Marsh & Mclennan Cos Inc reports 9.1% Net Income growth and almost no change in Revenue of 12,893
04 Feb 2016 • About Marsh & Mclennan Cos Inc (
$MHM) • By InTwits
Marsh & Mclennan Cos Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 22.0% in 2015 vs. 20.8% in 2014 vs. 17.1% in 2011
- Marsh & Mclennan Cos Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.7%. At the same time it's a lot of higher than industry average of 1.4%.
- CAPEX is quite volatile: 2,520 in 2015, 2,779 in 2014, 2,739 in 2013, 1,034 in 2012, 1,112 in 2011
- The company has highly profitable business model: ROIC is at 22.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.1x while industry average is 1.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Marsh & Mclennan Cos Inc ($MHM) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 11,526 | 11,924 | 12,261 | 12,951 | 12,893 | -0.4% |
| EBITDA | 1,970 | 2,178 | 2,435 | 2,689 | 2,842 | 5.7% |
| Net Income | 993 | 1,176 | 1,357 | 1,465 | 1,599 | 9.1% |
Balance Sheet
|
|---|
| Cash | 2,113 | 2,301 | 2,303 | 1,958 | 1,374 | -29.8% |
| Short Term Debt | 260 | 260 | 334 | 11 | 12 | 9.1% |
| Long Term Debt | 2,668 | 2,658 | 2,621 | 3,368 | 4,402 | 30.7% |
Cash flow
|
|---|
| Capex | 280 | 320 | 401 | 368 | 325 | -11.7% |
Ratios
|
|---|
| Revenue growth | 9.3% | 3.5% | 2.8% | 5.6% | -0.4% | |
| EBITDA growth | 52.0% | 10.6% | 11.8% | 10.4% | 5.7% | |
| EBITDA Margin | 17.1% | 18.3% | 19.9% | 20.8% | 22.0% | 1.3% |
| Net Income Margin | 8.6% | 9.9% | 11.1% | 11.3% | 12.4% | 1.1% |
| CAPEX, % of revenue | 2.4% | 2.7% | 3.3% | 2.8% | 2.5% | -0.3% |
| ROIC | 17.6% | 19.5% | 19.9% | 21.0% | 22.0% | 1.0% |
| ROE | 16.2% | 18.9% | 18.8% | 19.6% | 23.6% | 4.0% |
| Net Debt/EBITDA | 0.4x | 0.3x | 0.3x | 0.5x | 1.1x | 0.5x |
Revenue and profitability
The company's Revenue showed almost no change in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.3 pp from 20.8% to 22.0% in 2015.
Net Income marign increased slightly on 1.1 pp from 11.3% to 12.4% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.5% in 2015. The company showed almost no change in CAPEX/Revenue from 2012 to 2015. It's average level of CAPEX/Revenue for the last three years was 2.9%.
Return on investment
The company operates at high and attractive ROIC (21.98%) and ROE (23.57%). ROIC increased slightly on 0.99 pp from 21.0% to 22.0% in 2015. ROE increased on 4.0 pp from 19.6% to 23.6% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.6x. Net Debt / EBITDA jumped on 0.5x from 0.5x to 1.1x in 2015. Debt surged on 30.6% in 2015 while cash dropped on 29.8% in 2015.
Valuation
Marsh & Mclennan Cos Inc's trades at EV/EBITDA 1.2x and P/E 0.2x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 1.3x with the industry average at 4.7x.
Appendix 1: Peers in Nonlife Insurance
Below we provide Marsh & Mclennan Cos Inc benchmarking against other companies in Nonlife Insurance 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 |
|---|
| Helios Underwriting ($HUW) | -7.1% | 17.8% | 26.1% | 47.9% | |
| General Accident ($GACB) | | | -20.4% | 25.6% | -45.7% |
| Gable Hldgs Inc ($GAH) | 30.1% | 36.6% | 36.3% | 22.1% | |
| Randall & Quilter Invt Hldgs Ltd ($RQIH) | 12.1% | 40.7% | 4.7% | 20.7% | |
| Arab Insurance Group(Arig) ($AGRD) | -11.7% | 17.9% | -6.1% | 7.3% | |
| |
|---|
| Median (7 companies) | 5.8% | 17.9% | 4.7% | 20.7% | -31.4% |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | | 3.5% | 2.8% | 5.6% | -0.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| F.B.D.Hldgs ($FBH) | 1.6% | 3.0% | 5.4% | 7.0% | |
| Randall & Quilter Invt Hldgs Ltd ($RQIH) | 3.8% | 1.4% | 1.0% | 1.1% | |
| Rsa Insurance Group ($RSAB) | | 0.4% | 0.4% | 0.5% | 0.2% |
| General Accident ($GACB) | | 0.5% | 0.1% | 0.3% | 0.2% |
| Arab Insurance Group(Arig) ($AGRD) | 0.6% | 0.2% | 0.5% | 0.2% | |
| |
|---|
| Median (7 companies) | 0.6% | 0.4% | 0.5% | 0.3% | 0.2% |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 2.4% | 2.7% | 3.3% | 2.8% | 2.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Helios Underwriting ($HUW) | -2.4% | 2.9% | 2.3% | 4.9% | |
| Arab Insurance Group(Arig) ($AGRD) | -1.6% | 1.8% | 1.5% | 1.2% | |
| General Accident ($GACB) | | 0.4% | 0.7% | 1.0% | 0.6% |
| F.B.D.Hldgs ($FBH) | 4.8% | 5.4% | 5.0% | 0.2% | |
| Rsa Insurance Group ($RSAB) | | 2.9% | -0.6% | -0.1% | 1.2% |
| |
|---|
| Median (7 companies) | 0.1% | 2.9% | 1.5% | 0.2% | 0.9% |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 17.6% | 19.5% | 19.9% | 21.0% | 22.0% |
