Lg Electronics Inc revenue decline decelerated from 4.3% in 2015 to 2.0% in 2016
06 Jan 2017 • About Lg Electronics Inc (
$39IB) • By InTwits
Lg Electronics Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 5.6% in 2016 vs. 5.5% in 2015 vs. 5.4% in 2012
- Lg Electronics Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.5%. At the same time it's in pair with industry average of 3.8%.
- 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 potentially unprofitable business model: ROIC is at 6.5%
- It operates with high leverage: Net Debt/EBITDA is 1.8x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Lg Electronics Inc ($39IB) key annual financial indicators
| mln. KRW | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 55,122,623 | 58,140,376 | 59,040,767 | 56,509,008 | 55,367,033 | -2.0% |
| Gross Profit | 12,870,439 | 13,419,707 | 13,741,645 | 12,873,945 | 13,736,740 | 6.7% |
| SG&A | 10,605,063 | 11,258,419 | 11,086,238 | 10,787,544 | 11,656,588 | 8.1% |
| EBITDA | 2,998,910 | 3,212,834 | 3,806,759 | 3,125,012 | 3,080,745 | -1.4% |
| Net Income | 92,382 | 176,768 | 399,350 | 124,394 | 76,879 | -38.2% |
Balance Sheet
|
|---|
| Cash | 2,185,000 | 2,645,270 | 2,244,406 | 2,710,156 | 3,015,137 | 11.3% |
| Short Term Debt | 2,715,041 | 3,022,723 | 2,575,550 | 2,326,128 | 1,650,511 | -29.0% |
| Long Term Debt | 5,923,346 | 6,188,306 | 6,426,881 | 6,501,122 | 7,008,500 | 7.8% |
Cash flow
|
|---|
| Capex | 1,770,222 | 2,117,161 | 2,165,948 | 1,747,253 | 2,019,014 | 15.6% |
Ratios
|
|---|
| Revenue growth | 1.6% | 5.5% | 1.5% | -4.3% | -2.0% | |
| EBITDA growth | 94.0% | 7.1% | 18.5% | -17.9% | -1.4% | |
| Gross Margin | 23.3% | 23.1% | 23.3% | 22.8% | 24.8% | 2.0% |
| EBITDA Margin | 5.4% | 5.5% | 6.4% | 5.5% | 5.6% | 0.0% |
| Net Income Margin | 0.2% | 0.3% | 0.7% | 0.2% | 0.1% | -0.1% |
| SG&A, % of revenue | 19.2% | 19.4% | 18.8% | 19.1% | 21.1% | 2.0% |
| CAPEX, % of revenue | 3.2% | 3.6% | 3.7% | 3.1% | 3.6% | 0.6% |
| ROIC | 6.1% | 6.3% | 8.9% | 5.8% | 6.5% | 0.7% |
| ROE | 0.7% | 1.4% | 3.1% | 1.0% | 0.6% | -0.4% |
| Net Debt/EBITDA | 2.2x | 2.0x | 1.8x | 2.0x | 1.8x | -0.1x |
Revenue and profitability
The company's Revenue decreased on 2.0% in 2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.8 pp from 9.7% to 11.4% in 2016.
Gross Margin increased on 2.0 pp from 22.8% to 24.8% in 2016. SG&A as a % of Revenue increased slightly on 2.0 pp from 19.1% to 21.1% in 2016.
Net Income marign showed almost no change in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 3.6%. CAPEX/Revenue showed almost no change from 2013 to 2016. It's average CAPEX/Revenue for the last three years was 3.5%.Battling declining revenue the company invested a large share of EBITDA (65.5%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (6.52%) and ROE (0.59%). ROIC increased slightly on 0.71 pp from 5.8% to 6.5% in 2016. ROE showed almost no change in 2016.
Leverage (Debt)
Debt level is 1.8x Net Debt / EBITDA and 2.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.1x from 2.0x to 1.8x in 2016. Debt decreased slightly on 1.9% in 2016 while cash surged on 11.3% in 2016.
Appendix 1: Peers in Leisure Goods
Below you can find Lg Electronics Inc benchmarking vs. other companies in Leisure Goods 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 |
|---|
| Hornby ($HRN) | | -10.9% | -10.2% | 12.8% | -4.1% |
| Vmoto Ltd ($VMT) | 15.9% | 205.5% | 70.6% | 10.9% | |
| Tandem Group ($TND) | -16.3% | -2.1% | 10.5% | 9.8% | |
| Konami Corp ($KNM) | | -15.0% | -3.7% | 0.3% | 14.6% |
| |
|---|
| Median (4 companies) | -0.2% | -6.5% | 3.4% | 10.3% | 5.2% |
|---|
| Lg Electronics Inc ($39IB) | | 5.5% | 1.5% | -4.3% | -2.0% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hornby ($HRN) | 48.3% | 42.6% | 45.2% | 46.7% | 39.0% |
| Konami Corp ($KNM) | 34.4% | 32.4% | 31.3% | 32.8% | 35.0% |
| Tandem Group ($TND) | 29.7% | 29.2% | 30.5% | 29.4% | |
| Vmoto Ltd ($VMT) | 18.0% | 15.0% | 14.7% | 16.7% | |
| |
|---|
| Median (4 companies) | 32.0% | 30.8% | 30.9% | 31.1% | 37.0% |
|---|
| Lg Electronics Inc ($39IB) | 23.3% | 23.1% | 23.3% | 22.8% | 24.8% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vmoto Ltd ($VMT) | 31.8% | 3.2% | 2.0% | 18.3% | |
| Konami Corp ($KNM) | 19.1% | 14.3% | 13.3% | 16.5% | 21.5% |
| Hornby ($HRN) | 14.5% | 1.8% | 1.8% | 7.4% | -17.3% |
| Tandem Group ($TND) | 3.6% | 3.8% | 5.3% | 4.7% | |
| |
|---|
| Median (4 companies) | 16.8% | 3.5% | 3.6% | 11.9% | 2.1% |
|---|
| Lg Electronics Inc ($39IB) | 5.4% | 5.5% | 6.4% | 5.5% | 5.6% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Konami Corp ($KNM) | 3.5% | 4.4% | 21.7% | 11.8% | 7.6% |
| Hornby ($HRN) | 5.9% | 6.0% | 7.9% | 7.0% | 5.8% |
| Vmoto Ltd ($VMT) | 14.2% | 1.6% | 2.6% | 1.8% | |
| Tandem Group ($TND) | 0.5% | 10.2% | 1.2% | 0.4% | |
| |
|---|
| Median (4 companies) | 4.7% | 5.2% | 5.2% | 4.4% | 6.7% |
|---|
| Lg Electronics Inc ($39IB) | 3.2% | 3.6% | 3.7% | 3.1% | 3.6% |
Top companies by ROIC, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vmoto Ltd ($VMT) | -16.1% | 1.8% | 1.4% | 24.2% | |
| Tandem Group ($TND) | 20.4% | 37.6% | 37.6% | 16.6% | |
| Konami Corp ($KNM) | 16.2% | 8.4% | 3.2% | 6.6% | 10.4% |
| Hornby ($HRN) | 10.4% | -6.8% | -7.7% | 0.5% | -36.6% |
| |
|---|
| Median (4 companies) | 13.3% | 5.1% | 2.3% | 11.6% | -13.1% |
|---|
| Lg Electronics Inc ($39IB) | 6.1% | 6.3% | 8.9% | 5.8% | 6.5% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tandem Group ($TND) | -1.4x | -1.4x | -1.1x | 3.5x | |
| Hornby ($HRN) | 0.7x | 2.1x | 7.6x | 1.7x | |
| Vmoto Ltd ($VMT) | 0.9x | 1.4x | 1.0x | -0.5x | |
| Konami Corp ($KNM) | -0.7x | -0.9x | -0.2x | -0.6x | -1.4x |
| |
|---|
| Median (4 companies) | -0.0x | 0.2x | 0.4x | 0.6x | -1.4x |
|---|
| Lg Electronics Inc ($39IB) | 2.2x | 2.0x | 1.8x | 2.0x | 1.8x |
