Ezz Steel Net Debt / EBITDA dropped on 6.1x from 19.4x to 13.3x in 2015 and Revenue dropped on 14.2%
31 Mar 2016 • About Ezz Steel (
$AEZD) • By InTwits
Ezz Steel reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Ezz Steel doesn't have a profitable business model yet: 2015 ROIC is 0.9%
- EBITDA Margin is quite volatile: 5.7% in 2015, 3.3% in 2014, 10.8% in 2013, 9.3% in 2012, 12.5% in 2011
- Ezz Steel has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.6%. At the same time it's a lot of higher than industry average of 9.0%.
- CAPEX is quite volatile: 1,126 in 2015, 1,236 in 2014, 826 in 2013, 446 in 2012, 725 in 2011
- The company has potentially unprofitable business model: ROIC is at 0.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 13.3x while industry average is 14.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Ezz Steel ($AEZD) key annual financial indicators
| mln. EGP | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 18,611 | 19,799 | 21,294 | 19,398 | 16,641 | -14.2% |
| Gross Profit | 2,207 | 1,690 | 2,331 | 691 | 1,108 | 60.5% |
| SG&A | | | | 16 | 55 | 246.6% |
| EBITDA | 2,334 | 1,838 | 2,309 | 649 | 953 | 46.7% |
| Net Income | 202 | 8 | 134 | -697 | -418 | -40.0% |
Balance Sheet
|
|---|
| Cash | 1,171 | 1,290 | 2,154 | 916 | 4,784 | 422.2% |
| Short Term Debt | 4,796 | 6,485 | 7,071 | 7,624 | 10,450 | 37.1% |
| Long Term Debt | 4,370 | 3,593 | 3,427 | 5,894 | 6,971 | 18.3% |
Cash flow
|
|---|
| Capex | 725 | 446 | 826 | 1,236 | 1,126 | -8.9% |
Ratios
|
|---|
| Revenue growth | 12.0% | 6.4% | 7.5% | -8.9% | -14.2% | |
| EBITDA growth | 16.1% | -21.3% | 25.6% | -71.9% | 46.7% | |
| Gross Margin | 11.9% | 8.5% | 10.9% | 3.6% | 6.7% | 3.1% |
| EBITDA Margin | 12.5% | 9.3% | 10.8% | 3.3% | 5.7% | 2.4% |
| Net Income Margin | 1.1% | 0.0% | 0.6% | -3.6% | -2.5% | 1.1% |
| SG&A, % of revenue | | | | 0.1% | 0.3% | 0.2% |
| CAPEX, % of revenue | 3.9% | 2.3% | 3.9% | 6.4% | 6.8% | 0.4% |
| ROIC | 10.1% | 7.2% | 9.3% | -0.3% | 0.9% | 1.3% |
| ROE | 4.2% | 0.2% | 2.8% | -15.9% | -11.5% | 4.4% |
| Net Debt/EBITDA | 3.4x | 4.8x | 3.6x | 19.4x | 13.3x | -6.1x |
Revenue and profitability
Ezz Steel's Revenue dropped on 14.2% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.4 pp from 3.3% to 5.7% in 2015.
Gross Margin increased on 3.1 pp from 3.6% to 6.7% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign increased slightly on 1.1 pp from -3.6% to -2.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Ezz Steel had CAPEX/Revenue of 6.8%. The company's CAPEX/Revenue increased on 4.5 pp from 2.3% in 2012 to 6.8% in 2015. It's average CAPEX/Revenue for the last three years was 5.7%.Ezz Steel has spent a lot to CAPEX (118% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low but positive ROIC (0.95%) and negative ROE (-11.47%). ROIC increased slightly on 1.3 pp from -0.31% to 0.95% in 2015. ROE increased on 4.4 pp from -15.9% to -11.5% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 13.3x and Debt / EBITDA is 18.3x. Net Debt / EBITDA dropped on 6.1x from 19.4x to 13.3x in 2015. Debt jumped on 28.9% in 2015 while cash jumped on 422% in 2015.
Appendix 1: Peers in Industrial Metals & Mining
Below you can find Ezz Steel 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 |
|---|
| Base Resources Ltd ($BSE) | | | | | 399.7% |
| Norsk Hydro Asa ($NHY) | | -10.2% | 1.1% | 20.1% | 12.6% |
| Afarak Group ($AFRK) | | -19.2% | 5.4% | 27.4% | 8.7% |
| Aluminium Bahrain Bsc ($ALBH) | | -15.8% | 0.8% | 9.7% | -6.7% |
| Zibao Metals Recycling Hldgs Ltd ($ZBO) | | 196.8% | 8.2% | 1.7% | -9.0% |
| |
|---|
| Median (12 companies) | 18.5% | -9.0% | -1.4% | 2.4% | -16.8% |
|---|
| Ezz Steel ($AEZD) | | 6.4% | 7.5% | -8.9% | -14.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 59.0% | 49.1% | 43.4% | 52.2% | 55.7% |
| Severstal PJSC ($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% | 31.4% |
| First Quantum Minerals ($FQM) | 50.6% | 37.3% | 31.9% | 28.2% | 11.4% |
| |
|---|
| Median (13 companies) | 21.9% | 16.6% | 15.1% | 19.5% | 20.8% |
|---|
| Ezz Steel ($AEZD) | 11.9% | 8.5% | 10.9% | 3.6% | 6.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 49.5% | 38.6% | 29.2% | 46.8% | 47.0% |
| Base Resources Ltd ($BSE) | | | | -1.8% | 37.7% |
| Severstal PJSC ($SVST) | 22.5% | 14.9% | 19.3% | 26.4% | 32.4% |
| Magnitogorsk Iron & Steel Works ($MMK) | 13.5% | 13.1% | 14.0% | 19.5% | 28.3% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 19.2% | 15.6% | 13.8% | 21.8% | 24.3% |
| |
|---|
| Median (12 companies) | 16.3% | 13.3% | 13.8% | 13.0% | 17.5% |
|---|
| Ezz Steel ($AEZD) | 12.5% | 9.3% | 10.8% | 3.3% | 5.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First Quantum Minerals ($FQM) | 40.6% | 46.5% | 73.2% | 81.7% | 72.5% |
| Mmc Norilsk Nickel ($MNOD) | 15.6% | 22.3% | 17.1% | 10.8% | 19.0% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 17.5% | 12.0% | 6.9% | 5.4% | 7.7% |
| Severstal PJSC ($SVST) | 10.2% | 9.5% | 10.3% | 8.4% | 6.4% |
| Aluminium Bahrain Bsc ($ALBH) | 3.9% | 4.4% | 7.7% | 6.2% | 6.3% |
| |
|---|
| Median (12 companies) | 7.7% | 7.0% | 7.7% | 6.3% | 6.1% |
|---|
| Ezz Steel ($AEZD) | 3.9% | 2.3% | 3.9% | 6.4% | 6.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 32.4% | 21.8% | 14.2% | 34.1% | 31.7% |
| Severstal PJSC ($SVST) | 21.3% | 10.3% | 9.6% | 17.7% | 30.3% |
| Zibao Metals Recycling Hldgs Ltd ($ZBO) | | 41.7% | 56.6% | 55.8% | 26.6% |
| Magnitogorsk Iron & Steel Works ($MMK) | 2.4% | 1.8% | 1.4% | 9.1% | 18.1% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 11.8% | 7.2% | 4.1% | 12.0% | 15.7% |
| |
|---|
| Median (12 companies) | 11.9% | 5.4% | 4.1% | 9.1% | 8.4% |
|---|
| Ezz Steel ($AEZD) | 10.1% | 7.2% | 9.3% | -0.3% | 0.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First Quantum Minerals ($FQM) | -0.3x | 0.0x | 2.5x | 4.0x | 10.5x |
| Base Resources Ltd ($BSE) | | | | | 4.4x |
| OAO TMK ($TMKS) | 3.5x | 3.6x | 3.9x | 3.8x | 4.3x |
| Posco ($PIDD) | 2.9x | 3.3x | 3.9x | 3.7x | 3.6x |
| Novolipetsk Iron And Steel Corp ($NLMK) | 1.6x | 2.0x | 2.1x | 1.0x | 1.2x |
| |
|---|
| Median (12 companies) | 2.2x | 1.9x | 2.0x | 0.8x | 1.0x |
|---|
| Ezz Steel ($AEZD) | 3.4x | 4.8x | 3.6x | 19.4x | 13.3x |
