Tongaat Hulett Ltd reports 92.8% CAPEX growth in 2018 while 5.2% Revenue decline
28 May 2018 • About Tongaat Hulett Ltd (
$THL) • By InTwits
Tongaat Hulett Ltd reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Tongaat Hulett Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.6%. At the same time it's in pair with industry average of 7.3%
- CAPEX is quite volatile: 2,061 ZARm in FY2018, 1,069 ZARm in FY2017, 1,824 ZARm in FY2016, 808 ZARm in FY2015, 646 ZARm in FY2014
- The company has business model with low profitability: ROIC is 8.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Tongaat Hulett Ltd's Revenue decreased on 5.2%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.8 pp from 19.3% to 17.5% in FY2018.
Gross Margin decreased on 2.3 pp from 22.9% to 20.6% in FY2018. SG&A as a % of Revenue increased slightly on 1.6 pp from 11.6% to 13.1% in FY2018.
Net Income margin decreased slightly on 1.3 pp from 5.5% to 4.2% in FY2018.
Investments (CAPEX, working capital and M&A)
Tongaat Hulett Ltd's CAPEX/Revenue was 12.1% in FY2018. The company showed CAPEX/Revenue growth of 7.1 pp from 5.0% in FY2015 to 12.1% in FY2018. Average CAPEX/Revenue for the last three years was 9.7%. The company invested a big chunk of EBITDA (69.5%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (8.3%) and ROE (6.8%). ROIC decreased slightly on 1.5 pp from 9.8% to 8.3% in FY2018. ROE decreased slightly on 1.4 pp from 8.2% to 6.8% in FY2018.
Leverage (Debt)
Debt level is 2.3x Net Debt / EBITDA and 3.2x Debt / EBITDA. Net Debt / EBITDA jumped on 0.8x from 1.5x to 2.3x in FY2018. Debt surged on 19.7% while cash decreased on 2.9%.
Tongaat Hulett Ltd has short term refinancing risk: cash is only 58.3% of short term debt.
Financial and operational results
FY ended 31 Mar 2018
Tongaat Hulett Ltd ($THL) key annual financial indicators| mln. ZAR | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 15,716 | 16,155 | 16,676 | 17,915 | 16,982 | -5.2% |
| Gross Profit | 4,208 | 3,623 | 3,322 | 4,101 | 3,497 | -14.7% |
| SG&A | 2,012 | 1,948 | 2,101 | 2,074 | 2,231 | 7.6% |
| EBITDA | 2,982 | 2,669 | 2,922 | 3,455 | 2,965 | -14.2% |
| Net Income | 1,155 | 989 | 716 | 983 | 713 | -27.5% |
Balance Sheet
|
|---|
| Cash | 1,067 | 1,668 | 1,877 | 2,741 | 2,662 | -2.9% |
| Short Term Debt | 1,627 | 1,850 | 3,563 | 3,056 | 4,564 | 49.3% |
| Long Term Debt | 4,785 | 4,710 | 4,396 | 4,975 | 5,048 | 1.5% |
Cash flow
|
|---|
| Capex | 646 | 808 | 1,824 | 1,069 | 2,061 | 92.8% |
Ratios
|
|---|
| Revenue growth | 9.3% | 2.8% | 3.2% | 7.4% | -5.2% | |
| EBITDA growth | 14.1% | -10.5% | 9.5% | 18.2% | -14.2% | |
|
|---|
| Gross Margin | 26.8% | 22.4% | 19.9% | 22.9% | 20.6% | -2.3% |
| EBITDA Margin | 19.0% | 16.5% | 17.5% | 19.3% | 17.5% | -1.8% |
| SG&A, % of revenue | 12.8% | 12.1% | 12.6% | 11.6% | 13.1% | 1.6% |
| Net Income Margin | 7.3% | 6.1% | 4.3% | 5.5% | 4.2% | -1.3% |
| CAPEX, % of revenue | 4.1% | 5.0% | 10.9% | 6.0% | 12.1% | 6.2% |
|
|---|
| ROIC | 12.4% | 9.7% | 6.9% | 9.8% | 8.3% | -1.5% |
| ROE | 12.2% | 8.8% | 5.7% | 8.2% | 6.8% | -1.4% |
| Net Debt/EBITDA | 1.8x | 1.8x | 2.1x | 1.5x | 2.3x | 0.8x |
Peers in Food Producers
Below you can find Tongaat Hulett Ltd benchmarking vs. other companies in Food 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Narborough Plantations ($NBP) | | 3.5% | 0.5% | 38.2% | |
| R.E.A.Hldgs ($RE.B) | 13.9% | -28.1% | -12.4% | 26.5% | |
| Tate & Lyle ($BD15) | | -15.0% | 0.6% | 16.9% | -1.6% |
| Mhp Sa ($MHPC) | | -14.2% | -4.0% | 13.4% | |
| Carr'S Milling Industries ($CRM) | -8.4% | -22.8% | -4.9% | 9.9% | |
| |
|---|
| Median (18 companies) | -1.4% | -5.3% | 0.5% | 6.7% | -1.6% |
|---|
| Tongaat Hulett Ltd ($THL) | | 2.8% | 3.2% | 7.4% | -5.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Narborough Plantations ($NBP) | 59.7% | 54.6% | 56.1% | 63.0% | |
| Walcom Group Ltd ($WALG) | 62.2% | 60.5% | 58.8% | 54.6% | |
| Kakuzi ($KAKU) | 33.0% | 49.2% | 46.4% | 44.7% | |
| Unilever ($ULVR) | 41.4% | 42.2% | 42.7% | 43.1% | |
| Produce Investments ($PIL) | 33.5% | 36.4% | 37.9% | 35.7% | |
| |
|---|
| Median (16 companies) | 32.5% | 24.6% | 26.8% | 26.5% | |
|---|
| Tongaat Hulett Ltd ($THL) | 26.8% | 22.4% | 19.9% | 22.9% | 20.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Narborough Plantations ($NBP) | 39.6% | 37.4% | 40.8% | 48.6% | |
| Mhp Sa ($MHPC) | 37.0% | 38.8% | 37.0% | 35.3% | |
| Kakuzi ($KAKU) | 11.8% | 29.4% | 31.8% | 32.7% | |
| R.E.A.Hldgs ($RE.B) | 33.2% | 31.1% | 22.9% | 20.7% | |
| Unilever ($ULVR) | 19.4% | 16.8% | 18.0% | 19.8% | |
| |
|---|
| Median (18 companies) | 8.7% | 8.8% | 10.0% | 13.0% | 16.4% |
|---|
| Tongaat Hulett Ltd ($THL) | 19.0% | 16.5% | 17.5% | 19.3% | 17.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| R.E.A.Hldgs ($RE.B) | 11.8% | 17.4% | 39.3% | 32.8% | |
| Ros Agro ($AGRO) | 7.3% | 15.3% | 19.7% | 21.9% | |
| Cherkizovo Group OJSC ($CHE) | 9.7% | 12.2% | 10.4% | 10.9% | |
| Kakuzi ($KAKU) | 22.0% | 24.9% | 13.7% | 10.3% | |
| Real Good Food ($RGD) | 6.3% | 1.4% | 6.4% | 10.0% | |
| |
|---|
| Median (18 companies) | 4.8% | 4.6% | 3.5% | 4.7% | 4.1% |
|---|
| Tongaat Hulett Ltd ($THL) | 4.1% | 5.0% | 10.9% | 6.0% | 12.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Unilever ($ULVR) | 29.9% | 26.0% | 24.3% | 24.6% | |
| Mhp Sa ($MHPC) | 17.6% | 17.6% | 16.1% | 17.6% | |
| Kakuzi ($KAKU) | 4.3% | 17.4% | 15.8% | 15.6% | |
| Tate & Lyle ($BD15) | 13.2% | 1.8% | 7.2% | 12.1% | 14.4% |
| Kerry Group ($KYGA) | 16.6% | 15.8% | 12.8% | 11.9% | |
| |
|---|
| Median (19 companies) | 10.8% | 8.7% | 8.1% | 8.3% | 14.4% |
|---|
| Tongaat Hulett Ltd ($THL) | 12.4% | 9.7% | 6.9% | 9.8% | 8.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Avangardco Investments Public Ltd ($AVGR) | 1.7x | | 241.4x | 29.9x | |
| R.E.A.Hldgs ($RE.B) | 3.9x | 7.2x | 10.6x | 10.8x | |
| Zambeef Products ($ZAM) | 4.8x | 3.0x | 2.1x | 4.0x | |
| Ros Agro ($AGRO) | 0.6x | 1.8x | 1.9x | 3.7x | |
| Cherkizovo Group OJSC ($CHE) | 1.6x | 3.1x | 3.8x | 3.2x | |
| |
|---|
| Median (16 companies) | 1.4x | 1.6x | 1.4x | 1.9x | 0.9x |
|---|
| Tongaat Hulett Ltd ($THL) | 1.8x | 1.8x | 2.1x | 1.5x | 2.3x |
