BP reports 61.4% EBITDA decline and 37.0% Revenue decline

02 Feb 2016 • About BP ($BP.A) • By InTwits

BP reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

BP is a company in decline: 2015 revenue growth was -37.0%, 5 years revenue CAGR was -5.6%
EBITDA Margin is quite volatile: 3.0% in 2015, 4.9% in 2014, 10.9% in 2013, 7.1% in 2012, 11.8% in 2011
BP has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.4%. At the same time it's a lot of higher than industry average of 5.5%.
CAPEX is quite volatile: 30,993 in 2015, 34,696 in 2014, 23,394 in 2013, 14,700 in 2012, 3,930 in 2011
The company has unprofitable business model: ROIC is at -6.1%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

BP ($BP.A) key annual financial indicators

mln. $	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	375,517	375,765	379,136	353,568	222,894	-37.0%
Gross Profit	65,754	49,065	53,258	44,286	21,064	-52.4%
SG&A	13,958	13,357	13,070	12,696	11,553	-9.0%
EBITDA	44,136	26,844	41,313	17,360	6,708	-61.4%
Net Income	25,700	11,017	23,451	3,780	-6,482	-271.5%
Balance Sheet
Cash	14,067	19,635	22,520	29,763	26,389	-11.3%
Short Term Debt	9,044	10,033	7,381	6,877	6,944	1.0%
Long Term Debt	35,169	38,767	40,811	45,977	46,224	0.5%
Cash flow
Capex	17,845	23,222	24,520	22,546	18,648	-17.3%
Ratios
Revenue growth	26.4%	0.1%	0.9%	-6.7%	-37.0%
EBITDA growth	2,080.6%	-39.2%	53.9%	-58.0%	-61.4%
Gross Margin	17.5%	13.1%	14.0%	12.5%	9.5%	-3.1%
EBITDA Margin	11.8%	7.1%	10.9%	4.9%	3.0%	-1.9%
Net Income Margin	6.8%	2.9%	6.2%	1.1%	-2.9%	-4.0%
SG&A, % of revenue	3.7%	3.6%	3.4%	3.6%	5.2%	1.6%
CAPEX, % of revenue	4.8%	6.2%	6.5%	6.4%	8.4%	2.0%
ROIC	20.4%	8.0%	14.7%	1.2%	-6.1%	-7.3%
ROE	24.9%	9.6%	18.9%	3.1%	-6.2%	-9.4%
Net Debt/EBITDA	0.7x	1.1x	0.6x	1.3x	4.0x	2.7x

Revenue and profitability

BP's Revenue dropped on 37.0% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 1.9 pp from 4.9% to 3.0% in 2015.

Gross Margin decreased on 3.1 pp from 12.5% to 9.5% in 2015. SG&A as a % of Revenue increased slightly on 1.6 pp from 3.6% to 5.2% in 2015.

Net Income marign decreased on 4.0 pp from 1.1% to -2.9% in 2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 8.4% in 2015. The company's CAPEX/Revenue increased on 2.2 pp from 6.2% in 2012 to 8.4% in 2015. It's average CAPEX/Revenue for the last three years was 7.1%.BP has spent a lot to CAPEX (278% of EBITDA) which didn't stop revenue from falling.

Return on investment

The company operates at negative ROIC (-6.14%) and ROE (-6.22%). ROIC decreased on 7.3 pp from 1.2% to -6.1% in 2015. ROE decreased on 9.4 pp from 3.1% to -6.2% in 2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 4.0x and Debt / EBITDA is 7.9x. Net Debt / EBITDA surged on 2.7x from 1.3x to 4.0x in 2015. Debt increased slightly on 0.59% in 2015 while cash dropped on 11.3% in 2015.

Appendix 1: Peers in Oil & Gas Producers

Below we provide BP benchmarking against other companies in Oil & Gas Producers 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 5	FY2011	FY2012	FY2013	FY2014	FY2015
Cadogan Petroleum ($CAD)	38.9%	-46.1%	0.3%	764.9%
Parkmead Group(The) ($PMG)		-21.3%	38.0%	505.8%	-24.4%
Caza Oil & Gas Inc ($CAZA)	83.1%	21.5%	67.0%	178.3%
Nighthawk Energy ($HAWK)	-57.5%	75.5%	1,533.7%	81.8%
Iofina ($IOF)	13.4%	17.1%	2.9%	29.7%
Median (35 companies)	27.7%	17.1%	4.3%	0.5%	-8.8%
BP ($BP.A)		0.1%	0.9%	-6.7%	-37.0%

Top companies by Gross margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Bankers Petroleum Ltd ($BNK)	77.9%	77.5%	81.1%	80.8%
Oil & Gas Development Co ($OGDC)	66.0%	69.9%	70.9%	68.5%	62.7%
Nighthawk Energy ($HAWK)	14.5%	38.8%	66.8%	58.1%
Tethys Petroleum Limited ($TPL)	-4.2%	14.7%	28.9%	46.2%
Volga Gas ($VGAS)	45.5%			42.9%
Median (22 companies)	15.7%	18.3%	21.7%	17.4%	-21.7%
BP ($BP.A)	17.5%	13.1%	14.0%	12.5%	9.5%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Great Eastern Energy Corp ($GEEC)	48.7%	61.2%	64.1%	70.4%	66.5%
Oil & Gas Development Co ($OGDC)	67.6%	73.7%	65.9%	69.3%	62.4%
Bankers Petroleum Ltd ($BNK)	51.4%	53.3%	59.4%	68.3%
Jubilant Energy N.V. ($JUB)	-250.4%	23.7%	60.9%	67.6%	28.7%
Nighthawk Energy ($HAWK)	-358.5%	-80.7%	72.2%	57.7%
Median (36 companies)	9.4%	17.2%	20.6%	18.2%	28.4%
BP ($BP.A)	11.8%	7.1%	10.9%	4.9%	3.0%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jubilant Energy N.V. ($JUB)	301.5%	322.7%	481.7%	208.5%	5.9%
Caza Oil & Gas Inc ($CAZA)	430.1%	249.9%	352.9%	177.4%
Ithaca Energy Inc ($IAE)	160.2%	95.1%	83.4%	103.5%
Tethys Petroleum Limited ($TPL)	182.8%	52.0%	64.4%	95.2%
Ruspetro ($RPO)	83.5%	139.8%	55.2%	77.2%
Median (37 companies)	14.6%	17.7%	24.6%	17.2%	29.3%
BP ($BP.A)	4.8%	6.2%	6.5%	6.4%	8.4%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Oil & Gas Development Co ($OGDC)	41.2%	46.7%	40.4%	39.7%	24.3%
Haike Chemical Group Ltd ($HAIK)	7.7%	0.7%	1.0%	31.4%
Nighthawk Energy ($HAWK)	-5.1%	-3.9%	19.6%	23.1%
Novatek OAO ($NVTK)	47.4%	21.7%	29.0%	21.2%
Bankers Petroleum Ltd ($BNK)	19.7%	17.4%	20.8%	20.8%
Median (38 companies)	5.4%	4.6%	5.8%	5.7%	4.4%
BP ($BP.A)	20.4%	8.0%	14.7%	1.2%	-6.1%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jubilant Energy N.V. ($JUB)		77.9x	38.8x	44.6x	192.7x
Ruspetro ($RPO)		369.1x	34.8x	27.9x
Bg Group ($BG.)	1.2x	1.3x	1.7x	11.7x
President Energy ($PPC)				9.9x
Edge Resources Inc ($EDG)				8.0x	7.6x
Median (27 companies)	0.5x	0.4x	0.7x	1.3x	2.5x
BP ($BP.A)	0.7x	1.1x	0.6x	1.3x	4.0x

BP stock price chart

BP financials

mln.	FY2010	FY2011	FY2012

Revenue	297,107	375,517	375,765
EBITDA	2,024	44,136	26,844
Net income	-3,719.000	25,700	11,017
CAPEX	18,421	17,845	23,222
Debt	45,336	44,213	48,800
Cash	18,556	14,067	19,635

About BP

BP p.l.c. operates as an integrated oil and gas company worldwide. It operates in three segments: Upstream, Downstream, and Rosneft. The Upstream segment engages in the oil and natural gas exploration, field development, and production; midstream transportation, and storage and processing; and marketing and trade of natural gas, including liquefied natural gas (LNG), and power and natural gas liquids (NGL). It also owns and manages crude oil and natural gas pipelines; processing facilities and export terminals; and LNG processing facilities and transportation, as well as NGL extraction business. The Downstream segment refines, manufactures, markets, transports, supplies, and trades in crude oil, petroleum, and petrochemicals products and related services to wholesale and retail customers. It offers lubricants and related products under the Castrol, BP, and Aral brands to the automotive, industrial, marine, and energy markets; and petrochemicals products, such as purified terephthalic acid, paraxylene, acetic acid, olefins and derivatives, and specialty petrochemicals products. This segment also sells gasoline, diesel, and aviation fuel. The Rosneft segment engages in the exploration and production of hydrocarbons in the United States, Canada, Vietnam, Venezuela, Brazil, Algeria, the United Arab Emirates, Turkmenistan, and Norway; and offers jet fuel, bunkering, bitumen, and lubricants. This segment also owns and operates 10 refineries in Russia; and has an interest in 4 refineries in Germany. As of December 31, 2014, this segment owned and operated approximately 2,500 retail service stations in Russia. The company also produces bioethanol, sugar, and biobutanol; exports power to the local grid; transports hydrocarbon products through shipping and chartering services; and holds interests in 16 operating wind farms with a generation capacity of 2,585 megawatts. BP p.l.c. was founded in 1889 and is headquartered in London, the United Kingdom.