O2 Czech Republic As Net Income decreased on 2.5% and Revenue increased slightly on 0.92%
29 Jan 2019 • About O2 Czech Republic As (
$O2CZ) • By InTwits
O2 Czech Republic As reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- O2 Czech Republic As has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's in pair with industry average of 4.1%
- CAPEX is quite volatile: ₹1,929m in FY2018, ₹638m in FY2017, ₹1,437m in FY2016, ₹2,086m in FY2015, ₹2,963m in FY2014
- The company has highly profitable business model: ROIC is 24.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
O2 Czech Republic As's Revenue increased slightly on 0.92%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.1 pp from 5.5% to 3.3% in FY2018. During the last 5 years EBITDA Margin bottomed in 2016 at 27.3% and was growing since that time.
Gross Margin increased slightly on 1.2 pp from 48.7% to 49.9% in 2018.
Net Income margin decreased slightly on 0.51 pp from 14.8% to 14.3% in 2018. The efficient tax rate was 21.2% in 2018.
Investments (CAPEX, working capital and M&A)
O2 Czech Republic As's CAPEX/Revenue was 3.9% in 2018. The company's CAPEX/Revenue decreased slightly on 0.68 pp from 4.5% in 2015 to 3.9% in 2018. Average CAPEX/Revenue for the last three years was 4.3%.
O2 Czech Republic As has spent 2m CZK on M&A in 2018 which accounts for 0.0052% of revenue.
Return on investment
The company operates at high and attractive ROIC (24.3%) and ROE (35.5%). ROIC decreased slightly on 1.5 pp from 25.8% to 24.3% in 2018. ROE increased slightly on 1.6 pp from 33.9% to 35.5% in 2018. During the last 5 years ROIC topped in 2016 at 26.8% and was declining since that time. ROE grew at 7.2 pp per annum in 2014-2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.8x and Debt / EBITDA is 1.0x. Net Debt / EBITDA jumped on 0.1x from 0.6x to 0.8x in 2018. Debt showed almost no change in 2018 while cash dropped on 39.5%. Net Debt/EBITDA stuck to a growing trend at 0.2x per annum in the last 5 years.
O2 Czech Republic As has good short term financial stability: Interest coverage ratio (ICR) is 38.0x. O2 Czech Republic As has no short term refinancing risk: cash is higher than short term debt (6,513.2%).
Average interest expence charged on company's debt was 1.8% in 2018.
The company paid 116.2% of Net Income as dividends in 2018.
Management team
Jindrich Fremuth is a O2 Czech Republic As's CEO. Jindrich Fremuth has spent 2 years with the company. O2 Czech Republic As's CFO is Tomas Kouril. Tomas Kouril has 5 years tenure at the company.
The company has 5,338 employees. Average revenue per employee in 2018 was 7,156,800 CZK.
Financial and operational results
FY ended 31 Dec 2018
O2 Czech Republic As ($O2CZ) key annual financial indicators| mln. CZK | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 37,703 | 37,385 | 37,730 | 37,855 | 38,203 | 0.9% |
| Gross Profit | | | 18,300 | 18,432 | 19,074 | 3.5% |
| EBITDA | 15,333 | 11,160 | 10,299 | 10,506 | 10,681 | 1.7% |
| EBIT | | | | | 7,108 | |
| Interest expence | | | | | 187 | |
| Tax | | | | | 1,468 | |
| Net Income | 3,998 | 6,799 | 5,259 | 5,592 | 5,450 | -2.5% |
Balance Sheet
|
|---|
| Cash | 3,256 | 1,970 | 4,137 | 4,088 | 2,475 | -39.5% |
| Inventory | | | | | 906 | |
| Short Term Debt | 4,004 | 11 | 1 | 37 | 38 | 2.7% |
| Long Term Debt | 3,000 | 2,970 | 6,976 | 10,448 | 10,461 | 0.1% |
Cash flow
|
|---|
| Capex | 2,727 | 1,701 | 1,510 | 1,914 | 1,479 | -22.7% |
| Dividends | | | | | 6,332 | |
| Acquisitions | | | | | 2 | |
Ratios
|
|---|
| Revenue growth | -22.7% | -0.8% | 0.9% | 0.3% | 0.9% | |
| EBITDA growth | -17.0% | -27.2% | -7.7% | 2.0% | 1.7% | |
|
|---|
| Gross Margin | | | 48.5% | 48.7% | 49.9% | 1.2% |
| EBITDA Margin | 40.7% | 29.9% | 27.3% | 27.8% | 28.0% | 0.2% |
| EBIT Margin | | | | | 18.6% |
| Net Income Margin | 10.6% | 18.2% | 13.9% | 14.8% | 14.3% | -0.5% |
| CAPEX, % of revenue | 7.2% | 4.5% | 4.0% | 5.1% | 3.9% | -1.2% |
|
|---|
| ROIC | 7.2% | 14.5% | 26.8% | 25.8% | 24.3% | -1.5% |
| ROE | 7.3% | 18.8% | 29.3% | 33.9% | 35.5% | 1.6% |
| Net Debt/EBITDA | 0.2x | 0.1x | 0.3x | 0.6x | 0.8x | 0.1x |
| Interest expence / Average debt | | | | | 1.8% | |
People
|
|---|
| Employees | | | | | 5,338 | |
| Revenue/Employee, th. CZK | | | | | 7,157 | |
Peers in Fixed Line Telecommunications
Below you can find O2 Czech Republic As benchmarking vs. other companies in Fixed Line Telecommunications 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 |
|---|
| Telecom Egypt ($TEEG) | | 0.2% | 14.5% | 33.1% | |
| BT Group ($BT.A) | | -1.7% | 5.7% | 26.6% | -1.4% |
| Adept Telecom ($ADT) | | 5.8% | 30.9% | 19.2% | 34.8% |
| Kt Corp ($KTCD) | -1.6% | -4.9% | 2.1% | 2.8% | |
| Rostelekom ($RKMD) | | -0.5% | 0.0% | 2.7% | |
| |
|---|
| Median (11 companies) | -1.6% | -0.4% | 0.1% | 0.7% | 3.8% |
|---|
| O2 Czech Republic As ($O2CZ) | | -0.8% | 0.9% | 0.3% | 0.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Kt Corp ($KTCD) | 77.9% | 77.9% | 78.5% | 83.5% | |
| Koninklijke Kpn Nv ($0O8F) | | | 68.7% | 70.4% | |
| Verizon Communications Inc ($VZC) | 60.7% | 60.1% | 59.2% | 59.1% | 57.6% |
| Adept Telecom ($ADT) | 36.4% | 37.6% | 40.3% | 42.3% | 49.4% |
| Telecom Egypt ($TEEG) | 44.2% | 41.6% | 43.2% | 39.6% | |
| |
|---|
| Median (5 companies) | 43.9% | 41.5% | 51.2% | 59.1% | 53.5% |
|---|
| O2 Czech Republic As ($O2CZ) | | | 48.5% | 48.7% | 49.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ooredoo Qsc ($ORDS) | 37.6% | 39.2% | 39.2% | 40.5% | |
| Koninklijke Kpn Nv ($0O8F) | 39.1% | 33.2% | 35.7% | 35.5% | |
| Verizon Communications Inc ($VZC) | 28.4% | 37.3% | 34.1% | 35.2% | 30.3% |
| Hellenic Telecom.Organization S.A. ($OTES) | 35.4% | 31.3% | 32.4% | 32.2% | |
| Telefonica Sa ($TDE) | 31.7% | 24.1% | 29.1% | 31.1% | |
| |
|---|
| Median (11 companies) | 31.7% | 29.1% | 30.6% | 31.0% | 29.1% |
|---|
| O2 Czech Republic As ($O2CZ) | 40.7% | 29.9% | 27.3% | 27.8% | 28.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telecom Egypt ($TEEG) | 13.0% | 21.4% | 23.7% | 32.8% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 15.4% | 16.9% | 16.7% | 23.8% | |
| Rostelekom ($RKMD) | 19.3% | 21.1% | 20.8% | 19.9% | |
| Telefonica Sa ($TDE) | 19.1% | 18.7% | 17.7% | 17.3% | |
| Orange Polska Sa ($OPLD) | 17.6% | 16.9% | 44.8% | 17.0% | |
| |
|---|
| Median (11 companies) | 13.0% | 14.4% | 15.1% | 13.7% | 12.7% |
|---|
| O2 Czech Republic As ($O2CZ) | 7.2% | 4.5% | 4.0% | 5.1% | 3.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verizon Communications Inc ($VZC) | 10.1% | 19.3% | 15.4% | 14.8% | 11.3% |
| Adept Telecom ($ADT) | 13.2% | 14.3% | 16.5% | 14.2% | 14.1% |
| BT Group ($BT.A) | 34.7% | 37.5% | 20.7% | 13.9% | 15.4% |
| Telefonica Sa ($TDE) | 7.7% | 4.4% | 7.0% | 8.8% | |
| Koninklijke Kpn Nv ($0O8F) | 7.6% | 5.1% | 7.1% | 8.3% | |
| |
|---|
| Median (11 companies) | 8.7% | 7.1% | 7.1% | 7.9% | 14.1% |
|---|
| O2 Czech Republic As ($O2CZ) | 7.2% | 14.5% | 26.8% | 25.8% | 24.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telefonica Sa ($TDE) | 3.6x | 4.2x | 3.6x | 3.0x | |
| Koninklijke Kpn Nv ($0O8F) | 3.0x | 3.6x | 3.1x | 2.9x | |
| Verizon Communications Inc ($VZC) | 2.8x | 2.1x | 2.4x | 2.6x | 2.8x |
| Orange Polska Sa ($OPLD) | 1.0x | 1.2x | 5.1x | 2.3x | |
| Adept Telecom ($ADT) | 0.7x | 0.3x | 1.0x | 2.2x | 2.3x |
| |
|---|
| Median (11 companies) | 1.6x | 1.3x | 1.9x | 2.0x | 2.3x |
|---|
| O2 Czech Republic As ($O2CZ) | 0.2x | 0.1x | 0.3x | 0.6x | 0.8x |
