Smurfit Kappa Group reports 12.7% EBITDA growth and 1.6 pp EBITDA Margin growth from 12.7% to 14.3%
10 Feb 2016 • About Smurfit Kappa Group (
$SKG) • By InTwits
Smurfit Kappa Group reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 14.3% in 2015 vs. 12.7% in 2014 vs. 13.1% in 2011
- Smurfit Kappa Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.6%. At the same time it's in pair with industry average of 4.2%.
- CAPEX is quite volatile: 134 in 2015, 2,518 in 2014, 1,859 in 2013, 1,383 in 2012, 1,478 in 2011
- The company has highly profitable business model: ROIC is at 13.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.6x while industry average is 2.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Smurfit Kappa Group ($SKG) key annual financial indicators
| mln. € | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 7,357 | 7,335 | 7,957 | 8,083 | 8,109 | 0.3% |
| Gross Profit | 2,052 | 2,095 | 2,299 | 2,383 | 2,429 | 1.9% |
| SG&A | 1,449 | 1,519 | 1,631 | 1,672 | 1,659 | -0.8% |
| EBITDA | 966 | 983 | 1,015 | 1,027 | 1,157 | 12.7% |
| Net Income | 206 | 240 | 188 | 241 | 400 | 66.0% |
Balance Sheet
|
|---|
| Cash | 845 | 447 | 447 | 387 | 270 | -30.2% |
| Short Term Debt | 159 | 66 | 67 | 65 | 85 | 30.8% |
| Long Term Debt | 3,450 | 3,188 | 3,009 | 3,093 | 3,238 | 4.7% |
Cash flow
|
|---|
| Capex | 277 | 316 | 349 | 430 | 428 | -0.5% |
Ratios
|
|---|
| Revenue growth | 10.2% | -0.3% | 8.5% | 1.6% | 0.3% | |
| EBITDA growth | 21.1% | 1.8% | 3.3% | 1.2% | 12.7% | |
| Gross Margin | 27.9% | 28.6% | 28.9% | 29.5% | 30.0% | 0.5% |
| EBITDA Margin | 13.1% | 13.4% | 12.8% | 12.7% | 14.3% | 1.6% |
| Net Income Margin | 2.8% | 3.3% | 2.4% | 3.0% | 4.9% | 2.0% |
| SG&A, % of revenue | 19.7% | 20.7% | 20.5% | 20.7% | 20.5% | -0.2% |
| CAPEX, % of revenue | 3.8% | 4.3% | 4.4% | 5.3% | 5.3% | -0.0% |
| ROIC | 10.2% | 10.8% | 11.2% | 11.8% | 13.9% | 2.1% |
| ROE | 11.0% | 11.3% | 8.2% | 10.6% | 18.2% | 7.5% |
| Net Debt/EBITDA | 2.9x | 2.9x | 2.6x | 2.7x | 2.6x | -0.1x |
Revenue and profitability
The company's Revenue showed almost no change in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.6 pp from 12.7% to 14.3% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign increased slightly on 2.0 pp from 3.0% to 4.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Smurfit Kappa Group had CAPEX/Revenue of 5.3%. The company's CAPEX/Revenue increased slightly on 0.97 pp from 4.3% in 2012 to 5.3% in 2015. Average CAPEX/Revenue for the last three years was 5.0%.
Return on investment
The company operates at good ROIC (13.94%) and ROE (18.19%). ROIC increased on 2.1 pp from 11.8% to 13.9% in 2015. ROE increased on 7.5 pp from 10.6% to 18.2% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.6x and Debt / EBITDA is 2.9x. Net Debt / EBITDA decreased on 0.1x from 2.7x to 2.6x in 2015. Debt increased on 5.2% in 2015 while cash dropped on 30.2% in 2015.
Valuation
The company's trades at EV/EBITDA 2.7x and P/E 0.1x while industy averages are 10.5x and 26.1x. Smurfit Kappa Group's EV/(EBITDA-CAPEX) is 4.3x with the industry average at 4.7x.
Appendix 1: Peers in General Industrials
Below we provide Smurfit Kappa Group benchmarking against other companies in General Industrials 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 |
|---|
| Robinson ($RBN) | 10.3% | -1.6% | 10.2% | 20.3% | |
| Press Corp ($PESD) | -40.5% | 111.1% | 52.6% | 20.3% | |
| Thyssenkrupp Ag ($0O1C) | | -2.8% | -7.2% | 6.9% | 3.8% |
| Macfarlane Group ($MACF) | 6.7% | -1.9% | 1.4% | 6.9% | |
| Barloworld ($BWO) | | 17.5% | 1.6% | 4.4% | 1.0% |
| |
|---|
| Median (9 companies) | 8.5% | 3.1% | 1.4% | 4.4% | 1.0% |
|---|
| Smurfit Kappa Group ($SKG) | | -0.3% | 8.5% | 1.6% | 0.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Press Corp ($PESD) | 75.4% | 58.9% | 54.4% | 56.0% | |
| Macfarlane Group ($MACF) | 30.2% | 32.0% | 31.2% | 30.9% | |
| Honeywell International Inc ($HON) | 21.8% | 24.9% | 27.4% | 28.2% | 30.7% |
| Jardine Strategic Hldgs ($88EI) | 24.7% | 24.0% | 24.0% | 25.4% | |
| General Electric Co. ($GEC) | 40.2% | 38.4% | 37.7% | 24.5% | 23.9% |
| |
|---|
| Median (9 companies) | 22.2% | 24.0% | 24.6% | 24.5% | 23.9% |
|---|
| Smurfit Kappa Group ($SKG) | 27.9% | 28.6% | 28.9% | 29.5% | 30.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Press Corp ($PESD) | 37.1% | 29.5% | 29.6% | 29.2% | |
| Honeywell International Inc ($HON) | 9.7% | 13.5% | 16.6% | 16.8% | 20.0% |
| Robinson ($RBN) | 14.4% | 16.0% | 14.1% | 15.1% | |
| Jardine Strategic Hldgs ($88EI) | 28.8% | 15.0% | 13.3% | 13.5% | |
| General Electric Co. ($GEC) | 17.6% | 17.2% | 16.5% | 13.3% | 10.4% |
| |
|---|
| Median (9 companies) | 9.7% | 13.5% | 13.3% | 13.3% | 10.3% |
|---|
| Smurfit Kappa Group ($SKG) | 13.1% | 13.4% | 12.8% | 12.7% | 14.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Press Corp ($PESD) | 22.7% | 21.3% | 8.5% | 12.1% | |
| General Electric Co. ($GEC) | 8.9% | 10.5% | 9.4% | 6.1% | 6.3% |
| Jardine Strategic Hldgs ($88EI) | 4.4% | 5.8% | 5.2% | 4.1% | |
| Robinson ($RBN) | 4.9% | 4.3% | 6.0% | 3.5% | |
| Thyssenkrupp Ag ($0O1C) | 2.2% | 3.8% | 2.9% | 2.9% | 2.7% |
| |
|---|
| Median (9 companies) | 4.4% | 4.3% | 5.2% | 2.9% | 2.7% |
|---|
| Smurfit Kappa Group ($SKG) | 3.8% | 4.3% | 4.4% | 5.3% | 5.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Press Corp ($PESD) | 12.1% | 21.6% | 27.1% | 24.7% | |
| Honeywell International Inc ($HON) | 14.4% | 21.8% | 23.0% | 21.3% | 23.2% |
| Macfarlane Group ($MACF) | 15.1% | 17.9% | 22.2% | 19.0% | |
| Barloworld ($BWO) | 12.4% | 14.0% | 13.5% | 14.1% | 12.9% |
| Thyssenkrupp Ag ($0O1C) | 15.7% | -27.3% | -6.5% | 10.8% | 9.5% |
| |
|---|
| Median (9 companies) | 12.4% | 10.3% | 9.6% | 10.8% | 9.5% |
|---|
| Smurfit Kappa Group ($SKG) | 10.2% | 10.8% | 11.2% | 11.8% | 13.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| General Electric Co. ($GEC) | 11.8x | 10.5x | 8.9x | 12.0x | 10.6x |
| Coral Products ($CRU) | 1.5x | 1.5x | 2.9x | 3.4x | 2.7x |
| Thyssenkrupp Ag ($0O1C) | 1.1x | 3.4x | 4.5x | 2.0x | 1.8x |
| Jardine Strategic Hldgs ($88EI) | 0.6x | 1.4x | 1.3x | 1.3x | |
| Macfarlane Group ($MACF) | 1.3x | 1.0x | 0.8x | 1.3x | |
| |
|---|
| Median (9 companies) | 1.1x | 1.4x | 1.3x | 1.3x | 1.8x |
|---|
| Smurfit Kappa Group ($SKG) | 2.9x | 2.9x | 2.6x | 2.7x | 2.6x |
