Tongaat Hulett Ltd CAPEX jumped on 51.4% in 2016 and Revenue increased on 3.2%
30 May 2016 • About Tongaat Hulett Ltd (
$THL) • By InTwits
Tongaat Hulett Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Tongaat Hulett Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.1%. At the same time it's in pair with industry average of 8.7%.
- CAPEX is quite volatile: 912 in FY2016, 783 in FY2015, 816 in FY2014, 626 in FY2013, 1,484 in FY2012
- The company has business model with low profitability: ROIC is at 7.4%
- It operates with high leverage: Net Debt/EBITDA is 2.5x while industry average is 1.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Tongaat Hulett Ltd ($THL) key annual financial indicators
| mln. ZAR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 12,081 | 14,373 | 15,716 | 16,155 | 16,676 | 3.2% |
| Gross Profit | 3,196 | 3,162 | 4,208 | 3,623 | 3,365 | -7.1% |
| SG&A | 1,923 | 1,792 | 2,012 | 1,948 | 2,101 | 7.9% |
| EBITDA | 2,256 | 2,613 | 2,982 | 2,669 | 2,417 | -9.4% |
| Net Income | 889 | 1,079 | 1,155 | 989 | 820 | -17.1% |
Balance Sheet
|
|---|
| Cash | 592 | 917 | 1,067 | 1,668 | 1,877 | 12.5% |
| Short Term Debt | 3,425 | 2,294 | 1,627 | 1,850 | 3,563 | 92.6% |
| Long Term Debt | 2,469 | 4,203 | 4,785 | 4,710 | 4,396 | -6.7% |
Cash flow
|
|---|
| Capex | 731 | 1,174 | 646 | 808 | 1,223 | 51.4% |
Ratios
|
|---|
| Revenue growth | 24.8% | 19.0% | 9.3% | 2.8% | 3.2% | |
| EBITDA growth | 15.9% | 15.8% | 14.1% | -10.5% | -9.4% | |
| Gross Margin | 26.5% | 22.0% | 26.8% | 22.4% | 20.2% | -2.2% |
| EBITDA Margin | 18.7% | 18.2% | 19.0% | 16.5% | 14.5% | -2.0% |
| Net Income Margin | 7.4% | 7.5% | 7.3% | 6.1% | 4.9% | -1.2% |
| SG&A, % of revenue | 15.9% | 12.5% | 12.8% | 12.1% | 12.6% | 0.5% |
| CAPEX, % of revenue | 6.1% | 8.2% | 4.1% | 5.0% | 7.3% | 2.3% |
| ROIC | 13.7% | 12.8% | 12.4% | 9.7% | 7.4% | -2.2% |
| ROE | 15.4% | 14.3% | 12.2% | 8.8% | 6.5% | -2.3% |
| Net Debt/EBITDA | 2.4x | 2.1x | 1.8x | 1.8x | 2.5x | 0.7x |
Revenue and profitability
The company's Revenue increased on 3.2% in FY2016. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.0 pp from 16.5% to 14.5% in FY2016.
Gross Margin decreased on 2.2 pp from 22.4% to 20.2% in FY2016. SG&A as a % of Revenue increased slightly on 0.54 pp from 12.1% to 12.6% in FY2016.
Net Income marign decreased slightly on 1.2 pp from 6.1% to 4.9% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 7.3%. The company's CAPEX/Revenue decreased slightly on 0.83 pp from 8.2% in FY2013 to 7.3% in FY2016. For the last three years the average CAPEX/Revenue was 5.5%.Tongaat Hulett Ltd maintained rich investment policy and has spent a big chunk of EBITDA (50.6%) to CAPEX.
Return on investment
The company operates at low ROIC (7.44%) and ROE (6.49%). ROIC decreased on 2.2 pp from 9.7% to 7.4% in FY2016. ROE decreased on 2.3 pp from 8.8% to 6.5% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.5x and Debt / EBITDA is 3.3x. Net Debt / EBITDA jumped on 0.7x from 1.8x to 2.5x in FY2016. Debt jumped on 21.3% in FY2016 while cash surged on 12.5% in FY2016.
Appendix 1: Peers in Food Producers
Below we provide Tongaat Hulett Ltd benchmarking against other companies in Food Producers industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kakuzi ($KAKU) | 0.3% | -11.5% | 22.1% | 46.9% | |
| Fyffes ($FFY) | 18.9% | 6.6% | 2.0% | 15.6% | |
| Cherkizovo Group OJSC ($CHE) | 12.6% | 8.1% | 31.5% | 11.1% | |
| Glanbia ($GLB) | 14.4% | 7.7% | 6.6% | 9.3% | |
| Kerry Group ($KYGA) | 10.3% | -0.2% | -1.4% | 6.1% | |
| |
|---|
| Median (18 companies) | 10.3% | 6.3% | -1.4% | -2.0% | 0.6% |
|---|
| Tongaat Hulett Ltd ($THL) | | 19.0% | 9.3% | 2.8% | 3.2% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Walcom Group Ltd ($WALG) | 62.6% | 63.2% | 62.2% | 60.5% | |
| Narborough Plantations ($NBP) | 64.9% | 55.5% | 59.7% | 54.6% | 56.2% |
| Kakuzi ($KAKU) | 42.8% | 29.8% | 33.0% | 49.2% | |
| Zambeef Products ($ZAM) | 33.6% | 34.5% | 33.7% | 43.2% | |
| Ros Agro ($AGRO) | 28.8% | 22.1% | 33.6% | 42.1% | |
| |
|---|
| Median (16 companies) | 28.8% | 23.5% | 32.7% | 24.9% | 56.2% |
|---|
| Tongaat Hulett Ltd ($THL) | 26.5% | 22.0% | 26.8% | 22.4% | 20.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mhp Sa ($MHPC) | 33.2% | 26.1% | 37.0% | 38.8% | |
| Narborough Plantations ($NBP) | 58.1% | 42.5% | 39.6% | 37.4% | 40.8% |
| Ros Agro ($AGRO) | 20.6% | 15.5% | 28.1% | 34.6% | |
| R.E.A.Hldgs ($RE.B) | 35.3% | 34.0% | 33.2% | 31.1% | |
| Kakuzi ($KAKU) | 28.0% | 14.9% | 11.8% | 29.4% | |
| |
|---|
| Median (18 companies) | 9.9% | 9.3% | 8.9% | 12.1% | 25.5% |
|---|
| Tongaat Hulett Ltd ($THL) | 18.7% | 18.2% | 19.0% | 16.5% | 14.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kakuzi ($KAKU) | 20.1% | 20.8% | 22.0% | 24.9% | |
| R.E.A.Hldgs ($RE.B) | 40.3% | 10.9% | 11.8% | 17.4% | |
| Avangardco Investments Public Ltd ($AVGR) | 51.1% | 28.0% | 18.4% | 16.2% | |
| Zambeef Products ($ZAM) | 9.2% | 4.6% | 4.8% | 15.9% | |
| Ros Agro ($AGRO) | 20.0% | 10.5% | 7.3% | 15.3% | |
| |
|---|
| Median (18 companies) | 7.4% | 4.6% | 4.8% | 8.6% | 5.1% |
|---|
| Tongaat Hulett Ltd ($THL) | 6.1% | 8.2% | 4.1% | 5.0% | 7.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ros Agro ($AGRO) | 7.2% | 4.0% | 23.8% | 23.2% | |
| Origin Enterprises ($OGN) | 13.2% | 15.3% | 16.9% | 20.1% | |
| Mhp Sa ($MHPC) | 18.4% | 11.2% | 17.6% | 17.6% | |
| Kakuzi ($KAKU) | 11.4% | 4.7% | 4.3% | 17.4% | |
| Kerry Group ($KYGA) | 10.6% | 5.2% | 16.6% | 15.8% | |
| |
|---|
| Median (18 companies) | 12.2% | 5.2% | 11.6% | 8.7% | 5.2% |
|---|
| Tongaat Hulett Ltd ($THL) | 13.7% | 12.8% | 12.4% | 9.7% | 7.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| R.E.A.Hldgs ($RE.B) | 3.1x | 4.4x | 3.9x | 7.2x | |
| Tate & Lyle ($BD15) | 1.0x | 1.2x | 1.2x | 4.0x | 1.8x |
| Cherkizovo Group OJSC ($CHE) | 2.7x | 4.4x | 1.6x | 3.1x | |
| Zambeef Products ($ZAM) | 6.3x | 4.7x | 4.8x | 3.0x | |
| Mhp Sa ($MHPC) | 2.2x | 2.9x | 2.2x | 2.7x | |
| |
|---|
| Median (16 companies) | 1.0x | 1.3x | 1.5x | 1.7x | -0.2x |
|---|
| Tongaat Hulett Ltd ($THL) | 2.4x | 2.1x | 1.8x | 1.8x | 2.5x |
