Posco EBITDA dropped on 12.8% in 2015 and Revenue dropped on 10.6%
28 Jan 2016 • About Posco (
$PIDD) • By InTwits
Posco reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Posco has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.8%. At the same time it's in pair with industry average of 10.7%.
- CAPEX is quite volatile: 2,560,244 in 2015, 3,505,549 in 2014, 6,569,613 in 2013, 7,054,543 in 2012, 5,330,968 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Posco ($PIDD) key annual financial indicators
| mln. KRW | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 68,938,725 | 63,604,151 | 61,864,650 | 65,098,445 | 58,192,345 | -10.6% |
| Gross Profit | 9,114,875 | 7,461,259 | 6,860,059 | 7,283,404 | 6,534,247 | -10.3% |
| SG&A | 3,171,265 | 3,317,825 | 3,352,506 | 3,512,526 | 3,525,085 | 0.4% |
| EBITDA | 7,807,233 | 6,216,868 | 5,681,684 | 6,452,080 | 5,628,290 | -12.8% |
| Net Income | 3,648,140 | 2,462,080 | 1,376,390 | 626,100 | 180,646 | -71.1% |
Balance Sheet
|
|---|
| Cash | 4,386,902 | 4,680,526 | 4,208,562 | 3,811,202 | 4,870,185 | 27.8% |
| Short Term Debt | 10,806,805 | 10,525,392 | 10,727,864 | 12,217,372 | 12,397,908 | 1.5% |
| Long Term Debt | 16,049,711 | 14,445,046 | 15,572,216 | 15,257,588 | 12,863,608 | -15.7% |
Cash flow
|
|---|
| Capex | 5,330,968 | 7,054,543 | 6,569,613 | 3,505,549 | 2,560,244 | -27.0% |
Ratios
|
|---|
| Revenue growth | 44.0% | -7.7% | -2.7% | 5.2% | -10.6% | |
| EBITDA growth | -9.0% | -20.4% | -8.6% | 13.6% | -12.8% | |
| Gross Margin | 13.2% | 11.7% | 11.1% | 11.2% | 11.2% | 0.0% |
| EBITDA Margin | 11.3% | 9.8% | 9.2% | 9.9% | 9.7% | -0.2% |
| Net Income Margin | 5.3% | 3.9% | 2.2% | 1.0% | 0.3% | -0.7% |
| SG&A, % of revenue | 4.6% | 5.2% | 5.4% | 5.4% | 6.1% | 0.7% |
| CAPEX, % of revenue | 7.7% | 11.1% | 10.6% | 5.4% | 4.4% | -1.0% |
| ROIC | 8.6% | 5.3% | 4.2% | 4.4% | 3.3% | -1.1% |
| ROE | 9.7% | 6.3% | 3.3% | 1.4% | 0.4% | -1.1% |
| Net Debt/EBITDA | 2.9x | 3.3x | 3.9x | 3.7x | 3.6x | -0.0x |
Revenue and profitability
Posco's Revenue dropped on 10.6% in 2015. EBITDA Margin showed almost no change in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue increased slightly on 0.66 pp from 5.4% to 6.1% in 2015.
Net Income marign decreased slightly on 0.65 pp from 0.96% to 0.31% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 4.4%. CAPEX/Revenue decreased on 6.7 pp from 11.1% in 2012 to 4.4% in 2015. It's average CAPEX/Revenue for the last three years was 6.8%.
Return on investment
The company operates at low ROIC (3.31%) and ROE (0.36%). ROIC decreased slightly on 1.1 pp from 4.4% to 3.3% in 2015. ROE decreased slightly on 1.1 pp from 1.4% to 0.36% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.6x and Debt / EBITDA is 4.5x. Net Debt / EBITDA decreased on 0.045x from 3.7x to 3.6x in 2015. Debt decreased on 8.1% in 2015 while cash surged on 27.8% in 2015.
Valuation
The company's trades at EV/EBITDA 3.6x and P/E 0.0x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 6.6x with the industry average at 4.7x.
Appendix 1: Peers in Industrial Metals & Mining
Below you can find Posco benchmarking vs. other companies in Industrial Metals & Mining 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 |
|---|
| Afarak Group ($AFRK) | 29.0% | -19.2% | 5.4% | 27.4% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 8.2% | 2.4% | -0.1% | 26.4% | |
| Norsk Hydro Asa ($NHY) | -5.6% | -10.2% | 1.1% | 20.1% | |
| Aluminium Bahrain Bsc ($ALBH) | 17.6% | -15.8% | 0.8% | 9.7% | |
| Ambrian ($AMBR) | 28,056.2% | -26.8% | 44.6% | 6.8% | |
| |
|---|
| Median (14 companies) | 18.5% | -5.6% | 0.3% | 0.7% | 195.4% |
|---|
| Posco ($PIDD) | | -7.7% | -2.7% | 5.2% | -10.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 59.0% | 49.1% | 43.4% | 52.2% | |
| Severstal PJSC ($SVST) | 31.0% | 23.5% | 29.9% | 34.4% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 22.5% | 17.7% | 15.1% | 28.6% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | 28.6% | 23.8% | 19.4% | 28.3% | |
| First Quantum Minerals ($FQM) | 50.6% | 37.3% | 31.9% | 28.2% | |
| |
|---|
| Median (13 companies) | 21.9% | 16.6% | 15.1% | 19.5% | 12.8% |
|---|
| Posco ($PIDD) | 13.2% | 11.7% | 11.1% | 11.2% | 11.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 49.5% | 38.6% | 29.2% | 46.8% | |
| First Quantum Minerals ($FQM) | 47.7% | 80.0% | 38.1% | 39.9% | |
| Severstal PJSC ($SVST) | 22.5% | 14.9% | 19.3% | 26.4% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 17.1% | 12.7% | 5.7% | 25.3% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | 19.2% | 15.6% | 13.8% | 21.8% | |
| |
|---|
| Median (15 companies) | 16.3% | 13.3% | 13.8% | 13.0% | 20.2% |
|---|
| Posco ($PIDD) | 11.3% | 9.8% | 9.2% | 9.9% | 9.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Base Resources Ltd ($BSE) | | | | 401.9% | 6.3% |
| First Quantum Minerals ($FQM) | 40.6% | 46.5% | 73.2% | 81.7% | |
| Mmc Norilsk Nickel ($MNOD) | 15.6% | 22.3% | 17.1% | 10.8% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 9.0% | 7.0% | 7.9% | 9.9% | |
| Vimetco Nv ($VICO) | | | | 8.8% | |
| |
|---|
| Median (15 companies) | 6.0% | 6.7% | 7.6% | 6.4% | 3.1% |
|---|
| Posco ($PIDD) | 7.7% | 11.1% | 10.6% | 5.4% | 4.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Zibao Metals Recycling Hldgs Ltd ($ZBO) | | 41.7% | 56.6% | 55.8% | 26.6% |
| Mmc Norilsk Nickel ($MNOD) | 32.4% | 21.8% | 14.2% | 34.1% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 13.6% | 6.2% | -2.7% | 25.6% | |
| Severstal PJSC ($SVST) | 21.3% | 10.3% | 9.6% | 17.7% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | 11.8% | 7.2% | 4.1% | 12.0% | |
| |
|---|
| Median (15 companies) | 11.9% | 6.2% | 4.8% | 9.1% | 14.7% |
|---|
| Posco ($PIDD) | 8.6% | 5.3% | 4.2% | 4.4% | 3.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ambrian ($AMBR) | 3,395.4x | | 42.6x | 176.1x | |
| Ezz Steel ($AEZD) | 3.4x | 4.8x | 3.6x | 19.4x | |
| Vimetco Nv ($VICO) | 5.4x | 7.7x | | 10.9x | |
| First Quantum Minerals ($FQM) | -0.3x | 0.0x | 2.5x | 4.0x | |
| OAO TMK ($TMKS) | 3.5x | 3.6x | 3.9x | 3.8x | |
| |
|---|
| Median (14 companies) | 2.4x | 1.9x | 2.0x | 0.8x | 2.3x |
|---|
| Posco ($PIDD) | 2.9x | 3.3x | 3.9x | 3.7x | 3.6x |
