First Quantum Minerals reports 159% Net Income decline and 22.1 pp EBITDA Margin decline from 39.9% to 17.8%
18 Feb 2016 • About First Quantum Minerals (
$FQM) • By InTwits
First Quantum Minerals reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- First Quantum Minerals doesn't have a profitable business model yet: 2015 ROIC is -0.4%
- EBITDA Margin is quite volatile: 17.8% in 2015, 39.9% in 2014, 38.1% in 2013, 80.0% in 2012, 47.7% in 2011
- First Quantum Minerals has high CAPEX intensity: 5 year average CAPEX/Revenue was 62.9%. At the same time it's a lot of higher than industry average of 9.9%.
- CAPEX is quite volatile: 1,820 in 2015, 2,893 in 2014, 2,601 in 2013, 1,373 in 2012, 1,050 in 2011
- The company has unprofitable business model: ROIC is at -0.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
First Quantum Minerals ($FQM) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,584 | 2,950 | 3,553 | 3,542 | 2,511 | -29.1% |
| Gross Profit | 1,308 | 1,101 | 1,134 | 998 | 287 | -71.2% |
| SG&A | 74 | 76 | 123 | 116 | 83 | -28.5% |
| EBITDA | 1,232 | 2,361 | 1,352 | 1,413 | 447 | -68.4% |
| Net Income | 529 | 1,773 | 459 | 835 | -496 | -159.4% |
Balance Sheet
|
|---|
| Cash | 452 | 309 | 695 | 357 | 1,178 | 229.6% |
| Short Term Debt | 48 | 49 | 1,046 | 53 | 1,199 | 2,149.5% |
| Long Term Debt | 15 | 348 | 3,027 | 5,929 | 4,675 | -21.1% |
Cash flow
|
|---|
| Capex | 1,050 | 1,373 | 2,601 | 2,893 | 1,820 | -37.1% |
Ratios
|
|---|
| Revenue growth | 8.0% | 14.2% | 20.4% | -0.3% | -29.1% | |
| EBITDA growth | 102.2% | 91.6% | -42.7% | 4.5% | -68.4% | |
| Gross Margin | 50.6% | 37.3% | 31.9% | 28.2% | 11.4% | -16.7% |
| EBITDA Margin | 47.7% | 80.0% | 38.1% | 39.9% | 17.8% | -22.1% |
| Net Income Margin | 20.5% | 60.1% | 12.9% | 23.6% | -19.8% | -43.3% |
| SG&A, % of revenue | 2.9% | 2.6% | 3.5% | 3.3% | 3.3% | 0.0% |
| CAPEX, % of revenue | 40.6% | 46.5% | 73.2% | 81.7% | 72.5% | -9.2% |
| ROIC | 24.6% | 37.7% | 8.5% | 5.5% | -0.4% | -5.9% |
| ROE | 16.4% | 39.4% | 6.9% | 9.8% | -5.3% | -15.1% |
| Net Debt/EBITDA | -0.3x | 0.0x | 2.5x | 4.0x | 10.5x | 6.5x |
Revenue and profitability
First Quantum Minerals's Revenue dropped on 29.1% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 22.1 pp from 39.9% to 17.8% in 2015.
Gross Margin dropped on 16.7 pp from 28.2% to 11.4% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign dropped on 43.3 pp from 23.6% to -19.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 72.5% in 2015. CAPEX/Revenue jumped on 25.9 pp from 46.5% in 2012 to 72.5% in 2015. It's average level of CAPEX/Revenue for the last three years was 75.8%.First Quantum Minerals has spent a lot to CAPEX (407% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-0.45%) and ROE (-5.32%). ROIC decreased on 5.9 pp from 5.5% to -0.45% in 2015. ROE dropped on 15.1 pp from 9.8% to -5.3% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 10.5x and Debt / EBITDA is 13.1x. Net Debt / EBITDA surged on 6.5x from 4.0x to 10.5x in 2015. Debt decreased slightly on 1.8% in 2015 while cash jumped on 230% in 2015.
Management team
Philip Kelvin Rodda Pascall is a the company's CEO. Philip Kelvin Rodda Pascall is a founder and has spent 22 years at the company.
Appendix 1: Peers in Industrial Metals & Mining
Below you can find First Quantum Minerals 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 ($AFRK) | | -19.2% | 5.4% | 27.4% | 8.7% |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 8.2% | 2.4% | -0.1% | 26.4% | |
| Norsk Hydro Asa ($NHY) | | -10.2% | 1.1% | 20.1% | 12.6% |
| Aluminium Bahrain Bsc ($ALBH) | 17.6% | -15.8% | 0.8% | 9.7% | |
| Ambrian ($AMBR) | 28,056.2% | -26.8% | 44.6% | 6.8% | |
| |
|---|
| Median (14 companies) | 18.1% | -9.0% | -1.4% | 2.4% | -9.0% |
|---|
| First Quantum Minerals ($FQM) | | 14.2% | 20.4% | -0.3% | -29.1% |
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% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 16.7% | 15.5% | 14.9% | 21.9% | 30.6% |
| |
|---|
| Median (13 companies) | 19.0% | 14.8% | 14.9% | 18.0% | 21.2% |
|---|
| First Quantum Minerals ($FQM) | 50.6% | 37.3% | 31.9% | 28.2% | 11.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 49.5% | 38.6% | 29.2% | 46.8% | |
| Severstal PJSC ($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% | |
| Aluminium Bahrain Bsc ($ALBH) | 28.6% | 18.5% | 18.4% | 21.6% | |
| |
|---|
| Median (15 companies) | 15.3% | 12.9% | 12.1% | 12.6% | 14.6% |
|---|
| First Quantum Minerals ($FQM) | 47.7% | 80.0% | 38.1% | 39.9% | 17.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Base Resources Ltd ($BSE) | | | | 401.9% | 6.3% |
| Mmc Norilsk Nickel ($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% | |
| Severstal PJSC ($SVST) | 10.2% | 9.5% | 10.3% | 8.4% | 6.4% |
| |
|---|
| Median (15 companies) | 6.0% | 6.7% | 7.6% | 6.3% | 6.0% |
|---|
| First Quantum Minerals ($FQM) | 40.6% | 46.5% | 73.2% | 81.7% | 72.5% |
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 ($NLMK) | 11.8% | 7.2% | 4.1% | 12.0% | |
| |
|---|
| Median (15 companies) | 11.0% | 5.4% | 4.1% | 9.1% | 8.7% |
|---|
| First Quantum Minerals ($FQM) | 24.6% | 37.7% | 8.5% | 5.5% | -0.4% |
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 ($VICO) | 5.4x | 7.7x | | 10.9x | |
| OAO TMK ($TMKS) | 3.5x | 3.6x | 3.9x | 3.8x | |
| Posco ($PIDD) | 2.9x | 3.3x | 3.9x | 3.7x | 3.6x |
| |
|---|
| Median (14 companies) | 3.0x | 2.0x | 2.0x | 0.8x | 0.4x |
|---|
| First Quantum Minerals ($FQM) | -0.3x | 0.0x | 2.5x | 4.0x | 10.5x |
