BP reports 92.1% EBITDA growth and 4.0 pp EBITDA Margin growth from 3.0% to 7.0%

07 Feb 2017 • About BP ($BP.A) • By InTwits

BP reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

BP is a company in decline: FY2016 revenue growth was -17.9%, 5 years revenue CAGR was -13.4%
EBITDA Margin is quite volatile: 7.0% in FY2016, 3.0% in FY2015, 4.9% in FY2014, 10.9% in FY2013, 7.1% in FY2012
BP has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.3%. At the same time it's in pair with industry average of 3.0%.
CAPEX is quite volatile: 42,320 in 2016, 30,993 in 2015, 34,696 in 2014, 23,394 in 2013, 14,700 in 2012
The company has unprofitable business model: ROIC is at -1.8%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

BP ($BP.A) key annual financial indicators

mln. $	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	375,765	379,136	353,568	222,894	183,008	-17.9%
Gross Profit	49,065	53,258	44,286	21,064	21,712	3.1%
SG&A	13,357	13,070	12,696	11,553		-100.0%
EBITDA	26,844	41,313	17,360	6,708	12,883	92.1%
Net Income	11,017	23,451	3,780	-6,482	115	-101.8%
Balance Sheet
Cash	19,635	22,520	29,763	26,389	23,484	-11.0%
Short Term Debt	10,033	7,381	6,877	6,944	6,634	-4.5%
Long Term Debt	38,767	40,811	45,977	46,224	51,666	11.8%
Cash flow
Capex	23,222	24,520	22,546	18,648	16,701	-10.4%
Ratios
Revenue growth	0.1%	0.9%	-6.7%	-37.0%	-17.9%
EBITDA growth	-39.2%	53.9%	-58.0%	-61.4%	92.1%
Gross Margin	13.1%	14.0%	12.5%	9.5%	11.9%	2.4%
EBITDA Margin	7.1%	10.9%	4.9%	3.0%	7.0%	4.0%
Net Income Margin	2.9%	6.2%	1.1%	-2.9%	0.1%	3.0%
SG&A, % of revenue	3.6%	3.4%	3.6%	5.2%		-5.2%
CAPEX, % of revenue	6.2%	6.5%	6.4%	8.4%	9.1%	0.8%
ROIC	8.0%	14.7%	1.2%	-6.1%	-1.8%	4.3%
ROE	9.6%	18.9%	3.1%	-6.2%	0.1%	6.3%
Net Debt/EBITDA	1.1x	0.6x	1.3x	4.0x	2.7x	-1.3x

Revenue and profitability

The company's Revenue dropped on 17.9% in FY2016. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.0 pp from 3.0% to 7.0% in FY2016.

Gross Margin increased on 2.4 pp from 9.5% to 11.9% in FY2016.

Net Income marign increased on 3.0 pp from -2.9% to 0.063% in FY2016.

Capital expenditures (CAPEX) and working capital investments

BP's CAPEX/Revenue was 9.1% in FY2016. The company showed CAPEX/Revenue growth of 2.7 pp from 6.5% in FY2013 to 9.1% in FY2016. It's average level of CAPEX/Revenue for the last three years was 8.0%.The company has spent a lot to CAPEX (130% of EBITDA) which didn't stop revenue from falling.

Return on investment

The company operates at negative ROIC (-1.83%) and low but positive ROE (0.12%). ROIC increased on 4.3 pp from -6.1% to -1.8% in FY2016. ROE increased on 6.3 pp from -6.2% to 0.12% in FY2016.

Leverage (Debt)

Company's Net Debt / EBITDA is 2.7x and Debt / EBITDA is 4.5x. Net Debt / EBITDA dropped on 1.3x from 4.0x to 2.7x in FY2016. Debt increased on 9.7% in FY2016 while cash dropped on 11.0% in FY2016.

Appendix 1: Peers in Oil & Gas Producers

Below you can find BP benchmarking vs. other companies in Oil & Gas Producers 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
Cadogan Petroleum ($CAD)	-46.1%	0.3%	764.9%	131.2%
Eland Oil & Gas ($ELA)				54.8%
Zoltav Resources Inc ($ZOL)				40.6%
Novatek OAO ($NVTK)	19.8%	41.3%	20.0%	32.9%
AO Tatneft ($ATAD)		2.5%	4.7%	16.0%
Median (38 companies)	15.0%	4.3%	0.5%	-19.5%	-22.7%
BP ($BP.A)		0.9%	-6.7%	-37.0%	-17.9%

Top companies by Gross margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Bankers Petroleum Ltd ($BNK)	77.5%	81.1%	80.8%	72.2%
Serica Energy ($SQZ)				67.0%
Oil & Gas Development Co ($OGDC)	69.9%	70.9%	68.5%	62.7%	54.0%
Nighthawk Energy ($HAWK)	38.8%	66.8%	58.1%	49.8%
Caza Oil & Gas Inc ($CAZA)	0.1%	30.5%	40.8%	44.8%
Median (23 companies)	18.3%	21.7%	17.4%	12.6%	-13.0%
BP ($BP.A)	13.1%	14.0%	12.5%	9.5%	11.9%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Great Eastern Energy Corp ($GEEC)	61.2%	64.1%	70.4%	66.5%	50.0%
Oil & Gas Development Co ($OGDC)	73.7%	65.9%	69.3%	62.4%	55.0%
Serica Energy ($SQZ)				61.3%
Circle Oil ($COP)	53.5%	54.8%	51.1%	53.0%
Caza Oil & Gas Inc ($CAZA)	-50.7%	-3.0%	47.7%	49.8%
Median (39 companies)	17.2%	20.6%	16.5%	21.8%	11.7%
BP ($BP.A)	7.1%	10.9%	4.9%	3.0%	7.0%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
President Energy ($PPC)	51.5%	24.6%	10.4%	142.7%
Ruspetro ($RPO)	139.8%	55.2%	77.2%	80.3%
Parkmead Group(The) ($PMG)	6.4%	85.4%	39.8%	67.4%	6.1%
Bankers Petroleum Ltd ($BNK)	64.1%	50.0%	58.7%	47.3%
Volga Gas ($VGAS)			14.0%	45.5%
Median (39 companies)	17.7%	24.6%	16.5%	16.5%	6.1%
BP ($BP.A)	6.2%	6.5%	6.4%	8.4%	9.1%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Turkiye Petrol Rafinerileri A.S. ($TPRD)	13.6%	5.8%	5.3%	25.4%
Oil & Gas Development Co ($OGDC)	46.7%	40.4%	39.7%	24.3%	14.1%
AO Tatneft ($ATAD)	19.2%	19.1%	17.8%	19.7%
Novatek OAO ($NVTK)	21.7%	29.0%	21.2%	19.4%
Serica Energy ($SQZ)	-6.2%	-5.1%	-5.5%	19.4%
Median (39 companies)	4.2%	4.1%	5.3%	1.8%	0.9%
BP ($BP.A)	8.0%	14.7%	1.2%	-6.1%	-1.8%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Jubilant Energy N.V. ($JUB)	77.9x	38.8x	44.6x	192.7x
Ruspetro ($RPO)	369.1x	34.8x	27.9x	116.8x
Iofina ($IOF)	-5,718.9x			32.8x
Edge Resources Inc ($EDG)			8.0x	7.6x
Great Eastern Energy Corp ($GEEC)	6.0x	5.6x	4.8x	3.8x	6.4x
Median (30 companies)	0.4x	0.7x	1.3x	1.5x	2.7x
BP ($BP.A)	1.1x	0.6x	1.3x	4.0x	2.7x

BP stock price chart

BP financials

mln.	FY2010	FY2011	FY2012

Revenue	297,107	375,517	375,765
EBITDA	2,024	44,136	26,844
Net income	-3,719.000	25,700	11,017
CAPEX	18,421	17,845	23,222
Debt	45,336	44,213	48,800
Cash	18,556	14,067	19,635

About BP

BP p.l.c. operates as an integrated oil and gas company worldwide. It operates in three segments: Upstream, Downstream, and Rosneft. The Upstream segment engages in the oil and natural gas exploration, field development, and production; midstream transportation, and storage and processing; and marketing and trade of natural gas, including liquefied natural gas (LNG), and power and natural gas liquids (NGL). It also owns and manages crude oil and natural gas pipelines; processing facilities and export terminals; and LNG processing facilities and transportation, as well as NGL extraction business. The Downstream segment refines, manufactures, markets, transports, supplies, and trades in crude oil, petroleum, and petrochemicals products and related services to wholesale and retail customers. It offers lubricants and related products under the Castrol, BP, and Aral brands to the automotive, industrial, marine, and energy markets; and petrochemicals products, such as purified terephthalic acid, paraxylene, acetic acid, olefins and derivatives, and specialty petrochemicals products. This segment also sells gasoline, diesel, and aviation fuel. The Rosneft segment engages in the exploration and production of hydrocarbons in the United States, Canada, Vietnam, Venezuela, Brazil, Algeria, the United Arab Emirates, Turkmenistan, and Norway; and offers jet fuel, bunkering, bitumen, and lubricants. This segment also owns and operates 10 refineries in Russia; and has an interest in 4 refineries in Germany. As of December 31, 2014, this segment owned and operated approximately 2,500 retail service stations in Russia. The company also produces bioethanol, sugar, and biobutanol; exports power to the local grid; transports hydrocarbon products through shipping and chartering services; and holds interests in 16 operating wind farms with a generation capacity of 2,585 megawatts. BP p.l.c. was founded in 1889 and is headquartered in London, the United Kingdom.