Magnitogorsk Iron & Steel Works Net Income jumped on 1,077% in 2015 and EBITDA Margin increased on 8.8 pp from 19.5% to 28.3%
15 Feb 2016 • About Magnitogorsk Iron & Steel Works (
$MMK) • By InTwits
Magnitogorsk Iron & Steel Works reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Magnitogorsk Iron & Steel Works is a company in decline: 2015 revenue growth was -26.6%, 5 years revenue CAGR was -5.4%
- EBITDA Margin is expanding: 28.3% in 2015 vs. 19.5% in 2014 vs. 13.5% in 2011
- EBITDA Margin is quite volatile: 28.3% in 2015, 19.5% in 2014, 14.0% in 2013, 13.1% in 2012, 13.5% in 2011
- Magnitogorsk Iron & Steel Works has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.9%. At the same time it's in pair with industry average of 10.6%.
- CAPEX is quite volatile: 348 in 2015, 497 in 2014, 622 in 2013, 674 in 2012, 1,154 in 2011
- The company has highly profitable business model: ROIC is at 18.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Magnitogorsk Iron & Steel Works ($MMK) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 9,306 | 9,328 | 8,190 | 7,952 | 5,839 | -26.6% |
| Gross Profit | 1,550 | 1,447 | 1,223 | 1,740 | 1,785 | 2.6% |
| SG&A | 1,036 | 1,092 | 1,111 | 891 | 652 | -26.8% |
| EBITDA | 1,252 | 1,225 | 1,143 | 1,549 | 1,651 | 6.6% |
| Net Income | -120 | -84 | -2,400 | -43 | 420 | -1,076.7% |
Balance Sheet
|
|---|
| Cash | 424 | 362 | 154 | 327 | 369 | 12.8% |
| Short Term Debt | 1,334 | 1,631 | 1,010 | 863 | 893 | 3.5% |
| Long Term Debt | 3,068 | 2,236 | 2,163 | 1,722 | 954 | -44.6% |
Cash flow
|
|---|
| Capex | 1,154 | 674 | 622 | 497 | 348 | -30.0% |
Ratios
|
|---|
| Revenue growth | 20.6% | 0.2% | -12.2% | -2.9% | -26.6% | |
| EBITDA growth | -12.8% | -2.2% | -6.7% | 35.5% | 6.6% | |
| Gross Margin | 16.7% | 15.5% | 14.9% | 21.9% | 30.6% | 8.7% |
| EBITDA Margin | 13.5% | 13.1% | 14.0% | 19.5% | 28.3% | 8.8% |
| Net Income Margin | -1.3% | -0.9% | -29.3% | -0.5% | 7.2% | 7.7% |
| SG&A, % of revenue | 11.1% | 11.7% | 13.6% | 11.2% | 11.2% | -0.0% |
| CAPEX, % of revenue | 12.4% | 7.2% | 7.6% | 6.3% | 6.0% | -0.3% |
| ROIC | 2.4% | 1.8% | 1.4% | 9.1% | 18.1% | 9.0% |
| ROE | -1.2% | -0.9% | -29.1% | -0.8% | 11.6% | 12.4% |
| Net Debt/EBITDA | 3.2x | 2.9x | 2.6x | 1.5x | 0.9x | -0.6x |
Revenue and profitability
The company's Revenue dropped on 26.6% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 8.8 pp from 19.5% to 28.3% in 2015.
Gross Margin increased on 8.7 pp from 21.9% to 30.6% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign increased on 7.7 pp from -0.54% to 7.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 6.0% in 2015. Magnitogorsk Iron & Steel Works showed small CAPEX/Revenue decline of 1.3 pp from 7.2% in 2012 to 6.0% in 2015. It's average level of CAPEX/Revenue for the last three years was 6.6%.
Return on investment
The company operates at good ROIC (18.09%) while ROE is low (11.64%). ROIC increased on 9.0 pp from 9.1% to 18.1% in 2015. ROE surged on 12.4 pp from -0.80% to 11.6% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is 1.1x. Net Debt / EBITDA dropped on 0.6x from 1.5x to 0.9x in 2015. Debt dropped on 28.5% in 2015 while cash surged on 12.8% in 2015.
Valuation
Magnitogorsk Iron & Steel Works's trades at EV/EBITDA 0.9x and P/E 0.1x while industy averages are 10.5x and 26.1x. Magnitogorsk Iron & Steel Works's EV/(EBITDA-CAPEX) is 1.2x with the industry average at 4.7x.
Appendix 1: Peers in Industrial Metals & Mining
Below you can find Magnitogorsk Iron & Steel Works benchmarking vs. other companies in Industrial Metals & Mining 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 |
|---|
| Afarak Group ($AFRK) | 29.0% | -19.2% | 5.4% | 27.4% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 8.2% | 2.4% | -0.1% | 26.4% | |
| Norsk Hydro Asa ($NHY) | -5.6% | -10.2% | 1.1% | 20.1% | |
| Aluminium Bahrain Bsc ($ALBH) | 17.6% | -15.8% | 0.8% | 9.7% | |
| Ambrian ($AMBR) | 28,056.2% | -26.8% | 44.6% | 6.8% | |
| |
|---|
| Median (14 companies) | 17.6% | -9.0% | 0.3% | 2.4% | -9.8% |
|---|
| Magnitogorsk Iron & Steel Works ($MMK) | | 0.2% | -12.2% | -2.9% | -26.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 59.0% | 49.1% | 43.4% | 52.2% | |
| Severstal PJSC ($SVST) | 31.0% | 23.5% | 29.9% | 34.4% | 40.4% |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 22.5% | 17.7% | 15.1% | 28.6% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | 28.6% | 23.8% | 19.4% | 28.3% | |
| First Quantum Minerals ($FQM) | 50.6% | 37.3% | 31.9% | 28.2% | |
| |
|---|
| Median (13 companies) | 21.9% | 15.9% | 15.1% | 18.0% | 16.2% |
|---|
| Magnitogorsk Iron & Steel Works ($MMK) | 16.7% | 15.5% | 14.9% | 21.9% | 30.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 49.5% | 38.6% | 29.2% | 46.8% | |
| First Quantum Minerals ($FQM) | 47.7% | 80.0% | 38.1% | 39.9% | |
| Severstal PJSC ($SVST) | 22.5% | 14.9% | 19.3% | 26.4% | 32.4% |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 17.1% | 12.7% | 5.7% | 25.3% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | 19.2% | 15.6% | 13.8% | 21.8% | |
| |
|---|
| Median (15 companies) | 16.3% | 13.1% | 12.1% | 12.6% | 21.0% |
|---|
| Magnitogorsk Iron & Steel Works ($MMK) | 13.5% | 13.1% | 14.0% | 19.5% | 28.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Base Resources Ltd ($BSE) | | | | 401.9% | 6.3% |
| First Quantum Minerals ($FQM) | 40.6% | 46.5% | 73.2% | 81.7% | |
| Mmc Norilsk Nickel ($MNOD) | 15.6% | 22.3% | 17.1% | 10.8% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 9.0% | 7.0% | 7.9% | 9.9% | |
| Vimetco Nv ($VICO) | | | | 8.8% | |
| |
|---|
| Median (15 companies) | 6.0% | 6.7% | 7.7% | 6.4% | 5.3% |
|---|
| Magnitogorsk Iron & Steel Works ($MMK) | 12.4% | 7.2% | 7.6% | 6.3% | 6.0% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Zibao Metals Recycling Hldgs Ltd ($ZBO) | | 41.7% | 56.6% | 55.8% | 26.6% |
| Mmc Norilsk Nickel ($MNOD) | 32.4% | 21.8% | 14.2% | 34.1% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 13.6% | 6.2% | -2.7% | 25.6% | |
| Severstal PJSC ($SVST) | 21.3% | 10.3% | 9.6% | 17.7% | 30.3% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 11.8% | 7.2% | 4.1% | 12.0% | |
| |
|---|
| Median (15 companies) | 11.9% | 6.2% | 4.9% | 7.4% | 14.9% |
|---|
| Magnitogorsk Iron & Steel Works ($MMK) | 2.4% | 1.8% | 1.4% | 9.1% | 18.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ambrian ($AMBR) | 3,395.4x | | 42.6x | 176.1x | |
| Ezz Steel ($AEZD) | 3.4x | 4.8x | 3.6x | 19.4x | |
| Vimetco Nv ($VICO) | 5.4x | 7.7x | | 10.9x | |
| First Quantum Minerals ($FQM) | -0.3x | 0.0x | 2.5x | 4.0x | |
| OAO TMK ($TMKS) | 3.5x | 3.6x | 3.9x | 3.8x | |
| |
|---|
| Median (14 companies) | 2.2x | 1.9x | 2.0x | 0.8x | 2.0x |
|---|
| Magnitogorsk Iron & Steel Works ($MMK) | 3.2x | 2.9x | 2.6x | 1.5x | 0.9x |
