Ocado Group EBITDA dropped on 22.2% and EBITDA Margin decreased slightly on 1.5 pp from 5.1% to 3.6%
05 Feb 2019 • About Ocado Group (
$OCDO) • By InTwits
Ocado Group reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Ocado Group is a fast growth stock: FY2018 revenue growth was 9.9%, 5 year revenue CAGR was 15.1% at FY2018 ROIC -4.3%
- EBITDA Margin is declining: 3.6% in FY2018 vs. 5.1% in FY2017 vs. 7.2% in FY2014
- Ocado Group has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.9%. At the same time it's a lot of higher than industry average of 4.6%.
- CAPEX is quite volatile: £113m in FY2018, £131m in FY2017, £85m in FY2016, £71m in FY2015, £53m in FY2014
- The company has unprofitable business model: ROIC is -4.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ocado Group's Revenue increased on 9.9%. Revenue decline was accelerating on average at -2.2 pp per annum in FY2014-FY2018. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 14.2 pp from 18.8% to 33.0% in 2018. EBITDA Margin followed a declining trend at -0.92 pp per annum in the last 5 years.
Gross Margin showed almost no change in FY2018. SG&A as a % of Revenue increased on 2.9 pp from 37.9% to 40.8% in FY2018. SG&A as a % of Revenue followed a growing trend at 1.2 pp per annum in FY2014-FY2018.
Net Income margin decreased on 2.2 pp from -0.57% to -2.8% in FY2018. During FY2014-FY2018 Net Income margin topped in FY2015 at 1.1% and was declining since that time.
Investments (CAPEX, working capital and M&A)
Ocado Group's CAPEX/Revenue was 7.1% in FY2018. Ocado Group showed small growth in CAPEX/Revenue of 0.67 pp from 6.4% in FY2015 to 7.1% in FY2018. Average CAPEX/Revenue for the last three years was 7.6%. The company maintained rich investment policy and has spent a lot to CAPEX (194% of EBITDA). During FY2014-FY2018 CAPEX as a % of Revenue topped in FY2017 at 9.0%.
Return on investment
The company operates at negative ROIC (-4.3%) and ROE (-11.2%). ROIC decreased on 5.0 pp from 0.69% to -4.3% in FY2018. ROE decreased on 7.9 pp from -3.3% to -11.2% in FY2018. During the last 5 years ROIC topped in FY2015 at 4.8% and was declining since that time. During the last 5 years ROE topped in FY2015 at 5.1% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.9x and Debt / EBITDA is 6.2x. Debt decreased on 4.6% while cash surged on 174%.
Ocado Group has no short term refinancing risk: cash is higher than short term debt (1,793.9%).
Management team
Ocado Group's CEO Tim Steiner is a founder and has spent 9 years with the company. The company's CFO Duncan Tatton-Brown has spent 7 years with the company.
Financial and operational results
FY ended 02 Dec 2018
Ocado Group ($OCDO) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 949 | 1,108 | 1,271 | 1,455 | 1,599 | 9.9% |
| Gross Profit | 313 | 375 | 435 | 495 | 547 | 10.6% |
| SG&A | 338 | 405 | 466 | 552 | 652 | 18.2% |
| EBITDA | 69 | 79 | 81 | 75 | 58 | -22.2% |
| Net Income | 7 | 12 | 12 | -8 | -45 | |
Balance Sheet
|
|---|
| Cash | 76 | 46 | 51 | 150 | 411 | 173.9% |
| Short Term Debt | 31 | 28 | 83 | 27 | 23 | -15.8% |
| Long Term Debt | 145 | 145 | 133 | 351 | 338 | -3.7% |
Cash flow
|
|---|
| Capex | 53 | 71 | 85 | 131 | 113 | -13.9% |
Ratios
|
|---|
| Revenue growth | 19.8% | 16.7% | 14.8% | 14.4% | 9.9% | |
| EBITDA growth | 70.9% | 15.3% | 1.6% | -7.1% | -22.2% | |
|
|---|
| Gross Margin | 33.0% | 33.9% | 34.2% | 34.0% | 34.2% | 0.2% |
| EBITDA Margin | 7.2% | 7.2% | 6.3% | 5.1% | 3.6% | -1.5% |
| SG&A, % of revenue | 35.6% | 36.6% | 36.7% | 37.9% | 40.8% | 2.9% |
| Net Income Margin | 0.8% | 1.1% | 0.9% | -0.6% | -2.8% | -2.2% |
| CAPEX, % of revenue | 5.6% | 6.4% | 6.7% | 9.0% | 7.1% | -2.0% |
|
|---|
| ROIC | 3.7% | 4.8% | 4.4% | 0.7% | -4.3% | -5.0% |
| ROE | 3.5% | 5.1% | 4.8% | -3.3% | -11.2% | -7.9% |
| Net Debt/EBITDA | 1.4x | 1.6x | 2.0x | 3.0x | -0.9x | -3.9x |
Peers in Food & Drug Retailers
Below you can find Ocado Group benchmarking vs. other companies in Food & Drug Retailers 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 |
|---|
| X5 Retail Group N.V ($89VS) | | 27.6% | 27.8% | 25.3% | |
| Crawshaw Group ($CRAW) | | 17.1% | 50.5% | 19.3% | 0.7% |
| Lenta Ltd ($LNTA) | 34.5% | 30.3% | 21.2% | 19.2% | |
| Total Produce ($TOT) | 1.1% | 7.8% | 8.0% | 18.3% | |
| Jardine Matheson Hldgs ($J36) | 1.2% | -7.3% | 0.1% | 6.5% | |
| |
|---|
| Median (8 companies) | 1.2% | 7.8% | 8.0% | 12.4% | 0.7% |
|---|
| Ocado Group ($OCDO) | | 16.7% | 14.8% | 14.4% | 9.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crawshaw Group ($CRAW) | 43.8% | 44.4% | 45.1% | 43.5% | 42.0% |
| Dairy Farm International Hldgs ($DFIB) | 29.9% | 29.5% | 30.2% | 30.4% | |
| Magnit PJSC ($MGNT) | 28.9% | 28.5% | 27.5% | 26.6% | |
| X5 Retail Group N.V ($89VS) | 24.5% | 24.5% | 24.2% | 23.9% | |
| Jardine Matheson Hldgs ($J36) | 23.4% | 23.3% | 23.8% | 23.8% | |
| |
|---|
| Median (8 companies) | 24.5% | 24.5% | 24.2% | 23.8% | 42.0% |
|---|
| Ocado Group ($OCDO) | 33.0% | 33.9% | 34.2% | 34.0% | 34.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Jardine Matheson Hldgs ($J36) | 11.8% | 12.8% | 18.3% | 23.5% | |
| Lenta Ltd ($LNTA) | 11.0% | 11.1% | 10.2% | 9.7% | |
| X5 Retail Group N.V ($89VS) | 7.7% | 7.2% | 7.0% | 7.4% | |
| Magnit PJSC ($MGNT) | 11.3% | 10.9% | 9.6% | 7.4% | |
| Dairy Farm International Hldgs ($DFIB) | 6.6% | 5.8% | 6.0% | 5.2% | |
| |
|---|
| Median (8 companies) | 7.3% | 6.4% | 6.0% | 6.3% | -27.7% |
|---|
| Ocado Group ($OCDO) | 7.2% | 7.2% | 6.3% | 5.1% | 3.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Lenta Ltd ($LNTA) | 17.9% | 12.3% | 13.8% | 7.5% | |
| Crawshaw Group ($CRAW) | 1.2% | 6.3% | 6.1% | 6.7% | 2.0% |
| Magnit PJSC ($MGNT) | 7.3% | 5.7% | 4.6% | 6.4% | |
| X5 Retail Group N.V ($89VS) | 4.5% | 6.4% | 6.6% | 6.1% | |
| Jardine Matheson Hldgs ($J36) | 3.5% | 3.6% | 3.5% | 3.9% | |
| |
|---|
| Median (8 companies) | 3.5% | 5.1% | 3.9% | 5.0% | 2.0% |
|---|
| Ocado Group ($OCDO) | 5.6% | 6.4% | 6.7% | 9.0% | 7.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| X5 Retail Group N.V ($89VS) | 14.9% | 15.7% | 17.0% | 18.0% | |
| Lenta Ltd ($LNTA) | 24.5% | 20.3% | 16.0% | 14.4% | |
| Magnit PJSC ($MGNT) | 33.2% | 32.6% | 25.1% | 13.6% | |
| Dairy Farm International Hldgs ($DFIB) | 31.1% | 21.6% | 18.7% | 13.4% | |
| Total Produce ($TOT) | 10.3% | 9.5% | 9.2% | 12.6% | |
| |
|---|
| Median (8 companies) | 14.9% | 10.4% | 9.8% | 13.0% | -91.6% |
|---|
| Ocado Group ($OCDO) | 3.7% | 4.8% | 4.4% | 0.7% | -4.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| O'Key Group Sa ($OKEY) | 2.4x | 2.6x | 3.1x | 3.2x | |
| Lenta Ltd ($LNTA) | 2.8x | 1.9x | 2.8x | 2.6x | |
| X5 Retail Group N.V ($89VS) | 2.2x | 2.3x | 1.9x | 1.7x | |
| Magnit PJSC ($MGNT) | 0.9x | 0.9x | 1.1x | 1.3x | |
| Total Produce ($TOT) | 0.3x | 0.3x | 0.7x | 1.2x | |
| |
|---|
| Median (7 companies) | 1.3x | 1.1x | 1.0x | 1.3x | |
|---|
| Ocado Group ($OCDO) | 1.4x | 1.6x | 2.0x | 3.0x | -0.9x |
