Kerry Group Debt jumped on 30.3% in 2015 and Net Debt / EBITDA surged on 0.4x from 1.8x to 2.2x
23 Feb 2016 • About Kerry Group (
$KYGA) • By InTwits
Kerry Group reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Kerry Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.5%. At the same time it's in pair with industry average of 10.6%.
- CAPEX is quite volatile: 412 in 2015, 700 in 2014, 968 in 2013, 1,336 in 2012, 1,609 in 2011
- The company has highly profitable business model: ROIC is at 15.8%
- It operates with high leverage: Net Debt/EBITDA is 2.2x while industry average is 0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kerry Group ($KYGA) key annual financial indicators
| mln. € | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 5,302 | 5,848 | 5,837 | 5,757 | 6,105 | 6.1% |
| Gross Profit | 2,166 | 2,542 | | | | |
| EBITDA | 573 | 504 | 294 | 720 | 840 | 16.7% |
| Net Income | 361 | 261 | 84 | 480 | 525 | 9.5% |
Balance Sheet
|
|---|
| Cash | 238 | 215 | 246 | 284 | 236 | -16.7% |
| Short Term Debt | 39 | 213 | 44 | 303 | 38 | -87.3% |
| Long Term Debt | 1,560 | 1,287 | 1,282 | 1,271 | 2,012 | 58.3% |
Cash flow
|
|---|
| Capex | 144 | 168 | 190 | 274 | 252 | -8.0% |
Ratios
|
|---|
| Revenue growth | 6.9% | 10.3% | -0.2% | -1.4% | 6.1% | |
| EBITDA growth | -5.0% | -12.1% | -41.6% | 144.5% | 16.7% | |
| Gross Margin | 40.8% | 43.5% | | | | 0.0% |
| EBITDA Margin | 10.8% | 8.6% | 5.0% | 12.5% | 13.8% | 1.3% |
| Net Income Margin | 6.8% | 4.5% | 1.4% | 8.3% | 8.6% | 0.3% |
| CAPEX, % of revenue | 2.7% | 2.9% | 3.3% | 4.8% | 4.1% | -0.6% |
| ROIC | 14.0% | 10.6% | 5.2% | 16.6% | 15.8% | -0.8% |
| ROE | 20.8% | 13.5% | 4.2% | 22.8% | 20.9% | -1.9% |
| Net Debt/EBITDA | 2.4x | 2.6x | 3.7x | 1.8x | 2.2x | 0.4x |
Revenue and profitability
The company's Revenue increased on 6.1% in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.3 pp from 12.5% to 13.8% in 2015.
Net Income marign showed almost no change in 2015.
Capital expenditures (CAPEX) and working capital investments
Kerry Group's CAPEX/Revenue was 4.1% in 2015. The company showed small growth in CAPEX/Revenue of 1.3 pp from 2.9% in 2012 to 4.1% in 2015. Average CAPEX/Revenue for the last three years was 4.1%.
Return on investment
The company operates at high and attractive ROE (20.91%) while ROIC is a bit lower (15.80%). ROIC decreased slightly on 0.77 pp from 16.6% to 15.8% in 2015. ROE decreased slightly on 1.9 pp from 22.8% to 20.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.2x and Debt / EBITDA is 2.4x. Net Debt / EBITDA jumped on 0.4x from 1.8x to 2.2x in 2015. Debt surged on 30.3% in 2015 while cash dropped on 16.7% in 2015.
Valuation
Kerry Group's trades at EV/EBITDA 2.3x and P/E 0.3x while industy averages are 10.5x and 26.1x. Kerry Group's EV/(EBITDA-CAPEX) is 3.3x with the industry average at 4.7x.
Appendix 1: Peers in Food Producers
Below you can find Kerry Group benchmarking vs. other companies in Food 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 |
|---|
| Ros Agro ($AGRO) | 29.7% | -13.2% | 8.2% | 78.6% | |
| Cherkizovo Group OJSC ($CHE) | 20.0% | 12.6% | 8.1% | 31.5% | |
| Kakuzi ($KAKU) | -26.2% | 0.3% | -11.5% | 22.1% | |
| R.E.A.Hldgs ($RE.B) | 29.6% | -15.7% | -11.3% | 13.9% | |
| Tongaat Hulett Ltd ($THL) | | 24.8% | 19.0% | 9.3% | 2.8% |
| |
|---|
| Median (19 companies) | 22.9% | 12.6% | 6.6% | -0.2% | -7.0% |
|---|
| Kerry Group ($KYGA) | | 10.3% | -0.2% | -1.4% | 6.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Walcom Group Ltd ($WALG) | 63.5% | 62.6% | 63.2% | 62.2% | |
| Narborough Plantations ($NBP) | | 64.9% | 55.5% | 59.7% | 54.6% |
| R.E.A.Hldgs ($RE.B) | 56.7% | 44.4% | 37.3% | 36.8% | |
| Zambeef Products ($ZAM) | 32.3% | 33.6% | 34.5% | 33.7% | 43.2% |
| Ros Agro ($AGRO) | 19.5% | 28.8% | 22.1% | 33.6% | |
| |
|---|
| Median (17 companies) | 24.6% | 28.8% | 22.1% | 32.5% | 19.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Narborough Plantations ($NBP) | | 58.1% | 42.5% | 39.6% | 37.4% |
| Mhp Sa ($MHPC) | 32.6% | 33.2% | 26.1% | 37.0% | |
| R.E.A.Hldgs ($RE.B) | 52.8% | 35.3% | 34.0% | 33.2% | |
| Avangardco Investments Public Ltd ($AVGR) | 44.4% | 44.5% | 45.6% | 30.9% | |
| Ros Agro ($AGRO) | 10.9% | 20.6% | 15.5% | 28.1% | |
| |
|---|
| Median (19 companies) | 10.9% | 16.4% | 10.9% | 8.9% | 7.1% |
|---|
| Kerry Group ($KYGA) | 10.8% | 8.6% | 5.0% | 12.5% | 13.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Agriterra Ltd ($AGTA) | 18.9% | 54.8% | 49.5% | 43.0% | 11.2% |
| Kakuzi ($KAKU) | 15.5% | 20.1% | 20.8% | 22.0% | |
| Avangardco Investments Public Ltd ($AVGR) | 26.3% | 51.1% | 28.0% | 18.4% | |
| Asian Citrus Hldgs ($ACHL) | 14.9% | 19.3% | 28.6% | 17.7% | 14.3% |
| R.E.A.Hldgs ($RE.B) | 13.2% | 40.3% | 10.9% | 11.8% | |
| |
|---|
| Median (19 companies) | 13.2% | 7.4% | 8.2% | 4.8% | 5.2% |
|---|
| Kerry Group ($KYGA) | 2.7% | 2.9% | 3.3% | 4.8% | 4.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ros Agro ($AGRO) | 5.4% | 7.2% | 4.0% | 23.8% | |
| Cherkizovo Group OJSC ($CHE) | 11.7% | 13.5% | 4.8% | 22.4% | |
| Fyffes ($FFY) | 8.8% | 16.4% | 17.2% | 18.5% | |
| Mhp Sa ($MHPC) | 19.4% | 18.4% | 11.2% | 17.6% | |
| Origin Enterprises ($OGN) | 15.4% | 13.2% | 15.3% | 16.9% | 20.1% |
| |
|---|
| Median (19 companies) | 11.7% | 12.3% | 10.5% | 11.6% | 8.0% |
|---|
| Kerry Group ($KYGA) | 14.0% | 10.6% | 5.2% | 16.6% | 15.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Zambeef Products ($ZAM) | 3.0x | 6.3x | 4.7x | 4.8x | 3.0x |
| R.E.A.Hldgs ($RE.B) | 1.2x | 3.1x | 4.4x | 3.9x | |
| Ukrproduct Group ($UKR) | 4.3x | 2.7x | 4.4x | 3.4x | |
| Glanbia ($GLB) | 3.1x | 1.9x | 1.7x | 2.3x | |
| Mhp Sa ($MHPC) | 2.0x | 2.2x | 2.9x | 2.2x | |
| |
|---|
| Median (17 companies) | 1.3x | 1.0x | 1.3x | 1.5x | 1.6x |
|---|
| Kerry Group ($KYGA) | 2.4x | 2.6x | 3.7x | 1.8x | 2.2x |
