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Prudential revenue dropped on 31.3% in 2015

09 Mar 2016 • About Prudential ($PRU) • By InTwits

Prudential reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Prudential is a company in decline: 2015 revenue growth was -31.3%, 5 years revenue CAGR was -2.8%
  • Prudential has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.4%.
  • The company has potentially unprofitable business model: ROIC is at 0.9%
  • It operates with high leverage: Net Debt/EBITDA is 7.5x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Prudential ($PRU) key annual financial indicators

mln. £201120122013201420152015/2014
P&L
Revenue36,50654,43852,37560,12641,305-31.3%
Net Income1,4152,1631,3462,2162,57916.4%
Balance Sheet
Cash7,2576,1266,7856,4097,78221.4%
Short Term Debt4,3123,2133,0473,3563,292-1.9%
Long Term Debt3,6113,5544,6364,3045,01116.4%
Cash flow
Capex12413922117225648.8%
Ratios
Revenue growth-23.4%49.1%-3.8%14.8%-31.3%
Net Income Margin3.9%4.0%2.6%3.7%6.2%2.6%
CAPEX, % of revenue0.3%0.3%0.4%0.3%0.6%0.3%
ROIC0.8%1.1%0.6%0.8%0.9%0.1%
ROE17.1%22.9%13.5%20.7%20.8%0.2%

Revenue and profitability


Prudential's Revenue dropped on 31.3% in 2015.

Net Income marign increased on 2.6 pp from 3.7% to 6.2% in 2015.

Capital expenditures (CAPEX) and working capital investments


Prudential's CAPEX/Revenue was 0.62% in 2015. Prudential showed almost no change in CAPEX/Revenue from 2012 to 2015. For the last three years the average CAPEX/Revenue was 0.44%.

Return on investment


The company operates at good ROE (20.83%) while ROIC is low (0.92%). ROIC showed almost no change in 2015. ROE showed almost no change in 2015.

Leverage (Debt)


Debt increased on 8.4% in 2015 while cash jumped on 21.4% in 2015.

Management team


The company's CEO Michael A Wells "Mike" is a founder and has spent 3 years at the company. Prudential's CFO Nicolaos Andreas Nicandrou has spent 9 years at the company.

Appendix 1: Peers in Life Insurance


Below you can find Prudential benchmarking vs. other companies in Life Insurance 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
Aviva ($AV.A)-38.8%40.7%-20.4%25.6%
Shin Kong Financial Hldg Co ($SKFS)2.2%0.8%21.5%6.2%
Cathay Financial Hldg Co ($CFHS)41.4%-25.4%58.9%14.8%
Standard Life ($SL.)111.1%-12.3%-1.4%-46.4%
Sagicor Financial Corp ($SFI)-25.1%12.7%-2.3%-2.8%
 
Median (6 companies)-25.1%9.5%-0.7%6.7%4.0%
Prudential ($PRU)49.1%-3.8%14.8%-31.3%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Sagicor Financial Corp ($SFI)1.3%1.9%1.8%2.1%
Torchmark Corp ($TMK)0.2%0.1%0.3%0.5%1.0%
Shin Kong Financial Hldg Co ($SKFS)0.2%0.4%0.3%0.4%0.8%
Aviva ($AV.A)0.3%0.5%0.1%0.3%
Cathay Financial Hldg Co ($CFHS)0.2%1.1%0.3%0.2%
 
Median (6 companies)0.2%0.5%0.3%0.3%0.8%
Prudential ($PRU)0.3%0.3%0.4%0.3%0.6%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Torchmark Corp ($TMK)5.5%5.4%4.9%4.6%4.3%
Cathay Financial Hldg Co ($CFHS)0.5%0.6%0.9%1.3%
Aviva ($AV.A)0.5%0.4%0.7%1.0%
Shin Kong Financial Hldg Co ($SKFS)0.6%0.8%0.8%0.7%0.5%
Standard Life ($SL.)0.5%0.7%0.5%0.5%0.4%
 
Median (6 companies)0.5%0.7%0.8%1.0%0.5%
Prudential ($PRU)0.8%1.1%0.6%0.8%0.9%