Kerry Group reports 3.3% EBITDA decline and 0.51 pp EBITDA Margin decline from 13.8% to 13.2%
21 Feb 2017 • About Kerry Group (
$KYGA) • By InTwits
Kerry Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 13.2% in FY2016, 13.8% in FY2015, 12.5% in FY2014, 5.0% in FY2013, 8.6% in FY2012
- Kerry Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.7%. At the same time it's in pair with industry average of 10.3%.
- CAPEX is quite volatile: 494 in 2016, 412 in 2015, 700 in 2014, 968 in 2013, 1,336 in 2012
- The company has highly profitable business model: ROIC is at 13.1%
- It operates with high leverage: Net Debt/EBITDA is 1.8x while industry average is 1.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kerry Group ($KYGA) key annual financial indicators
| mln. € | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 5,848 | 5,837 | 5,757 | 6,105 | 6,131 | 0.4% |
| Gross Profit | 2,542 | | | | | |
| EBITDA | 504 | 294 | 720 | 840 | 812 | -3.3% |
| Net Income | 261 | 84 | 480 | 525 | 533 | 1.5% |
Balance Sheet
|
|---|
| Cash | 215 | 246 | 284 | 236 | 565 | 138.9% |
| Short Term Debt | 213 | 44 | 303 | 38 | 193 | 401.3% |
| Long Term Debt | 1,287 | 1,282 | 1,271 | 2,012 | 1,867 | -7.2% |
Cash flow
|
|---|
| Capex | 168 | 190 | 274 | 252 | 224 | -11.3% |
Ratios
|
|---|
| Revenue growth | 10.3% | -0.2% | -1.4% | 6.1% | 0.4% | |
| EBITDA growth | -12.1% | -41.6% | 144.5% | 16.7% | -3.3% | |
| Gross Margin | 43.5% | | | | | 0.0% |
| EBITDA Margin | 8.6% | 5.0% | 12.5% | 13.8% | 13.2% | -0.5% |
| Net Income Margin | 4.5% | 1.4% | 8.3% | 8.6% | 8.7% | 0.1% |
| CAPEX, % of revenue | 2.9% | 3.3% | 4.8% | 4.1% | 3.7% | -0.5% |
| ROIC | 10.6% | 5.2% | 16.6% | 15.8% | 13.1% | -2.7% |
| ROE | 13.5% | 4.2% | 22.8% | 20.9% | 18.1% | -2.8% |
| Net Debt/EBITDA | 2.6x | 3.7x | 1.8x | 2.2x | 1.8x | -0.3x |
Revenue and profitability
The company's Revenue showed almost no change in FY2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.7 pp from 48.9% to 51.6% in FY2016.
Net Income marign showed almost no change in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 3.7%. CAPEX/Revenue showed almost no change from FY2013 to FY2016. It's average CAPEX/Revenue for the last three years was 4.2%.
Return on investment
The company operates at good ROIC (13.10%) and ROE (18.12%). ROIC decreased on 2.7 pp from 15.8% to 13.1% in FY2016. ROE decreased on 2.8 pp from 20.9% to 18.1% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.8x and Debt / EBITDA is 2.5x. Net Debt / EBITDA dropped on 0.3x from 2.2x to 1.8x in FY2016. Debt showed almost no change in FY2016 while cash surged on 139% in FY2016.
Valuation
The company's trades at EV/EBITDA 2.0x and P/E 0.3x while industy averages are 15.6x and 19.1x. The company's EV/(EBITDA-CAPEX) is 2.8x with the industry average at 19.0x.
Appendix 1: Peers in Food Producers
Below we provide Kerry Group benchmarking against other companies in Food Producers 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 |
|---|
| Kakuzi ($KAKU) | 0.3% | -11.5% | 22.1% | 46.9% | |
| Fyffes ($FFY) | 18.9% | 6.6% | 2.0% | 15.6% | |
| Cherkizovo Group OJSC ($CHE) | 12.6% | 8.1% | 31.5% | 11.1% | |
| Glanbia ($GLB) | 14.4% | 7.7% | 6.6% | 9.3% | |
| Ros Agro ($AGRO) | -13.2% | 8.2% | 78.6% | 4.1% | |
| |
|---|
| Median (20 companies) | 13.7% | 6.6% | -3.5% | -5.3% | 3.2% |
|---|
| Kerry Group ($KYGA) | | -0.2% | -1.4% | 6.1% | 0.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Walcom Group Ltd ($WALG) | 62.6% | 63.2% | 62.2% | 60.5% | |
| Narborough Plantations ($NBP) | 64.9% | 55.5% | 59.7% | 54.6% | 56.2% |
| Kakuzi ($KAKU) | 42.8% | 29.8% | 33.0% | 49.2% | |
| Zambeef Products ($ZAM) | 33.6% | 34.5% | 33.7% | 43.2% | 36.3% |
| Ros Agro ($AGRO) | 28.8% | 22.1% | 33.6% | 42.1% | |
| |
|---|
| Median (19 companies) | 28.8% | 22.0% | 29.6% | 24.4% | 23.4% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mhp Sa ($MHPC) | 33.2% | 26.1% | 37.0% | 38.8% | |
| Narborough Plantations ($NBP) | 58.1% | 42.5% | 39.6% | 37.4% | 40.8% |
| Ros Agro ($AGRO) | 20.6% | 15.5% | 28.1% | 34.6% | |
| R.E.A.Hldgs ($RE.B) | 35.3% | 34.0% | 33.2% | 31.1% | |
| Kakuzi ($KAKU) | 28.0% | 14.9% | 11.8% | 29.4% | |
| |
|---|
| Median (20 companies) | 16.4% | 10.1% | 8.7% | 8.8% | 9.2% |
|---|
| Kerry Group ($KYGA) | 8.6% | 5.0% | 12.5% | 13.8% | 13.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kakuzi ($KAKU) | 20.1% | 20.8% | 22.0% | 24.9% | |
| R.E.A.Hldgs ($RE.B) | 40.3% | 10.9% | 11.8% | 17.4% | |
| Avangardco Investments Public Ltd ($AVGR) | 51.1% | 28.0% | 18.4% | 16.2% | |
| Zambeef Products ($ZAM) | 9.2% | 4.6% | 4.8% | 15.9% | 7.5% |
| Ros Agro ($AGRO) | 20.0% | 10.5% | 7.3% | 15.3% | |
| |
|---|
| Median (20 companies) | 7.4% | 6.4% | 5.5% | 5.5% | 2.5% |
|---|
| Kerry Group ($KYGA) | 2.9% | 3.3% | 4.8% | 4.1% | 3.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ros Agro ($AGRO) | 7.2% | 4.0% | 23.8% | 23.2% | |
| Origin Enterprises ($OGN) | 13.2% | 15.3% | 16.9% | 20.1% | 15.3% |
| Mhp Sa ($MHPC) | 18.4% | 11.2% | 17.6% | 17.6% | |
| Kakuzi ($KAKU) | 11.4% | 4.7% | 4.3% | 17.4% | |
| Fyffes ($FFY) | 16.4% | 17.2% | 18.5% | 14.7% | |
| |
|---|
| Median (20 companies) | 12.3% | 8.6% | 9.7% | 8.2% | 7.4% |
|---|
| Kerry Group ($KYGA) | 10.6% | 5.2% | 16.6% | 15.8% | 13.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| R.E.A.Hldgs ($RE.B) | 3.1x | 4.4x | 3.9x | 7.2x | |
| Tate & Lyle ($BD15) | 1.0x | 1.2x | 1.2x | 4.0x | 1.8x |
| Real Good Food ($RGD) | | 2.5x | 5.7x | 3.2x | 1.3x |
| Cherkizovo Group OJSC ($CHE) | 2.7x | 4.4x | 1.6x | 3.1x | |
| Zambeef Products ($ZAM) | 6.3x | 4.7x | 4.8x | 3.0x | 1.8x |
| |
|---|
| Median (17 companies) | 1.0x | 1.5x | 1.6x | 1.8x | 1.2x |
|---|
| Kerry Group ($KYGA) | 2.6x | 3.7x | 1.8x | 2.2x | 1.8x |
