United Utilities Group Net Income surged on 46.6% in 2016 and Revenue increased slightly on 0.57%
26 May 2016 • About United Utilities Group (
$UU.) • By InTwits
United Utilities Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- United Utilities Group has high CAPEX intensity: 5 year average CAPEX/Revenue was 37.0%. At the same time it's a lot of higher than industry average of 22.5%.
- CAPEX is quite volatile: 65.2 in 2016, 38.8 in 2015, 29.5 in 2014, 25.8 in 2013, 12.8 in 2012
- The company has potentially unprofitable business model: ROIC is at 5.4%
- It operates with high leverage: Net Debt/EBITDA is 7.3x while industry average is 4.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
United Utilities Group ($UU.) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,565 | 1,636 | 1,689 | 1,720 | 1,730 | 0.6% |
| EBITDA | 889 | 931 | 967 | 1,006 | 932 | -7.4% |
| Net Income | 317 | 302 | 739 | 271 | 398 | 46.6% |
Balance Sheet
|
|---|
| Cash | 321 | 202 | 116 | 244 | 214 | -12.5% |
| Short Term Debt | 127 | 166 | 112 | 578 | 469 | -18.8% |
| Long Term Debt | 5,728 | 6,007 | 5,929 | 6,067 | 6,509 | 7.3% |
Cash flow
|
|---|
| Capex | 502 | 626 | 662 | 666 | 634 | -4.7% |
Ratios
|
|---|
| Revenue growth | 3.4% | 4.5% | 3.2% | 1.9% | 0.6% | |
| EBITDA growth | 2.1% | 4.7% | 3.9% | 4.0% | -7.4% | |
| EBITDA Margin | 56.8% | 56.9% | 57.3% | 58.5% | 53.8% | -4.6% |
| Net Income Margin | 20.2% | 18.5% | 43.8% | 15.8% | 23.0% | 7.2% |
| CAPEX, % of revenue | 32.1% | 38.2% | 39.2% | 38.7% | 36.7% | -2.0% |
| ROIC | 6.9% | 6.6% | 6.8% | 6.7% | 5.4% | -1.3% |
| ROE | 18.4% | 16.6% | 36.2% | 11.7% | 15.5% | 3.8% |
| Net Debt/EBITDA | 6.2x | 6.4x | 6.1x | 6.4x | 7.3x | 0.9x |
Revenue and profitability
The company's Revenue increased slightly on 0.57% in FY2016. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 4.6 pp from 58.5% to 53.8% in FY2016.
Net Income marign increased on 7.2 pp from 15.8% to 23.0% in FY2016.
Capital expenditures (CAPEX) and working capital investments
United Utilities Group's CAPEX/Revenue was 36.7% in FY2016. United Utilities Group showed small CAPEX/Revenue decline of 1.6 pp from 38.2% in FY2013 to 36.7% in FY2016. It's average CAPEX/Revenue for the last three years was 38.2%.The company invested a large share of EBITDA (68.1%) to CAPEX.
Return on investment
The company operates at good ROE (15.47%) while ROIC is low (5.42%). ROIC decreased slightly on 1.3 pp from 6.7% to 5.4% in FY2016. ROE increased on 3.8 pp from 11.7% to 15.5% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.3x and Debt / EBITDA is 7.5x. Net Debt / EBITDA jumped on 0.9x from 6.4x to 7.3x in FY2016. Debt increased on 5.0% in FY2016 while cash dropped on 12.5% in FY2016.
Appendix 1: Peers in Gas, Water & Multiutilities
Below you can find United Utilities Group benchmarking vs. other companies in Gas, Water & Multiutilities 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Inter RAO JSC ($IRAO) | 3.7% | 19.1% | 11.9% | 12.3% | |
| Dee Valley Group ($DVW) | 3.5% | 3.2% | 4.3% | 3.4% | |
| National Grid ($NG.) | | 3.8% | 3.1% | 2.6% | -0.6% |
| |
|---|
| Median (3 companies) | 3.6% | 3.8% | 4.3% | 3.4% | -0.6% |
|---|
| United Utilities Group ($UU.) | | 4.5% | 3.2% | 1.9% | 0.6% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dee Valley Group ($DVW) | 97.0% | 96.9% | 97.0% | 96.9% | |
| |
|---|
| Median (1 company) | 97.0% | 96.9% | 97.0% | 96.9% | |
|---|
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dee Valley Group ($DVW) | 56.4% | 53.5% | 50.5% | 49.2% | |
| National Grid ($NG.) | 34.9% | 35.6% | 34.8% | 34.7% | 37.7% |
| Inter RAO JSC ($IRAO) | -2.7% | 0.8% | 5.6% | 5.9% | |
| |
|---|
| Median (3 companies) | 34.9% | 35.6% | 34.8% | 34.7% | 37.7% |
|---|
| United Utilities Group ($UU.) | 56.8% | 56.9% | 57.3% | 58.5% | 53.8% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dee Valley Group ($DVW) | 32.0% | 66.9% | 28.1% | 27.3% | |
| National Grid ($NG.) | 22.8% | 22.4% | 19.9% | 20.2% | 22.5% |
| Inter RAO JSC ($IRAO) | 8.8% | 6.2% | 4.9% | 3.5% | |
| |
|---|
| Median (3 companies) | 22.8% | 22.4% | 19.9% | 20.2% | 22.5% |
|---|
| United Utilities Group ($UU.) | 32.1% | 38.2% | 39.2% | 38.7% | 36.7% |
Top companies by ROIC, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| National Grid ($NG.) | 9.8% | 9.6% | 8.9% | 9.0% | 9.2% |
| Dee Valley Group ($DVW) | 8.2% | 7.9% | 7.5% | 7.4% | |
| Inter RAO JSC ($IRAO) | -6.9% | -4.3% | 4.4% | 5.5% | |
| |
|---|
| Median (3 companies) | 8.2% | 7.9% | 7.5% | 7.4% | 9.2% |
|---|
| United Utilities Group ($UU.) | 6.9% | 6.6% | 6.8% | 6.7% | 5.4% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| National Grid ($NG.) | 4.7x | 5.4x | 5.0x | 4.9x | 5.0x |
| Dee Valley Group ($DVW) | 3.2x | 4.0x | 4.2x | 4.2x | |
| Inter RAO JSC ($IRAO) | | 2.4x | 0.7x | 0.2x | |
| |
|---|
| Median (3 companies) | 3.9x | 4.0x | 4.2x | 4.2x | 5.0x |
|---|
| United Utilities Group ($UU.) | 6.2x | 6.4x | 6.1x | 6.4x | 7.3x |
