Mitsubishi Corp reports 137% Net Income decline and 2.2 pp EBITDA Margin decline from 4.9% to 2.7%
10 May 2016 • About Mitsubishi Corp (
$MBC) • By InTwits
Mitsubishi Corp reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Mitsubishi Corp doesn't have a profitable business model yet: FY2016 ROIC is -0.3%
- EBITDA Margin is quite volatile: 2.7% in FY2016, 4.9% in FY2015, 4.4% in FY2014, 4.8% in FY2013, 7.4% in FY2012
- Mitsubishi Corp has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.2%. At the same time it's a lot of higher than industry average of 2.8%.
- CAPEX is quite volatile: 2,324,112 in 2016, 2,560,244 in 2015, 3,505,549 in 2014, 6,569,613 in 2013, 7,054,543 in 2012
- The company has unprofitable business model: ROIC is at -0.3%
- It operates with high leverage: Net Debt/EBITDA is 25.0x while industry average is 1.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Mitsubishi Corp ($MBC) key annual financial indicators
| mln. JPY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 5,565,832 | 6,009,887 | 7,635,168 | 7,669,489 | 6,925,582 | -9.7% |
| Gross Profit | 1,127,860 | 1,054,933 | 1,186,005 | 1,209,894 | 1,098,877 | -9.2% |
| SG&A | 845,234 | 885,912 | 952,898 | 998,751 | 1,015,968 | 1.7% |
| EBITDA | 409,465 | 288,510 | 336,486 | 373,267 | 183,669 | -50.8% |
| Net Income | 452,344 | 323,457 | 361,359 | 400,574 | -149,395 | -137.3% |
Balance Sheet
|
|---|
| Cash | 1,252,951 | 1,345,920 | 1,332,036 | 1,725,189 | 1,500,960 | -13.0% |
| Short Term Debt | 1,519,168 | 1,404,281 | 1,396,337 | 1,527,456 | 1,489,222 | -2.5% |
| Long Term Debt | 3,803,587 | 4,540,420 | 4,736,331 | 4,875,298 | 4,595,941 | -5.7% |
Cash flow
|
|---|
| Capex | 412,991 | 581,786 | 496,108 | 307,539 | 249,062 | -19.0% |
Ratios
|
|---|
| Revenue growth | 6.9% | 8.0% | 27.0% | 0.4% | -9.7% | |
| EBITDA growth | -10.5% | -29.5% | 16.6% | 10.9% | -50.8% | |
| Gross Margin | 20.3% | 17.6% | 15.5% | 15.8% | 15.9% | 0.1% |
| EBITDA Margin | 7.4% | 4.8% | 4.4% | 4.9% | 2.7% | -2.2% |
| Net Income Margin | 8.1% | 5.4% | 4.7% | 5.2% | -2.2% | -7.4% |
| SG&A, % of revenue | 15.2% | 14.7% | 12.5% | 13.0% | 14.7% | 1.6% |
| CAPEX, % of revenue | 7.4% | 9.7% | 6.5% | 4.0% | 3.6% | -0.4% |
| ROIC | 3.0% | 1.3% | 1.3% | 1.3% | -0.3% | -1.6% |
| ROE | 13.3% | 8.1% | 7.5% | 7.5% | -2.9% | -10.5% |
| Net Debt/EBITDA | 9.9x | 15.9x | 14.3x | 12.5x | 25.0x | 12.4x |
Revenue and profitability
The company's Revenue decreased on 9.7% in FY2016. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 2.2 pp from 4.9% to 2.7% in FY2016.
Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue increased slightly on 1.6 pp from 13.0% to 14.7% in FY2016.
Net Income marign decreased on 7.4 pp from 5.2% to -2.2% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Mitsubishi Corp had CAPEX/Revenue of 3.6%. The company's CAPEX/Revenue decreased on 6.1 pp from 9.7% in FY2013 to 3.6% in FY2016. It's average CAPEX/Revenue for the last three years was 4.7%.The company has spent a lot to CAPEX (136% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-0.29%) and ROE (-2.94%). ROIC decreased slightly on 1.6 pp from 1.3% to -0.29% in FY2016. ROE dropped on 10.5 pp from 7.5% to -2.9% in FY2016.
Leverage (Debt)
Debt level is 25.0x Net Debt / EBITDA and 33.1x Debt / EBITDA. Net Debt / EBITDA surged on 12.4x from 12.5x to 25.0x in FY2016. Debt decreased on 5.0% in FY2016 while cash dropped on 13.0% in FY2016.
Appendix 1: Peers in Support Services
Below you can find Mitsubishi Corp benchmarking vs. other companies in Support Services 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Camco Clean Energy ($CCE) | | 88.0% | -54.7% | 99.4% | |
| Optimal Payments ($OPAY) | 39.9% | 41.5% | 44.0% | 68.1% | |
| Inspired Energy ($INSE) | 83.8% | 44.8% | 42.2% | 40.2% | |
| Ibex Global Solutions ($IBEX) | 7.4% | 35.7% | 30.0% | 29.8% | |
| Rtc Group ($RTC) | 40.1% | 13.6% | 4.3% | 27.4% | |
| |
|---|
| Median (52 companies) | 5.9% | 6.9% | 4.7% | 6.6% | 3.1% |
|---|
| Mitsubishi Corp ($MBC) | | 8.0% | 27.0% | 0.4% | -9.7% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Inspired Energy ($INSE) | 94.6% | 86.8% | 78.7% | 76.2% | |
| Ienergizer Ltd ($IBPO) | 56.2% | 78.4% | 76.8% | 72.7% | |
| Grafenia ($GRA) | 53.4% | 54.3% | 56.1% | 70.8% | |
| Vianet Group ($VNET) | 53.3% | 51.3% | 58.8% | 69.2% | |
| Prime People ($PRP) | 63.4% | 58.3% | 57.7% | 61.4% | |
| |
|---|
| Median (46 companies) | 29.5% | 28.8% | 30.4% | 28.6% | 25.7% |
|---|
| Mitsubishi Corp ($MBC) | 20.3% | 17.6% | 15.5% | 15.8% | 15.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northgate ($67GX) | 41.2% | 40.4% | 40.6% | 39.4% | 38.3% |
| Inspired Energy ($INSE) | 46.2% | 48.5% | 1.5% | 35.4% | |
| Vianet Group ($VNET) | 18.6% | 17.3% | 19.7% | 27.1% | |
| Vp ($VP.) | 23.9% | 24.5% | 24.2% | 26.2% | |
| Optimal Payments ($OPAY) | 10.3% | 18.5% | 21.3% | 22.6% | |
| |
|---|
| Median (52 companies) | 6.7% | 6.4% | 6.9% | 7.7% | 7.3% |
|---|
| Mitsubishi Corp ($MBC) | 7.4% | 4.8% | 4.4% | 4.9% | 2.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vp ($VP.) | 21.4% | 17.7% | 21.6% | 25.7% | |
| Sagentia Group ($SAG) | 1.9% | 1.4% | 1.5% | 25.2% | |
| Augean ($AUG) | 9.8% | 15.9% | 12.3% | 12.3% | |
| Falkland Islands Hldgs ($FKL) | 3.7% | 6.8% | 12.9% | 11.9% | |
| Capital Drilling Ltd ($CAPD) | 18.9% | 4.9% | 13.9% | 10.1% | |
| |
|---|
| Median (52 companies) | 1.0% | 1.1% | 1.0% | 1.1% | 0.9% |
|---|
| Mitsubishi Corp ($MBC) | 7.4% | 9.7% | 6.5% | 4.0% | 3.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Inspired Energy ($INSE) | 63.9% | 65.5% | -7.5% | 28.0% | |
| Petards Group ($PEG) | 35.5% | -78.0% | 24.7% | 23.9% | |
| Servoca ($SVCA) | 1.0% | 7.8% | 14.9% | 22.3% | |
| Rtc Group ($RTC) | 14.6% | 17.6% | 19.9% | 22.2% | |
| Mortice Ltd ($MORT) | 32.2% | 29.2% | 19.6% | 21.9% | |
| |
|---|
| Median (52 companies) | 9.9% | 7.9% | 9.4% | 10.3% | 11.9% |
|---|
| Mitsubishi Corp ($MBC) | 3.0% | 1.3% | 1.3% | 1.3% | -0.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Redhall Group ($RHL) | 22.8x | 5.8x | 6.6x | 16.8x | |
| Ienergizer Ltd ($IBPO) | 6.3x | 2.8x | 3.0x | 4.0x | |
| Ceps ($CEPS) | | 3.0x | 6.6x | 3.8x | |
| Kellan Group(The ($KLN) | | | 6.5x | 3.6x | |
| Premier Farnell ($PFLA) | 1.7x | 2.1x | 2.1x | 3.1x | 3.8x |
| |
|---|
| Median (49 companies) | 0.8x | 0.5x | 0.6x | 0.4x | 0.6x |
|---|
| Mitsubishi Corp ($MBC) | 9.9x | 15.9x | 14.3x | 12.5x | 25.0x |
