Produce Investments EBITDA surged on 32.9% in 2016 and EBITDA Margin increased on 2.0 pp from 7.1% to 9.2%
29 Sep 2016 • About Produce Investments (
$PIL) • By InTwits
Produce Investments reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Produce Investments has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's in pair with industry average of 31.0%.
- CAPEX is quite volatile: 3.7 in FY2016, 5.8 in FY2015, 6.5 in FY2014, 2.6 in FY2013, 3.3 in FY2012
- The company has business model with average profitability: ROIC is at 11.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.1x while industry average is 1.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Produce Investments ($PIL) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 153.9 | 206.0 | 191.8 | 178.4 | 185.1 | 3.7% |
| Gross Profit | 43.0 | 51.5 | 64.3 | 65.0 | 70.1 | 7.8% |
| SG&A | | | 53.3 | 56.9 | 60.9 | 6.9% |
| EBITDA | 10.9 | 11.6 | 16.2 | 12.8 | 17.0 | 32.9% |
| Net Income | 4.9 | 6.1 | 7.6 | 5.5 | 3.2 | -41.5% |
Balance Sheet
|
|---|
| Cash | 7.0 | 5.7 | 2.2 | 2.8 | 0.7 | -73.1% |
| Short Term Debt | 1.4 | 2.3 | 11.5 | 16.5 | 18.9 | 14.5% |
| Long Term Debt | 9.8 | 20.8 | 15.3 | 7.0 | 0.0 | -100.0% |
Cash flow
|
|---|
| Capex | 3.3 | 2.6 | 6.5 | 5.8 | 3.7 | -35.0% |
Ratios
|
|---|
| Revenue growth | -10.2% | 33.9% | -6.9% | -7.0% | 3.7% | |
| EBITDA growth | 7.2% | 6.5% | 39.7% | -21.3% | 32.9% | |
| Gross Margin | 27.9% | 25.0% | 33.5% | 36.4% | 37.9% | 1.4% |
| EBITDA Margin | 7.1% | 5.6% | 8.5% | 7.1% | 9.2% | 2.0% |
| Net Income Margin | 3.2% | 2.9% | 4.0% | 3.1% | 1.7% | -1.3% |
| SG&A, % of revenue | | | 27.8% | 31.9% | 32.9% | 1.0% |
| CAPEX, % of revenue | 2.2% | 1.3% | 3.4% | 3.2% | 2.0% | -1.2% |
| ROIC | 17.7% | 15.2% | 15.9% | 10.2% | 11.9% | 1.7% |
| ROE | 20.3% | 20.9% | 18.7% | 11.1% | 6.3% | -4.7% |
| Net Debt/EBITDA | 0.4x | 1.5x | 1.5x | 1.6x | 1.1x | -0.6x |
Revenue and profitability
Produce Investments's Revenue increased on 3.7% in FY2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.93 pp from 9.5% to 10.4% in FY2016.
Gross Margin increased slightly on 1.4 pp from 36.4% to 37.9% in FY2016. SG&A as a % of Revenue increased slightly on 0.96 pp from 31.9% to 32.9% in FY2016.
Net Income marign decreased slightly on 1.3 pp from 3.1% to 1.7% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Produce Investments had CAPEX/Revenue of 2.0%. CAPEX/Revenue increased slightly on 0.75 pp from 1.3% in FY2013 to 2.0% in FY2016. It's average level of CAPEX/Revenue for the last three years was 2.9%.
Return on investment
The company operates at low ROIC (11.91%) and ROE (6.32%). ROIC increased slightly on 1.7 pp from 10.2% to 11.9% in FY2016. ROE decreased on 4.7 pp from 11.1% to 6.3% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.1x. Net Debt / EBITDA dropped on 0.6x from 1.6x to 1.1x in FY2016. Debt dropped on 19.6% in FY2016 while cash dropped on 73.1% in FY2016.
Valuation
The company's trades at EV/EBITDA 3.4x and P/E 12.1x while industy averages are 15.6x and 19.1x. The company's EV/(EBITDA-CAPEX) is 4.3x with the industry average at 19.0x.
Appendix 1: Peers in Food Producers
Below we provide Produce Investments 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 ($KYGA) | 10.3% | -0.2% | -1.4% | 6.1% | |
| |
|---|
| Median (20 companies) | 12.6% | 6.3% | -0.8% | -1.9% | 0.6% |
|---|
| Produce Investments ($PIL) | | 33.9% | -6.9% | -7.0% | 3.7% |
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 ($AGRO) | 28.8% | 22.1% | 33.6% | 42.1% | |
| |
|---|
| Median (18 companies) | 28.8% | 22.0% | 26.8% | 23.4% | 23.4% |
|---|
| Produce Investments ($PIL) | 27.9% | 25.0% | 33.5% | 36.4% | 37.9% |
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 ($KAKU) | 28.0% | 14.9% | 11.8% | 29.4% | |
| |
|---|
| Median (20 companies) | 16.4% | 10.1% | 10.3% | 12.1% | 10.3% |
|---|
| Produce Investments ($PIL) | 7.1% | 5.6% | 8.5% | 7.1% | 9.2% |
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 ($AGRO) | 20.0% | 10.5% | 7.3% | 15.3% | |
| |
|---|
| Median (20 companies) | 7.4% | 6.4% | 5.5% | 5.5% | 6.4% |
|---|
| Produce Investments ($PIL) | 2.2% | 1.3% | 3.4% | 3.2% | 2.0% |
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% | 15.3% |
| Mhp Sa ($MHPC) | 18.4% | 11.2% | 17.6% | 17.6% | |
| Kakuzi ($KAKU) | 11.4% | 4.7% | 4.3% | 17.4% | |
| Kerry Group ($KYGA) | 10.6% | 5.2% | 16.6% | 15.8% | |
| |
|---|
| Median (20 companies) | 12.2% | 5.9% | 9.7% | 8.2% | 7.2% |
|---|
| Produce Investments ($PIL) | 17.7% | 15.2% | 15.9% | 10.2% | 11.9% |
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 |
| Real Good Food ($RGD) | | 2.5x | 5.7x | 3.2x | 1.3x |
| Cherkizovo Group OJSC ($CHE) | 2.7x | 4.4x | 1.6x | 3.1x | |
| Zambeef Products ($ZAM) | 6.3x | 4.7x | 4.8x | 3.0x | |
| |
|---|
| Median (17 companies) | 1.4x | 1.7x | 1.7x | 1.8x | 1.3x |
|---|
| Produce Investments ($PIL) | 0.4x | 1.5x | 1.5x | 1.6x | 1.1x |
