Frontline Ltd revenue jumped on 86.0% in 2016 while EBITDA Margin dropped on 32.1 pp from 74.6% to 42.5%
28 Feb 2017 • About Frontline Ltd (
$FRO) • By InTwits
Frontline Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 42.5% in FY2016, 74.6% in FY2015, 64.5% in FY2014, -4.6% in FY2013, 17.2% in FY2012
- Frontline Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 68.1%. At the same time it's a lot of higher than industry average of 10.9%.
- CAPEX is quite volatile: 461 in FY2016, 515 in FY2015, 123 in FY2014, 1.6 in FY2013, 9.2 in FY2012
- The company has potentially unprofitable business model: ROIC is at 6.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 4.1x while industry average is 3.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Frontline Ltd ($FRO) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 365.0 | 330.8 | 146.9 | 300.4 | 558.7 | 86.0% |
| SG&A | 21.4 | 20.2 | 3.0 | 6.9 | 27.4 | 296.0% |
| EBITDA | 62.8 | -15.1 | 94.8 | 224.2 | 237.4 | 5.9% |
| Net Income | -52.2 | -120.6 | 90.8 | 101.2 | 86.7 | -14.4% |
Balance Sheet
|
|---|
| Cash | 84.7 | 32.5 | 151.3 | 179.5 | 164.0 | -8.7% |
| Short Term Debt | 32.1 | 28.3 | 28.3 | 100.0 | 100.3 | 0.3% |
| Long Term Debt | 851.2 | 725.3 | 303.9 | 809.2 | 1,037.4 | 28.2% |
Cash flow
|
|---|
| Capex | 9.2 | 1.6 | 122.9 | 515.0 | 461.1 | -10.5% |
Ratios
|
|---|
| Revenue growth | -27.8% | -9.4% | -55.6% | 104.5% | 86.0% | |
| EBITDA growth | -9.1% | -124.1% | -727.4% | 136.5% | 5.9% | |
| EBITDA Margin | 17.2% | -4.6% | 64.5% | 74.6% | 42.5% | -32.1% |
| Net Income Margin | -14.3% | -36.4% | 61.8% | 33.7% | 15.5% | -18.2% |
| SG&A, % of revenue | 5.9% | 6.1% | 2.0% | 2.3% | 4.9% | 2.6% |
| CAPEX, % of revenue | 2.5% | 0.5% | 83.6% | 171.4% | 82.5% | -88.9% |
| ROIC | -1.0% | -8.9% | 7.6% | 12.1% | 6.3% | -5.9% |
| ROE | -51.6% | | | 12.0% | 7.9% | -4.1% |
| Net Debt/EBITDA | 12.7x | | 1.9x | 3.3x | 4.1x | 0.8x |
Revenue and profitability
Frontline Ltd's Revenue jumped on 86.0% in FY2016. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 32.1 pp from 74.6% to 42.5% in FY2016.
SG&A as a % of Revenue increased on 2.6 pp from 2.3% to 4.9% in FY2016.
Net Income marign dropped on 18.2 pp from 33.7% to 15.5% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Frontline Ltd's CAPEX/Revenue was 82.5% in FY2016. Frontline Ltd's CAPEX/Revenue jumped on 82.0 pp from 0.48% in FY2013 to 82.5% in FY2016. For the last three years the average CAPEX/Revenue was 113%.To secure this fast growth the company made large investments to CAPEX (194% of EBITDA).
Return on investment
The company operates at low ROIC (6.25%) and ROE (7.94%). ROIC decreased on 5.9 pp from 12.1% to 6.3% in FY2016. ROE decreased on 4.1 pp from 12.0% to 7.9% in FY2016.
Leverage (Debt)
Debt level is 4.1x Net Debt / EBITDA and 4.8x Debt / EBITDA. Net Debt / EBITDA surged on 0.8x from 3.3x to 4.1x in FY2016. Debt jumped on 25.1% in FY2016 while cash decreased on 8.7% in FY2016.
Appendix 1: Peers in Industrial Transportation
Below we provide Frontline Ltd benchmarking against other companies in Industrial Transportation 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 |
|---|
| Zhejiang Expressway Co ($ZHEH) | 2.2% | 13.3% | 20.5% | 32.2% | |
| Wisdom Marine Lines Co Limited ($WML) | 11.2% | -0.8% | 8.8% | 21.6% | |
| Dp World Ltd ($0P5M) | 4.8% | -1.5% | 12.7% | 16.7% | |
| Center Fr Cargo Cont Trf Trcnt PJSC ($TRCN) | 17.8% | 7.7% | -6.6% | 16.2% | |
| Globaltrans Investment ($GLTR) | 28.9% | 12.9% | -7.4% | -0.7% | |
| |
|---|
| Median (14 companies) | 2.2% | -1.4% | 5.8% | -6.2% | -1.2% |
|---|
| Frontline Ltd ($FRO) | | -9.4% | -55.6% | 104.5% | 86.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Novorossiysk Commercial Sea Port ($NCSP) | 57.9% | 54.3% | 61.0% | 72.9% | |
| Global Ports Investments ($GLPR) | 40.3% | 58.8% | 58.8% | 68.0% | |
| Dp World Ltd ($0P5M) | 35.8% | 39.8% | 41.9% | 48.4% | |
| Zhejiang Expressway Co ($ZHEH) | 34.0% | 36.9% | 37.7% | 43.6% | |
| Wisdom Marine Lines Co Limited ($WML) | 30.3% | 20.3% | 20.7% | 24.1% | |
| |
|---|
| Median (10 companies) | 30.8% | 23.0% | 21.9% | 22.1% | 23.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Capital Lease Aviation ($CLA) | 101.2% | 88.5% | 89.2% | 80.5% | |
| Global Ports Investments ($GLPR) | 57.1% | 60.3% | 69.6% | 71.2% | |
| Zhejiang Expressway Co ($ZHEH) | 49.6% | 51.1% | 53.5% | 58.0% | |
| Wisdom Marine Lines Co Limited ($WML) | 56.9% | 52.0% | 52.8% | 55.2% | |
| Dp World Ltd ($0P5M) | 38.2% | 39.3% | 42.4% | 45.7% | |
| |
|---|
| Median (14 companies) | 29.6% | 24.8% | 17.0% | 16.8% | -5.0% |
|---|
| Frontline Ltd ($FRO) | 17.2% | -4.6% | 64.5% | 74.6% | 42.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dp World Ltd ($0P5M) | 20.6% | 33.4% | 20.7% | 28.9% | |
| Yangming Marine Transport Corp ($YMTD) | 13.1% | 8.2% | 7.0% | 7.7% | |
| Novorossiysk Commercial Sea Port ($NCSP) | 5.4% | 10.4% | 9.9% | 7.3% | |
| Center Fr Cargo Cont Trf Trcnt PJSC ($TRCN) | 15.6% | 16.9% | 11.5% | 5.7% | |
| Wisdom Marine Lines Co Limited ($WML) | 163.8% | 108.4% | 4.2% | 5.2% | |
| |
|---|
| Median (14 companies) | 11.2% | 9.3% | 4.2% | 2.8% | 2.8% |
|---|
| Frontline Ltd ($FRO) | 2.5% | 0.5% | 83.6% | 171.4% | 82.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Novorossiysk Commercial Sea Port ($NCSP) | 11.0% | 4.5% | 17.1% | 16.1% | |
| Zhejiang Expressway Co ($ZHEH) | 11.2% | 13.3% | 13.2% | 15.3% | |
| Global Ports Investments ($GLPR) | 17.0% | 7.1% | 12.1% | 14.6% | |
| Dx ($DX.) | 9.3% | 9.6% | 14.5% | 12.8% | -52.4% |
| Globaltrans Investment ($GLTR) | 25.5% | 16.3% | 6.4% | 10.3% | |
| |
|---|
| Median (14 companies) | 8.4% | 6.3% | 6.7% | 6.7% | -23.8% |
|---|
| Frontline Ltd ($FRO) | -1.0% | -8.9% | 7.6% | 12.1% | 6.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Evergreen Marine Corp(Taiwan) ($EGMD) | 7.9x | 33.6x | 6.7x | 18.3x | |
| Wisdom Marine Lines Co Limited ($WML) | 8.5x | 9.0x | 9.1x | 8.4x | |
| Novorossiysk Commercial Sea Port ($NCSP) | 4.1x | 7.1x | 2.6x | 4.1x | |
| Interbulk Group ($INB) | 3.3x | 4.1x | 3.5x | 3.6x | |
| Global Ports Investments ($GLPR) | 0.8x | 6.6x | 2.8x | 3.6x | |
| |
|---|
| Median (12 companies) | 3.1x | 4.1x | 2.8x | 3.3x | 4.1x |
|---|
| Frontline Ltd ($FRO) | 12.7x | | 1.9x | 3.3x | 4.1x |
