Unilever reports 55.1% Net Income growth in 2018 and 8.4 pp EBITDA Margin growth from 19.8% to 28.1%
31 Jan 2019 • About Unilever (
$ULVR) • By InTwits
Unilever reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 28.1% in 2018 vs. 19.8% in 2017 vs. 19.4% in 2014
- Unilever has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's a lot of higher than industry average of 4.6%.
- CAPEX is quite volatile: £102m in 2018, £75m in 2017, £97m in 2016, £29m in 2015, £55m in 2014
- The company has highly profitable business model: ROIC is 31.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Unilever's Revenue decreased on 5.1%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 8.4 pp from 19.8% to 28.1% in 2018. During 2014-2018 EBITDA Margin bottomed in 2015 at 16.8% and was growing since that time.
Gross Margin showed almost no change in 2018. Gross Margin followed a growing trend at 0.53 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 7.7 pp from 31.0% to 23.3% in 2018.
Net Income margin increased on 7.1 pp from 11.3% to 18.4% in 2018. During 2014-2018 Net Income margin bottomed in 2015 at 9.2% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In 2018 Unilever had CAPEX/Revenue of 2.6%. CAPEX/Revenue decreased slightly on 0.90 pp from 3.5% in 2015 to 2.6% in 2018. It's average level of CAPEX/Revenue for the last three years was 2.9%. CAPEX as a % of Revenue declined at -0.33 pp per annum in the last 5 years.
Return on investment
The company operates at high and attractive ROIC (31.6%) and ROE (74.5%). ROIC increased on 7.1 pp from 24.6% to 31.6% in 2018. ROE surged on 34.1 pp from 40.4% to 74.5% in 2018. During 2014-2018 ROIC bottomed in 2016 at 24.3% and was growing since that time. During 2014-2018 ROE bottomed in 2016 at 32.6% and was growing since that time.
Leverage (Debt)
Debt level is 1.5x Net Debt / EBITDA and 1.7x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from 2.0x to 1.5x in 2018. Debt increased slightly on 2.0% while cash decreased on 2.6%.
Unilever has short term refinancing risk: cash is only 95.5% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 4.9x and P/E 5.2x.
Management team
Alan Jope is a Unilever's CEO. Alan Jope is a founder and has spent 1 year with the company. The company's CFO is Graeme David Pitkethly. Graeme David Pitkethly has 3 years tenure at the company.
Financial and operational results
FY ended 31 Dec 2018
Unilever ($ULVR) key annual financial indicators| mln. € | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 48,436 | 53,272 | 52,713 | 53,715 | 50,982 | -5.1% |
| Gross Profit | 20,049 | 22,464 | 22,484 | 23,168 | 22,213 | -4.1% |
| SG&A | 11,114 | 13,944 | 13,705 | 16,652 | 11,876 | -28.7% |
| EBITDA | 9,412 | 8,972 | 9,474 | 10,609 | 14,331 | 35.1% |
| Net Income | 5,171 | 4,909 | 5,184 | 6,053 | 9,389 | 55.1% |
Balance Sheet
|
|---|
| Cash | 2,151 | 2,302 | 3,382 | 3,317 | 3,230 | -2.6% |
| Short Term Debt | 5,259 | 4,671 | 5,275 | 8,156 | 3,383 | -58.5% |
| Long Term Debt | 7,113 | 10,121 | 11,135 | 16,127 | 21,374 | 32.5% |
Cash flow
|
|---|
| Capex | 1,893 | 1,867 | 1,804 | 1,509 | 1,329 | -11.9% |
Ratios
|
|---|
| Revenue growth | -2.7% | 10.0% | -1.0% | 1.9% | -5.1% | |
| EBITDA growth | 8.6% | -4.7% | 5.6% | 12.0% | 35.1% | |
|
|---|
| Gross Margin | 41.4% | 42.2% | 42.7% | 43.1% | 43.6% | 0.4% |
| EBITDA Margin | 19.4% | 16.8% | 18.0% | 19.8% | 28.1% | 8.4% |
| SG&A, % of revenue | 22.9% | 26.2% | 26.0% | 31.0% | 23.3% | -7.7% |
| Net Income Margin | 10.7% | 9.2% | 9.8% | 11.3% | 18.4% | 7.1% |
| CAPEX, % of revenue | 3.9% | 3.5% | 3.4% | 2.8% | 2.6% | -0.2% |
|
|---|
| ROIC | 29.9% | 26.0% | 24.3% | 24.6% | 31.6% | 7.1% |
| ROE | 36.9% | 33.8% | 32.6% | 40.4% | 74.5% | 34.1% |
| Net Debt/EBITDA | 1.1x | 1.4x | 1.4x | 2.0x | 1.5x | -0.5x |
Peers in Food Producers
Below we provide Unilever 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 | 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 ($MHPC) | | -14.2% | -4.0% | 13.4% | |
| |
|---|
| Median (19 companies) | 4.3% | -5.1% | 0.6% | 7.3% | 10.3% |
|---|
| Unilever ($ULVR) | | 10.0% | -1.0% | 1.9% | -5.1% |
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 ($KAKU) | 33.0% | 49.2% | 46.4% | 44.7% | |
| Produce Investments ($PIL) | 33.5% | 36.4% | 37.9% | 35.7% | 37.8% |
| Zambeef Products ($ZAM) | 33.7% | 43.2% | 36.3% | 32.9% | 35.0% |
| |
|---|
| Median (17 companies) | 29.6% | 24.4% | 24.1% | 24.4% | 16.9% |
|---|
| Unilever ($ULVR) | 41.4% | 42.2% | 42.7% | 43.1% | 43.6% |
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% | |
| Tongaat Hulett Ltd ($THL) | 19.0% | 16.5% | 17.5% | 19.3% | 17.5% |
| |
|---|
| Median (19 companies) | 8.9% | 10.4% | 10.0% | 12.3% | 4.5% |
|---|
| Unilever ($ULVR) | 19.4% | 16.8% | 18.0% | 19.8% | 28.1% |
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 ($RGD) | 6.3% | 1.4% | 6.4% | 10.0% | 8.4% |
| |
|---|
| Median (19 companies) | 4.8% | 5.0% | 5.0% | 4.7% | 2.8% |
|---|
| Unilever ($ULVR) | 3.9% | 3.5% | 3.4% | 2.8% | 2.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| 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% | |
| Origin Enterprises ($OGN) | 16.9% | 20.1% | 15.3% | 11.1% | 13.0% |
| |
|---|
| Median (20 companies) | 11.6% | 8.9% | 7.9% | 7.3% | 8.3% |
|---|
| Unilever ($ULVR) | 29.9% | 26.0% | 24.3% | 24.6% | 31.6% |
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 | 2.0x |
| Ros Agro ($AGRO) | 0.6x | 1.8x | 1.9x | 3.7x | |
| |
|---|
| Median (17 companies) | 1.6x | 1.8x | 1.8x | 1.8x | 0.9x |
|---|
| Unilever ($ULVR) | 1.1x | 1.4x | 1.4x | 2.0x | 1.5x |
