Produce Investments reports 119% EBITDA decline in 2018 and 8.4 pp EBITDA Margin decline from 7.0% to -1.4%
12 Oct 2018 • About Produce Investments (
$PIL) • By InTwits
Produce Investments reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: -1.4% in FY2018, 7.0% in FY2017, 9.2% in FY2016, 7.1% in FY2015, 8.5% in FY2014
- Produce Investments has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's a lot of higher than industry average of 2.4%.
- CAPEX is quite volatile: £5m in FY2018, £11m in FY2017, £4m in FY2016, £6m in FY2015, £6m in FY2014
- The company has unprofitable business model: ROIC is -10.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 6.0%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 8.4 pp from 7.0% to -1.4% in FY2018.
Gross Margin increased on 2.1 pp from 35.7% to 37.8% in FY2018. SG&A as a % of Revenue jumped on 10.8 pp from 31.5% to 42.4% in FY2018.
Net Income margin decreased on 8.2 pp from 3.0% to -5.2% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 Produce Investments had CAPEX/Revenue of 2.8%. CAPEX/Revenue showed almost no change from FY2015 to FY2018. Average CAPEX/Revenue for the last three years was 3.4%.
Return on investment
The company operates at negative ROIC (-10.1%) and ROE (-19.9%). ROIC dropped on 20.2 pp from 10.1% to -10.1% in FY2018. ROE dropped on 31.5 pp from 11.6% to -19.9% in FY2018.
Leverage (Debt)
Debt level is -2.5x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 2.0x from 2.0x to in FY2018. Debt dropped on 10.0% while cash dropped on 17.3%.
Produce Investments has short term refinancing risk: cash is only 35.3% of short term debt.
Financial and operational results
FY ended 30 Nov -0001
Produce Investments ($PIL) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 191.8 | 178.4 | 185.1 | 200.1 | 188.2 | -6.0% |
| Gross Profit | 64.3 | 65.0 | 70.1 | 71.4 | 71.1 | -0.5% |
| SG&A | 53.3 | 56.9 | 60.9 | 63.1 | 79.7 | 26.4% |
| EBITDA | 16.2 | 12.8 | 17.0 | 14.0 | -2.7 | -119.1% |
| Net Income | 7.6 | 5.5 | 3.2 | 6.0 | -9.7 | -261.1% |
Balance Sheet
|
|---|
| Cash | 2.2 | 2.8 | 0.7 | 7.7 | 6.4 | -17.3% |
| Short Term Debt | 11.5 | 16.5 | 18.9 | 18.9 | 18.2 | -3.7% |
| Long Term Debt | 15.3 | 7.0 | 0.0 | 16.9 | 14.0 | -17.0% |
Cash flow
|
|---|
| Capex | 6.5 | 5.8 | 3.7 | 11.0 | 5.4 | -51.1% |
Ratios
|
|---|
| Revenue growth | -6.9% | -7.0% | 3.7% | 8.1% | -6.0% | |
| EBITDA growth | 39.7% | -21.3% | 32.9% | -17.4% | -119.1% | |
|
|---|
| Gross Margin | 33.5% | 36.4% | 37.9% | 35.7% | 37.8% | 2.1% |
| EBITDA Margin | 8.5% | 7.1% | 9.2% | 7.0% | -1.4% | -8.4% |
| SG&A, % of revenue | 27.8% | 31.9% | 32.9% | 31.5% | 42.4% | 10.8% |
| Net Income Margin | 4.0% | 3.1% | 1.7% | 3.0% | -5.2% | -8.2% |
| CAPEX, % of revenue | 3.4% | 3.2% | 2.0% | 5.5% | 2.8% | -2.6% |
|
|---|
| ROIC | 15.9% | 10.2% | 12.1% | 10.1% | -10.1% | -20.2% |
| ROE | 18.7% | 11.1% | 6.3% | 11.6% | -19.9% | -31.5% |
| Net Debt/EBITDA | 1.5x | 1.6x | 1.1x | 2.0x | |
Peers in Food Producers
Below you can find Produce Investments 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 |
|---|
| Ukrproduct Group ($UKR) | -38.9% | -36.8% | 0.2% | 51.2% | |
| Narborough Plantations ($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 ($MHPC) | | -14.2% | -4.0% | 13.4% | |
| |
|---|
| Median (19 companies) | 1.0% | 1.3% | 0.5% | 7.0% | 2.5% |
|---|
| Produce Investments ($PIL) | | -7.0% | 3.7% | 8.1% | -6.0% |
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% | |
| Zambeef Products ($ZAM) | 33.7% | 43.2% | 36.3% | 32.9% | |
| |
|---|
| Median (17 companies) | 29.6% | 24.4% | 24.1% | 24.4% | 16.9% |
|---|
| Produce Investments ($PIL) | 33.5% | 36.4% | 37.9% | 35.7% | 37.8% |
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 ($ULVR) | 19.4% | 16.8% | 18.0% | 19.8% | |
| |
|---|
| Median (19 companies) | 11.8% | 13.8% | 11.2% | 13.7% | 5.1% |
|---|
| Produce Investments ($PIL) | 8.5% | 7.1% | 9.2% | 7.0% | -1.4% |
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 ($RGD) | 6.3% | 1.4% | 6.4% | 10.0% | 8.4% |
| |
|---|
| Median (19 companies) | 4.8% | 5.0% | 5.0% | 4.6% | 4.1% |
|---|
| Produce Investments ($PIL) | 3.4% | 3.2% | 2.0% | 5.5% | 2.8% |
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 ($KYGA) | 16.6% | 15.8% | 12.8% | 11.9% | |
| |
|---|
| Median (20 companies) | 11.6% | 8.9% | 7.9% | 7.3% | 8.3% |
|---|
| Produce Investments ($PIL) | 15.9% | 10.2% | 12.1% | 10.1% | -10.1% |
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 | |
| Ukrproduct Group ($UKR) | 3.4x | | 17.7x | 6.2x | |
| Zambeef Products ($ZAM) | 4.8x | 3.0x | 2.1x | 4.0x | |
| Ros Agro ($AGRO) | 0.6x | 1.8x | 1.9x | 3.7x | |
| |
|---|
| Median (17 companies) | 1.4x | 1.8x | 1.8x | 1.8x | 0.9x |
|---|
| Produce Investments ($PIL) | 1.5x | 1.6x | 1.1x | 2.0x | |
