First Quantum Minerals reports 116% EBITDA growth and 6.5% Revenue growth
16 Feb 2017 • About First Quantum Minerals (
$FQM) • By InTwits
First Quantum Minerals reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- First Quantum Minerals doesn't have a profitable business model yet: 2016 ROIC is 1.6%
- EBITDA Margin is quite volatile: 36.1% in 2016, 17.8% in 2015, 39.9% in 2014, 38.1% in 2013, 80.0% in 2012
- First Quantum Minerals has high CAPEX intensity: 5 year average CAPEX/Revenue was 66.0%. At the same time it's a lot of higher than industry average of 10.1%.
- The company has potentially unprofitable business model: ROIC is at 1.6%
- It operates with high leverage: Net Debt/EBITDA is 4.5x while industry average is 2.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
First Quantum Minerals ($FQM) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2,950 | 3,553 | 3,542 | 2,511 | 2,673 | 6.5% |
| Gross Profit | 1,101 | 1,134 | 998 | 287 | 339 | 18.1% |
| SG&A | 76 | 123 | 116 | 83 | 70 | -15.7% |
| EBITDA | 2,361 | 1,352 | 1,413 | 447 | 966 | 116.1% |
| Net Income | 1,773 | 459 | 835 | -496 | -45 | -90.9% |
Balance Sheet
|
|---|
| Cash | 309 | 695 | 357 | 1,178 | 1,463 | 24.2% |
| Short Term Debt | 49 | 1,046 | 53 | 1,199 | 1,283 | 7.0% |
| Long Term Debt | 348 | 3,027 | 5,929 | 4,675 | 4,561 | -2.4% |
Cash flow
|
|---|
| Capex | 1,373 | 2,601 | 2,893 | 1,820 | 1,497 | -17.7% |
Ratios
|
|---|
| Revenue growth | 14.2% | 20.4% | -0.3% | -29.1% | 6.5% | |
| EBITDA growth | 91.6% | -42.7% | 4.5% | -68.4% | 116.1% | |
| Gross Margin | 37.3% | 31.9% | 28.2% | 11.4% | 12.7% | 1.3% |
| EBITDA Margin | 80.0% | 38.1% | 39.9% | 17.8% | 36.1% | 18.3% |
| Net Income Margin | 60.1% | 12.9% | 23.6% | -19.8% | -1.7% | 18.1% |
| SG&A, % of revenue | 2.6% | 3.5% | 3.3% | 3.3% | 2.6% | -0.7% |
| CAPEX, % of revenue | 46.5% | 73.2% | 81.7% | 72.5% | 56.0% | -16.5% |
| ROIC | 37.7% | 8.5% | 5.5% | -0.4% | 1.6% | 2.1% |
| ROE | 39.4% | 6.9% | 9.8% | -5.3% | -0.5% | 4.8% |
| Net Debt/EBITDA | 0.0x | 2.5x | 4.0x | 10.5x | 4.5x | -6.0x |
Revenue and profitability
First Quantum Minerals's Revenue increased on 6.5% in 2016. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 18.3 pp from 17.8% to 36.1% in 2016.
Gross Margin increased slightly on 1.3 pp from 11.4% to 12.7% in 2016. SG&A as a % of Revenue decreased slightly on 0.69 pp from 3.3% to 2.6% in 2016.
Net Income marign surged on 18.1 pp from -19.8% to -1.7% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 56.0% in 2016. First Quantum Minerals's CAPEX/Revenue dropped on 17.2 pp from 73.2% in 2013 to 56.0% in 2016. Average CAPEX/Revenue for the last three years was 70.1%.The company maintained rich investment policy and has spent a lot to CAPEX (155% of EBITDA).
Return on investment
The company operates at low but positive ROIC (1.63%) and negative ROE (-0.48%). ROIC increased on 2.1 pp from -0.45% to 1.6% in 2016. ROE increased on 4.8 pp from -5.3% to -0.48% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.5x and Debt / EBITDA is 6.0x. Net Debt / EBITDA dropped on 6.0x from 10.5x to 4.5x in 2016. Debt decreased slightly on 0.51% in 2016 while cash surged on 24.2% in 2016.
Management team
Philip Kelvin Rodda Pascall is a First Quantum Minerals's CEO. Philip Kelvin Rodda Pascall is a founder and has spent 22 years at the company.
Appendix 1: Peers in Industrial Metals & Mining
Below we provide First Quantum Minerals benchmarking against other companies in Industrial Metals & Mining 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 |
|---|
| Base Resources Ltd ($BSE) | | | | 399.7% | 16.2% |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 2.4% | -0.1% | 26.4% | 45.5% | |
| Norsk Hydro Asa ($NHY) | | 1.1% | 20.1% | 12.6% | -6.5% |
| Afarak Group ($AFRK) | -19.2% | 5.4% | 27.4% | 8.7% | |
| Vimetco Nv ($VICO) | -13.4% | -6.5% | -12.8% | -5.3% | |
| |
|---|
| Median (15 companies) | -7.2% | -1.4% | 2.4% | -10.6% | -6.5% |
|---|
| First Quantum Minerals ($FQM) | | 20.4% | -0.3% | -29.1% | 6.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 49.1% | 43.4% | 52.2% | 55.7% | |
| Severstal PJSC ($SVST) | 23.5% | 29.9% | 34.4% | 40.4% | 39.6% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 23.8% | 19.4% | 28.3% | 31.4% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 15.5% | 14.9% | 21.9% | 30.6% | 32.2% |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 17.7% | 15.1% | 28.6% | 24.8% | |
| |
|---|
| Median (13 companies) | 14.8% | 14.9% | 18.0% | 20.5% | 16.8% |
|---|
| First Quantum Minerals ($FQM) | 37.3% | 31.9% | 28.2% | 11.4% | 12.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 38.6% | 29.2% | 46.8% | 47.0% | |
| Base Resources Ltd ($BSE) | | | -1.8% | 37.7% | 35.8% |
| Severstal PJSC ($SVST) | 14.9% | 19.3% | 26.4% | 32.4% | 31.2% |
| Magnitogorsk Iron & Steel Works ($MMK) | 13.1% | 14.0% | 19.5% | 28.3% | 34.5% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 15.6% | 13.8% | 21.8% | 24.3% | |
| |
|---|
| Median (15 companies) | 12.9% | 12.1% | 12.6% | 14.6% | 18.4% |
|---|
| First Quantum Minerals ($FQM) | 80.0% | 38.1% | 39.9% | 17.8% | 36.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 22.3% | 17.1% | 10.8% | 19.0% | |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 7.0% | 7.9% | 9.9% | 8.1% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | 12.0% | 6.9% | 5.4% | 7.7% | |
| Ezz Steel ($AEZD) | 2.3% | 3.9% | 6.4% | 6.8% | |
| Vimetco Nv ($VICO) | | | 8.8% | 6.6% | |
| |
|---|
| Median (15 companies) | 6.7% | 7.6% | 6.3% | 6.3% | 8.2% |
|---|
| First Quantum Minerals ($FQM) | 46.5% | 73.2% | 81.7% | 72.5% | 56.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 21.8% | 14.2% | 34.1% | 31.7% | |
| Severstal PJSC ($SVST) | 10.3% | 9.6% | 17.7% | 30.3% | 29.7% |
| Zibao Metals Recycling Hldgs Ltd ($ZBO) | 41.7% | 56.6% | 55.8% | 26.6% | 0.9% |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 6.2% | -2.7% | 25.6% | 24.4% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 1.8% | 1.4% | 9.1% | 18.1% | 26.7% |
| |
|---|
| Median (15 companies) | 5.4% | 4.1% | 9.1% | 8.1% | 5.0% |
|---|
| First Quantum Minerals ($FQM) | 37.7% | 8.5% | 5.5% | -0.4% | 1.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vimetco Nv ($VICO) | 7.7x | | 10.9x | 14.6x | |
| Ezz Steel ($AEZD) | 4.8x | 3.6x | 19.4x | 13.3x | |
| Base Resources Ltd ($BSE) | | | | 4.4x | 3.7x |
| OAO TMK ($TMKS) | 3.6x | 3.9x | 3.8x | 4.3x | |
| Posco ($PIDD) | 3.3x | 3.9x | 3.7x | 3.6x | 3.4x |
| |
|---|
| Median (14 companies) | 2.0x | 2.0x | 0.8x | 1.0x | 0.1x |
|---|
| First Quantum Minerals ($FQM) | 0.0x | 2.5x | 4.0x | 10.5x | 4.5x |
