Royal Dutch Shell reports 47.2% EBITDA decline and 1.7 pp EBITDA Margin decline from 10.5% to 8.9%
04 Feb 2016 • About Royal Dutch Shell (
$RDSB) • By InTwits
Royal Dutch Shell reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Royal Dutch Shell is a company in decline: 2015 revenue growth was -37.1%, 5 years revenue CAGR was -6.4%
- EBITDA Margin is declining: 8.9% in 2015 vs. 10.5% in 2014 vs. 11.9% in 2011
- Royal Dutch Shell has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.8%. At the same time it's a lot of higher than industry average of 13.2%.
- CAPEX is quite volatile: 34,936 in FY2015, 43,361 in FY2014, 42,702 in FY2013, 53,507 in FY2012, 92,321 in FY2011
- The company has unprofitable business model: ROIC is at -1.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Royal Dutch Shell ($RDSB) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 470,171 | 467,153 | 451,235 | 421,105 | 264,960 | -37.1% |
| Gross Profit | 73,669 | 71,213 | 69,650 | 63,789 | 42,221 | -33.8% |
| SG&A | 14,335 | 14,465 | 14,675 | 13,965 | 11,956 | -14.4% |
| EBITDA | 55,943 | 52,337 | 48,379 | 44,378 | 23,453 | -47.2% |
| Net Income | 30,918 | 26,712 | 16,371 | 14,874 | 1,939 | -87.0% |
Balance Sheet
|
|---|
| Cash | 11,292 | 18,550 | 9,696 | 21,607 | 31,752 | 47.0% |
| Short Term Debt | 6,712 | 7,833 | 8,344 | 7,208 | 5,530 | -23.3% |
| Long Term Debt | 30,463 | 29,921 | 36,218 | 38,332 | 52,849 | 37.9% |
Cash flow
|
|---|
| Capex | 26,301 | 32,576 | 40,145 | 31,854 | 26,131 | -18.0% |
Ratios
|
|---|
| Revenue growth | 27.7% | -0.6% | -3.4% | -6.7% | -37.1% | |
| EBITDA growth | 33.7% | -6.4% | -7.6% | -8.3% | -47.2% | |
| Gross Margin | 15.7% | 15.2% | 15.4% | 15.1% | 15.9% | 0.8% |
| EBITDA Margin | 11.9% | 11.2% | 10.7% | 10.5% | 8.9% | -1.7% |
| Net Income Margin | 6.6% | 5.7% | 3.6% | 3.5% | 0.7% | -2.8% |
| SG&A, % of revenue | 3.0% | 3.1% | 3.3% | 3.3% | 4.5% | 1.2% |
| CAPEX, % of revenue | 5.6% | 7.0% | 8.9% | 7.6% | 9.9% | 2.3% |
| ROIC | 20.3% | 17.2% | 11.9% | 8.8% | -1.5% | -10.2% |
| ROE | 19.5% | 15.5% | 9.2% | 8.5% | 1.2% | -7.3% |
| Net Debt/EBITDA | 0.5x | 0.4x | 0.7x | 0.5x | 1.1x | 0.6x |
Revenue and profitability
Royal Dutch Shell's Revenue dropped on 37.1% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.7 pp from 10.5% to 8.9% in 2015.
Gross Margin increased slightly on 0.79 pp from 15.1% to 15.9% in 2015. SG&A as a % of Revenue increased slightly on 1.2 pp from 3.3% to 4.5% in 2015.
Net Income marign decreased on 2.8 pp from 3.5% to 0.73% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Royal Dutch Shell had CAPEX/Revenue of 9.9%. The company's CAPEX/Revenue increased on 2.9 pp from 7.0% in 2012 to 9.9% in 2015. It's average CAPEX/Revenue for the last three years was 8.8%.Royal Dutch Shell has spent a lot to CAPEX (111% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-1.47%) and low but positive ROE (1.16%). ROIC dropped on 10.2 pp from 8.8% to -1.5% in 2015. ROE decreased on 7.3 pp from 8.5% to 1.2% in 2015.
Leverage (Debt)
Debt level is 1.1x Net Debt / EBITDA and 2.5x Debt / EBITDA. Net Debt / EBITDA surged on 0.6x from 0.5x to 1.1x in 2015. Debt surged on 28.2% in 2015 while cash jumped on 47.0% in 2015.
Valuation
Royal Dutch Shell's trades at EV/EBITDA 1.2x and P/E 0.3x while industy averages are 10.5x and 26.1x.
Appendix 1: Peers in Oil & Gas Producers
Below you can find Royal Dutch Shell benchmarking vs. other companies in Oil & Gas Producers 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 |
|---|
| 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 ($IOF) | 13.4% | 17.1% | 2.9% | 29.7% | |
| |
|---|
| Median (35 companies) | 28.6% | 17.1% | 4.3% | 0.5% | -18.0% |
|---|
| Royal Dutch Shell ($RDSB) | | -0.6% | -3.4% | -6.7% | -37.1% |
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 ($VGAS) | 45.5% | | | 42.9% | |
| |
|---|
| Median (22 companies) | 17.5% | 18.3% | 21.7% | 16.3% | -6.1% |
|---|
| Royal Dutch Shell ($RDSB) | 15.7% | 15.2% | 15.4% | 15.1% | 15.9% |
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 ($HAWK) | -358.5% | -80.7% | 72.2% | 57.7% | |
| |
|---|
| Median (36 companies) | 9.3% | 17.2% | 20.6% | 18.2% | 28.1% |
|---|
| Royal Dutch Shell ($RDSB) | 11.9% | 11.2% | 10.7% | 10.5% | 8.9% |
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 ($RPO) | 83.5% | 139.8% | 55.2% | 77.2% | |
| |
|---|
| Median (37 companies) | 14.6% | 17.7% | 24.6% | 17.2% | 27.0% |
|---|
| Royal Dutch Shell ($RDSB) | 5.6% | 7.0% | 8.9% | 7.6% | 9.9% |
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 ($BNK) | 19.7% | 17.4% | 20.8% | 20.8% | |
| |
|---|
| Median (38 companies) | 5.4% | 4.6% | 5.8% | 5.3% | 0.2% |
|---|
| Royal Dutch Shell ($RDSB) | 20.3% | 17.2% | 11.9% | 8.8% | -1.5% |
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 ($EDG) | | | | 8.0x | 7.6x |
| |
|---|
| Median (27 companies) | 0.5x | 0.5x | 0.7x | 1.3x | 3.8x |
|---|
| Royal Dutch Shell ($RDSB) | 0.5x | 0.4x | 0.7x | 0.5x | 1.1x |
