x from 1.8x to 2.0x in 2015. Debt decreased slightly on 1.9% in 2015 while cash jumped on 20.8% in 2015.
Appendix 1: Peers in Leisure Goods
Below we provide Lg Electronics Inc benchmarking against other companies in Leisure Goods 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 |
|---|
| Vmoto Ltd ($VMT) | -60.4% | 15.9% | 205.5% | 70.6% | |
| Tandem Group ($TND) | -3.0% | -16.3% | -2.1% | 10.5% | |
| Konami Corp ($KNM) | | 3.0% | -15.0% | -3.7% | 0.3% |
| Hornby ($HRN) | | 1.7% | -10.9% | -10.2% | 12.8% |
| |
|---|
| Median (4 companies) | -31.7% | 2.4% | -6.5% | 3.4% | 6.5% |
|---|
| Lg Electronics Inc ($39IB) | | 1.6% | 5.5% | 1.5% | -4.3% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hornby ($HRN) | 46.2% | 48.3% | 42.6% | 45.2% | 46.7% |
| Konami Corp ($KNM) | 26.7% | 34.4% | 32.4% | 31.3% | 32.8% |
| Tandem Group ($TND) | 28.4% | 29.7% | 29.2% | 30.5% | |
| Vmoto Ltd ($VMT) | 21.0% | 18.0% | 15.0% | 14.7% | |
| |
|---|
| Median (4 companies) | 27.6% | 32.0% | 30.8% | 30.9% | 39.7% |
|---|
| Lg Electronics Inc ($39IB) | 22.5% | 23.3% | 23.1% | 23.3% | 22.8% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Konami Corp ($KNM) | 12.9% | 19.1% | 14.3% | 13.3% | 16.5% |
| Tandem Group ($TND) | 3.8% | 3.6% | 3.8% | 5.3% | |
| Vmoto Ltd ($VMT) | -50.8% | 31.8% | 3.2% | 2.0% | |
| Hornby ($HRN) | 14.9% | 14.5% | 1.8% | 1.8% | 7.4% |
| |
|---|
| Median (4 companies) | 8.3% | 16.8% | 3.5% | 3.6% | 11.9% |
|---|
| Lg Electronics Inc ($39IB) | 2.8% | 5.4% | 5.5% | 6.4% | 5.5% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Konami Corp ($KNM) | 4.1% | 3.5% | 4.4% | 21.7% | 11.8% |
| Hornby ($HRN) | 7.1% | 5.9% | 6.0% | 7.9% | 7.0% |
| Vmoto Ltd ($VMT) | 29.5% | 14.2% | 1.6% | 2.6% | |
| Tandem Group ($TND) | 0.2% | 0.5% | 10.2% | 1.2% | |
| |
|---|
| Median (4 companies) | 5.6% | 4.7% | 5.2% | 5.2% | 9.4% |
|---|
| Lg Electronics Inc ($39IB) | 3.4% | 3.2% | 3.6% | 3.7% | 3.1% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tandem Group ($TND) | 18.3% | 20.4% | 37.6% | 37.6% | |
| Konami Corp ($KNM) | 8.7% | 16.2% | 8.4% | 3.2% | 6.6% |
| Vmoto Ltd ($VMT) | -25.3% | -16.1% | 1.8% | 1.4% | |
| Hornby ($HRN) | 10.2% | 10.4% | -6.8% | -7.7% | 0.5% |
| |
|---|
| Median (4 companies) | 9.4% | 13.3% | 5.1% | 2.3% | 3.5% |
|---|
| Lg Electronics Inc ($39IB) | 1.8% | 6.1% | 6.3% | 8.9% | 5.8% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hornby ($HRN) | 0.7x | 0.7x | 2.1x | 7.6x | 1.7x |
| Vmoto Ltd ($VMT) | | 0.9x | 1.4x | 1.0x | |
| Konami Corp ($KNM) | -0.4x | -0.7x | -0.9x | -0.2x | -0.6x |
| Tandem Group ($TND) | -2.1x | -1.4x | -1.4x | -1.1x | |
| |
|---|
| Median (4 companies) | -0.4x | -0.0x | 0.2x | 0.4x | 0.5x |
|---|
| Lg Electronics Inc ($39IB) | 3.3x | 2.2x | 2.0x | 1.8x | 2.0x |
