Bg Group reports 501% EBITDA growth while 16.3% Revenue decline
05 Feb 2016 • About Bg Group (
$BG.) • By InTwits
Bg Group reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 39.0% in 2015, 5.4% in 2014, 34.3% in 2013, 46.6% in 2012, 52.4% in 2011
- Bg Group has high CAPEX intensity: 5 year average CAPEX/Revenue was 49.0%. At the same time it's a lot of higher than industry average of 30.3%.
- CAPEX is quite volatile: 1,126 in 2015, 1,236 in 2014, 826 in 2013, 446 in 2012, 725 in 2011
- The company has potentially unprofitable business model: ROIC is at 6.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Bg Group ($BG.) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 17,667 | 18,933 | 19,192 | 19,289 | 16,148 | -16.3% |
| EBITDA | 9,254 | 8,814 | 6,591 | 1,048 | 6,295 | 500.7% |
| Net Income | 4,234 | 4,523 | 2,441 | -1,044 | 2,334 | -323.6% |
Balance Sheet
|
|---|
| Cash | 3,601 | 4,434 | 6,208 | 5,295 | 7,200 | 36.0% |
| Short Term Debt | 1,160 | 1,064 | 475 | 1,586 | 1,268 | -20.1% |
| Long Term Debt | 13,977 | 14,443 | 17,054 | 15,921 | 15,473 | -2.8% |
Cash flow
|
|---|
| Capex | 10,300 | 9,974 | 10,605 | 8,510 | 5,596 | -34.2% |
Ratios
|
|---|
| Revenue growth | 2.9% | 7.2% | 1.4% | 0.5% | -16.3% | |
| EBITDA growth | 19.5% | -4.8% | -25.2% | -84.1% | 500.7% | |
| EBITDA Margin | 52.4% | 46.6% | 34.3% | 5.4% | 39.0% | 33.6% |
| Net Income Margin | 24.0% | 23.9% | 12.7% | -5.4% | 14.5% | 19.9% |
| CAPEX, % of revenue | 58.3% | 52.7% | 55.3% | 44.1% | 34.7% | -9.5% |
| ROIC | 16.0% | 12.4% | 7.0% | -3.6% | 6.8% | 10.3% |
| ROE | 15.2% | 14.5% | 7.5% | -3.4% | 7.9% | 11.3% |
| Net Debt/EBITDA | 1.2x | 1.3x | 1.7x | 11.7x | 1.5x | -10.1x |
Revenue and profitability
The company's Revenue dropped on 16.3% in 2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 33.6 pp from 5.4% to 39.0% in 2015.
Net Income marign jumped on 19.9 pp from -5.4% to 14.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 34.7%. The company's CAPEX/Revenue dropped on 18.0 pp from 52.7% in 2012 to 34.7% in 2015. It's average CAPEX/Revenue for the last three years was 44.7%.Battling declining revenue Bg Group invested a large share of EBITDA (88.9%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (6.76%) and ROE (7.93%). ROIC jumped on 10.3 pp from -3.6% to 6.8% in 2015. ROE jumped on 11.3 pp from -3.4% to 7.9% in 2015.
Leverage (Debt)
Debt level is 1.5x Net Debt / EBITDA and 2.7x Debt / EBITDA. Net Debt / EBITDA dropped on 10.1x from 11.7x to 1.5x in 2015. Debt decreased on 4.4% in 2015 while cash jumped on 36.0% in 2015.
Valuation
The company's trades at EV/EBITDA 1.6x and P/E 0.2x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 14.4x with the industry average at 4.7x.
Appendix 1: Peers in Oil & Gas Producers
Below you can find Bg Group 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 ($IOF) | 13.4% | 17.1% | 2.9% | 29.7% | |
| |
|---|
| Median (35 companies) | 30.5% | 17.1% | 4.3% | -0.8% | -21.2% |
|---|
| Bg Group ($BG.) | | 7.2% | 1.4% | 0.5% | -16.3% |
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 ($VGAS) | 45.5% | | | 42.9% | |
| |
|---|
| Median (23 companies) | 16.6% | 17.7% | 20.0% | 15.1% | 9.5% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Great Eastern Energy Corp ($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) | 9.3% | 16.2% | 17.4% | 18.2% | 27.6% |
|---|
| Bg Group ($BG.) | 52.4% | 46.6% | 34.3% | 5.4% | 39.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jubilant Energy N.V. ($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) | 13.9% | 17.5% | 21.1% | 15.9% | 21.9% |
|---|
| Bg Group ($BG.) | 58.3% | 52.7% | 55.3% | 44.1% | 34.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Oil & Gas Development Co ($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% | -0.7% |
|---|
| Bg Group ($BG.) | 16.0% | 12.4% | 7.0% | -3.6% | 6.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jubilant Energy N.V. ($JUB) | | 77.9x | 38.8x | 44.6x | 192.7x |
| Ruspetro ($RPO) | | 369.1x | 34.8x | 27.9x | |
| President Energy ($PPC) | | | | 9.9x | |
| Edge Resources Inc ($EDG) | | | | 8.0x | 7.6x |
| Great Eastern Energy Corp ($GEEC) | 10.7x | 6.0x | 5.6x | 4.8x | 3.8x |
| |
|---|
| Median (27 companies) | 0.5x | 0.4x | 0.7x | 1.3x | 2.5x |
|---|
| Bg Group ($BG.) | 1.2x | 1.3x | 1.7x | 11.7x | 1.5x |
