Marsh & Mclennan Cos Inc reports 10.6% Net Income growth and 2.5% Revenue growth
02 Feb 2017 • About Marsh & Mclennan Cos Inc (
$MHM) • By InTwits
Marsh & Mclennan Cos Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 23.5% in 2016 vs. 22.0% in 2015 vs. 18.3% in 2012
- Marsh & Mclennan Cos Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's a lot of higher than industry average of 1.1%.
- CAPEX is quite volatile: 362 in 2016, 252 in 2015, 735 in 2014, 1,528 in 2013, 457 in 2012
- The company has highly profitable business model: ROIC is at 23.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.2x while industry average is 1.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Marsh & Mclennan Cos Inc ($MHM) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 11,924 | 12,261 | 12,951 | 12,893 | 13,211 | 2.5% |
| EBITDA | 2,178 | 2,435 | 2,689 | 2,842 | 3,102 | 9.1% |
| Net Income | 1,176 | 1,357 | 1,465 | 1,599 | 1,768 | 10.6% |
Balance Sheet
|
|---|
| Cash | 2,301 | 2,303 | 1,958 | 1,374 | 1,026 | -25.3% |
| Short Term Debt | 260 | 334 | 11 | 12 | 312 | 2,500.0% |
| Long Term Debt | 2,658 | 2,621 | 3,368 | 4,402 | 4,495 | 2.1% |
Cash flow
|
|---|
| Capex | 320 | 401 | 368 | 325 | 253 | -22.2% |
Ratios
|
|---|
| Revenue growth | 3.5% | 2.8% | 5.6% | -0.4% | 2.5% | |
| EBITDA growth | 10.6% | 11.8% | 10.4% | 5.7% | 9.1% | |
| EBITDA Margin | 18.3% | 19.9% | 20.8% | 22.0% | 23.5% | 1.4% |
| Net Income Margin | 9.9% | 11.1% | 11.3% | 12.4% | 13.4% | 1.0% |
| CAPEX, % of revenue | 2.7% | 3.3% | 2.8% | 2.5% | 1.9% | -0.6% |
| ROIC | 19.5% | 19.9% | 21.0% | 22.0% | 23.6% | 1.6% |
| ROE | 18.9% | 18.8% | 19.6% | 23.6% | 27.8% | 4.3% |
| Net Debt/EBITDA | 0.3x | 0.3x | 0.5x | 1.1x | 1.2x | 0.1x |
Revenue and profitability
The company's Revenue increased on 2.5% in 2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.0 pp from 34.7% to 37.7% in FY2016.
Net Income marign increased slightly on 0.98 pp from 12.4% to 13.4% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 1.9%. CAPEX/Revenue decreased slightly on 1.4 pp from 3.3% in 2013 to 1.9% in 2016. It's average level of CAPEX/Revenue for the last three years was 2.4%.
Return on investment
The company operates at high and attractive ROIC (23.60%) and ROE (27.83%). ROIC increased slightly on 1.6 pp from 22.0% to 23.6% in 2016. ROE increased on 4.3 pp from 23.6% to 27.8% in 2016.
Leverage (Debt)
Debt level is 1.2x Net Debt / EBITDA and 1.5x Debt / EBITDA. Net Debt / EBITDA surged on 0.1x from 1.1x to 1.2x in 2016. Debt increased on 8.9% in 2016 while cash dropped on 25.3% in 2016.
Valuation
The company's trades at EV/EBITDA 1.3x and P/E 0.2x while industy averages are 15.6x and 19.1x. Marsh & Mclennan Cos Inc's EV/(EBITDA-CAPEX) is 1.5x with the industry average at 19.0x.
Appendix 1: Peers in Nonlife Insurance
Below you can find Marsh & Mclennan Cos Inc benchmarking vs. other companies in Nonlife Insurance 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 |
|---|
| Gable Hldgs Inc ($GAH) | 36.6% | 36.3% | 22.1% | 17.2% | |
| Helios Underwriting ($HUW) | 17.8% | 26.1% | 47.9% | 12.8% | |
| Randall & Quilter Invt Hldgs Ltd ($RQIH) | 40.7% | 4.7% | 20.7% | 10.0% | |
| Brit ($BRIT) | -4.9% | -1.2% | 3.9% | 4.5% | |
| F.B.D.Hldgs ($FBH) | 0.2% | 0.2% | 1.1% | 0.8% | |
| |
|---|
| Median (8 companies) | 17.8% | 2.4% | 14.0% | 2.7% | 68.2% |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | | 2.8% | 5.6% | -0.4% | 2.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| F.B.D.Hldgs ($FBH) | 3.0% | 5.4% | 7.0% | 5.2% | |
| Brit ($BRIT) | 0.3% | 0.1% | 0.2% | 1.6% | |
| Randall & Quilter Invt Hldgs Ltd ($RQIH) | 1.4% | 1.0% | 1.1% | 0.3% | |
| Arab Insurance Group(Arig) ($AGRD) | 0.2% | 0.5% | 0.2% | 0.3% | |
| General Accident ($GACB) | 0.5% | 0.1% | 0.3% | 0.2% | 0.1% |
| |
|---|
| Median (8 companies) | 0.3% | 0.5% | 0.2% | 0.3% | 0.2% |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 2.7% | 3.3% | 2.8% | 2.5% | 1.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Helios Underwriting ($HUW) | 2.9% | 2.3% | 4.9% | 1.5% | |
| Rsa Insurance Group ($RSAB) | 2.9% | -0.6% | -0.1% | 1.2% | 2.7% |
| General Accident ($GACB) | 0.4% | 0.7% | 1.0% | 0.6% | 0.4% |
| Brit ($BRIT) | 2.7% | 3.6% | 4.6% | 0.5% | |
| Arab Insurance Group(Arig) ($AGRD) | 1.8% | 1.5% | 1.2% | -0.7% | |
| |
|---|
| Median (8 companies) | 2.9% | 1.9% | 0.6% | -0.1% | 1.6% |
|---|
| Marsh & Mclennan Cos Inc ($MHM) | 19.5% | 19.9% | 21.0% | 22.0% | 23.6% |
