Smurfit Kappa Group Net Income jumped on 11% in 2016 and EBITDA Margin increased slightly on 0.59 pp from 14.3% to 14.9%
08 Feb 2017 • About Smurfit Kappa Group (
$SKG) • By InTwits
Smurfit Kappa Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Smurfit Kappa Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's in pair with industry average of 4.4%.
- CAPEX is quite volatile: 311 in 2016, 134 in 2015, 2,518 in 2014, 1,859 in 2013, 1,383 in 2012
- The company has highly profitable business model: ROIC is at 14.1%
- It operates with high leverage: Net Debt/EBITDA is 2.4x while industry average is 2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Smurfit Kappa Group ($SKG) key annual financial indicators
| mln. € | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 7,335 | 7,957 | 8,083 | 8,109 | 8,159 | 0.6% |
| Gross Profit | 2,095 | 2,299 | 2,383 | 2,429 | 2,469 | 1.6% |
| SG&A | 1,519 | 1,631 | 1,672 | 1,659 | 1,639 | -1.2% |
| EBITDA | 983 | 1,015 | 1,027 | 1,157 | 1,212 | 4.8% |
| Net Income | 240 | 188 | 241 | 400 | 444 | 11.0% |
Balance Sheet
|
|---|
| Cash | 447 | 447 | 387 | 270 | 436 | 61.5% |
| Short Term Debt | 66 | 67 | 65 | 85 | 137 | 61.2% |
| Long Term Debt | 3,188 | 3,009 | 3,093 | 3,238 | 3,247 | 0.3% |
Cash flow
|
|---|
| Capex | 316 | 349 | 430 | 428 | 427 | -0.2% |
Ratios
|
|---|
| Revenue growth | -0.3% | 8.5% | 1.6% | 0.3% | 0.6% | |
| EBITDA growth | 1.8% | 3.3% | 1.2% | 12.7% | 4.8% | |
| Gross Margin | 28.6% | 28.9% | 29.5% | 30.0% | 30.3% | 0.3% |
| EBITDA Margin | 13.4% | 12.8% | 12.7% | 14.3% | 14.9% | 0.6% |
| Net Income Margin | 3.3% | 2.4% | 3.0% | 4.9% | 5.4% | 0.5% |
| SG&A, % of revenue | 20.7% | 20.5% | 20.7% | 20.5% | 20.1% | -0.4% |
| CAPEX, % of revenue | 4.3% | 4.4% | 5.3% | 5.3% | 5.2% | -0.0% |
| ROIC | 10.8% | 11.2% | 11.8% | 13.9% | 14.1% | 0.2% |
| ROE | 11.3% | 8.2% | 10.6% | 18.2% | 19.7% | 1.5% |
| Net Debt/EBITDA | 2.9x | 2.6x | 2.7x | 2.6x | 2.4x | -0.2x |
Revenue and profitability
The company's Revenue increased slightly on 0.62% in FY2016. 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.
Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign increased slightly on 0.51 pp from 4.9% to 5.4% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 5.2%. Smurfit Kappa Group's CAPEX/Revenue increased slightly on 0.85 pp from 4.4% in FY2013 to 5.2% in FY2016. It's average CAPEX/Revenue for the last three years was 5.3%.
Return on investment
The company operates at good ROIC (14.12%) and ROE (19.71%). ROIC showed almost no change in FY2016. ROE increased slightly on 1.5 pp from 18.2% to 19.7% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.4x and Debt / EBITDA is 2.8x. Net Debt / EBITDA dropped on 0.2x from 2.6x to 2.4x in FY2016. Debt increased slightly on 1.8% in FY2016 while cash surged on 61.5% in FY2016.
Appendix 1: Peers in General Industrials
Below we provide Smurfit Kappa Group benchmarking against other companies in General Industrials 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 |
|---|
| Press Corp ($PESD) | 111.1% | 52.6% | 20.3% | 17.8% | |
| Macfarlane Group ($MACF) | -1.9% | 1.4% | 6.9% | 10.0% | |
| Robinson ($RBN) | -1.6% | 10.2% | 20.3% | 3.8% | |
| Thyssenkrupp Ag ($0O1C) | | -7.2% | 6.9% | 3.8% | -8.2% |
| Coral Products ($CRU) | | -0.2% | -0.3% | 1.2% | 7.4% |
| |
|---|
| Median (9 companies) | 2.5% | 1.4% | 4.4% | 1.2% | 3.9% |
|---|
| Smurfit Kappa Group ($SKG) | | 8.5% | 1.6% | 0.3% | 0.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 58.9% | 54.4% | 56.0% | 54.5% | |
| Macfarlane Group ($MACF) | 32.0% | 31.2% | 30.9% | 31.5% | |
| Honeywell International Inc ($HON) | 24.9% | 27.4% | 28.2% | 30.7% | 30.9% |
| Coral Products ($CRU) | 22.1% | 24.6% | 23.7% | 29.6% | 33.1% |
| Jardine Strategic Hldgs ($88EI) | 24.0% | 24.0% | 25.4% | 25.5% | |
| |
|---|
| Median (9 companies) | 24.0% | 24.6% | 24.5% | 25.5% | 22.0% |
|---|
| Smurfit Kappa Group ($SKG) | 28.6% | 28.9% | 29.5% | 30.0% | 30.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 29.5% | 29.6% | 29.2% | 25.3% | |
| Honeywell International Inc ($HON) | 13.5% | 16.6% | 16.8% | 20.0% | 19.6% |
| Jardine Strategic Hldgs ($88EI) | 15.0% | 13.3% | 13.5% | 15.1% | |
| General Electric Co. ($GEC) | 17.2% | 16.5% | 13.3% | 10.4% | 9.4% |
| Barloworld ($BWO) | 8.4% | 9.1% | 10.0% | 10.3% | 10.0% |
| |
|---|
| Median (9 companies) | 13.5% | 13.3% | 13.3% | 10.3% | 9.4% |
|---|
| Smurfit Kappa Group ($SKG) | 13.4% | 12.8% | 12.7% | 14.3% | 14.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Press Corp ($PESD) | 21.3% | 8.5% | 12.1% | 9.0% | |
| General Electric Co. ($GEC) | 10.5% | 9.4% | 6.1% | 6.3% | 6.0% |
| Robinson ($RBN) | 4.3% | 6.0% | 3.5% | 3.7% | |
| Jardine Strategic Hldgs ($88EI) | 5.8% | 5.2% | 4.1% | 2.9% | |
| Honeywell International Inc ($HON) | 2.3% | 2.4% | 2.7% | 2.8% | 2.8% |
| |
|---|
| Median (9 companies) | 4.3% | 5.2% | 2.9% | 2.8% | 3.1% |
|---|
| Smurfit Kappa Group ($SKG) | 4.3% | 4.4% | 5.3% | 5.3% | 5.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Honeywell International Inc ($HON) | 21.8% | 23.0% | 21.3% | 23.2% | 19.6% |
| Press Corp ($PESD) | 21.6% | 27.1% | 24.7% | 18.9% | |
| Macfarlane Group ($MACF) | 17.9% | 22.2% | 19.0% | 17.8% | |
| Barloworld ($BWO) | 14.0% | 13.5% | 14.1% | 12.9% | 12.8% |
| Thyssenkrupp Ag ($0O1C) | -27.3% | -6.5% | 10.8% | 9.5% | 12.7% |
| |
|---|
| Median (9 companies) | 10.3% | 9.6% | 10.8% | 9.5% | 12.7% |
|---|
| Smurfit Kappa Group ($SKG) | 10.8% | 11.2% | 11.8% | 13.9% | 14.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| General Electric Co. ($GEC) | 10.5x | 8.9x | 12.0x | 10.6x | 7.8x |
| Coral Products ($CRU) | 1.5x | 2.9x | 3.4x | 2.7x | 2.5x |
| Thyssenkrupp Ag ($0O1C) | 3.4x | 4.5x | 2.0x | 1.8x | 1.8x |
| Barloworld ($BWO) | 1.5x | 1.4x | 1.2x | 1.7x | 1.2x |
| Macfarlane Group ($MACF) | 1.0x | 0.8x | 1.3x | 1.3x | |
| |
|---|
| Median (9 companies) | 1.4x | 1.3x | 1.3x | 1.3x | 1.8x |
|---|
| Smurfit Kappa Group ($SKG) | 2.9x | 2.6x | 2.7x | 2.6x | 2.4x |
