Norsk Hydro Asa reports 51.5% Net Income decline in 2018 and 6.8 pp EBITDA Margin decline from 16.8% to 10.0%
07 Feb 2019 • About Norsk Hydro Asa (
$NHY) • By InTwits
Norsk Hydro Asa reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Norsk Hydro Asa is a fast growth stock: 2018 revenue growth was 45.9%, 5 year revenue CAGR was 19.7% at 2018 ROIC 7.6%
- Norsk Hydro Asa has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.0%. At the same time it's a lot of higher than industry average of 1.8%.
- CAPEX is quite volatile: ₹0m in FY2018, ₹2,440m in FY2017, ₹953m in FY2016, ₹9,475m in FY2015, ₹12,853m in FY2014
- The company has business model with low profitability: ROIC is 7.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Norsk Hydro Asa's Revenue jumped on 45.9%. During the last 5 years Revenue growth bottomed in 2016 at -6.5% and was accelerating since that time. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 6.8 pp from 16.8% to 10.0% in 2018.
Net Income margin decreased on 5.4 pp from 8.0% to 2.7% in 2018. During the last 5 years Net Income margin topped in 2017 at 8.0%. The efficient tax rate was 33.4% in 2018.
Investments (CAPEX, working capital and M&A)
Norsk Hydro Asa's CAPEX/Revenue was 4.5% in 2018. CAPEX/Revenue decreased slightly on 1.5 pp from 6.0% in 2015 to 4.5% in 2018. Average CAPEX/Revenue for the last three years was 6.5%. During 2014-2018 CAPEX as a % of Revenue topped in 2016 at 8.4% and was declining since that time.
Return on investment
The company operates at low ROIC (7.6%) and ROE (4.9%). ROIC decreased on 4.2 pp from 11.8% to 7.6% in 2018. ROE decreased on 5.5 pp from 10.4% to 4.9% in 2018. During 2014-2018 ROE topped in 2017 at 10.4%.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is 1.0x. Net Debt / EBITDA surged on 0.3x from 0.3x to 0.6x in 2018. Debt decreased on 9.5% while cash dropped on 49.3%. During 2014-2018 Net Debt/EBITDA bottomed in 2016 at -0.1x and was growing since that time.
Norsk Hydro Asa has good short term financial stability: Interest coverage ratio (ICR) is 12.2x. Norsk Hydro Asa has short term refinancing risk: cash is only 70.2% of short term debt.
Average interest expence charged on company's debt was 4.5% in 2018.
The company paid 85.1% of Net Income as dividends in 2018.
Management team
The company has 0.041% shares owned by insiders.
At the end of financial year the company had 36,236 employees. Average revenue per employee in 2018 was 4,398,306 NOK.
Financial and operational results
FY ended 31 Dec 2018
Norsk Hydro Asa ($NHY) key annual financial indicators| mln. NOK | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 77,907 | 87,694 | 81,953 | 109,220 | 159,377 | 45.9% |
| EBITDA | 9,823 | 12,771 | 11,067 | 18,345 | 15,891 | -13.4% |
| EBIT | | | | | 8,522 | |
| Interest expence | | | | | 699 | |
| Tax | | | | | 2,139 | |
| Net Income | 797 | 2,020 | 6,388 | 8,783 | 4,256 | -51.5% |
Balance Sheet
|
|---|
| Cash | 9,253 | 6,917 | 8,037 | 11,828 | 5,995 | -49.3% |
| Inventory | | | | | 26,483 | |
| Short Term Debt | 6,040 | 3,562 | 3,283 | 8,244 | 8,543 | 3.6% |
| Long Term Debt | 5,127 | 3,969 | 3,397 | 9,012 | 7,080 | -21.4% |
Cash flow
|
|---|
| Capex | 3,294 | 5,254 | 6,913 | 7,296 | 7,219 | -1.1% |
| Dividends | | | | | 3,622 | |
Ratios
|
|---|
| Revenue growth | 20.1% | 12.6% | -6.5% | 33.3% | 45.9% | |
| EBITDA growth | 52.4% | 30.0% | -13.3% | 65.8% | -13.4% | |
|
|---|
| EBITDA Margin | 12.6% | 14.6% | 13.5% | 16.8% | 10.0% | -6.8% |
| EBIT Margin | | | | | 5.3% |
| Net Income Margin | 1.0% | 2.3% | 7.8% | 8.0% | 2.7% | -5.4% |
| CAPEX, % of revenue | 4.2% | 6.0% | 8.4% | 6.7% | 4.5% | -2.2% |
|
|---|
| ROIC | 5.9% | 8.7% | 6.6% | 11.8% | 7.6% | -4.2% |
| ROE | 1.1% | 2.7% | 8.2% | 10.4% | 4.9% | -5.5% |
| Net Debt/EBITDA | 0.2x | 0.0x | -0.1x | 0.3x | 0.6x | 0.3x |
| Interest expence / Average debt | | | | | 4.5% | |
People
|
|---|
| Insider ownership | | | | | 0.0% | |
| Employees | | | | | 36,236 | |
| Revenue/Employee, th. NOK | | | | | 4,398 | |
Peers in Industrial Metals & Mining
Below we provide Norsk Hydro Asa benchmarking against other companies in Industrial Metals & Mining 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 |
|---|
| Ezz Steel ($AEZD) | -8.9% | -14.2% | 39.3% | 80.0% | |
| Zibao Metals Recycling Hldgs Ltd ($ZBO) | | -9.0% | 23.1% | 62.8% | 6.0% |
| Magnitogorsk Iron & Steel Works ($MMK) | | -26.6% | -3.6% | 34.0% | |
| Severstal PJSC ($SVST) | | -22.9% | -7.5% | 32.7% | 9.3% |
| Novolipetsk Iron And Steel Corp ($NLMK) | | -23.0% | -4.6% | 31.8% | 19.7% |
| |
|---|
| Median (13 companies) | 3.3% | -14.2% | -3.6% | 29.5% | 8.2% |
|---|
| Norsk Hydro Asa ($NHY) | | 12.6% | -6.5% | 33.3% | 45.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Mmc Norilsk Nickel ($MNOD) | 52.2% | 55.7% | 49.9% | 49.7% | |
| Severstal PJSC ($SVST) | 34.4% | 40.4% | 39.6% | 39.7% | 42.7% |
| Base Resources Ltd ($BSE) | 11.8% | 21.2% | 21.0% | 35.9% | 39.7% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 28.3% | 31.4% | 33.6% | 32.5% | 36.2% |
| Magnitogorsk Iron & Steel Works ($MMK) | 21.9% | 30.6% | 32.2% | 30.2% | |
| |
|---|
| Median (12 companies) | 18.7% | 17.0% | 21.0% | 23.9% | 24.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Base Resources Ltd ($BSE) | -2.0% | 37.7% | 35.8% | 50.9% | 54.9% |
| Mmc Norilsk Nickel ($MNOD) | 46.8% | 47.0% | 46.5% | 41.2% | |
| Severstal PJSC ($SVST) | 26.4% | 32.4% | 31.2% | 32.6% | 36.1% |
| First Quantum Minerals ($FQM) | 39.9% | 17.8% | 36.1% | 32.5% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 19.5% | 28.3% | 34.5% | 26.5% | |
| |
|---|
| Median (13 companies) | 13.0% | 17.3% | 20.7% | 24.0% | 21.7% |
|---|
| Norsk Hydro Asa ($NHY) | 12.6% | 14.6% | 13.5% | 16.8% | 10.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| First Quantum Minerals ($FQM) | 81.7% | 72.5% | 56.0% | 60.9% | |
| Aluminium Bahrain Bsc ($ALBH) | 6.2% | 6.3% | 16.1% | 54.2% | 57.7% |
| Mmc Norilsk Nickel ($MNOD) | 10.8% | 19.0% | 20.2% | 21.2% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 6.3% | 6.0% | 8.2% | 8.8% | |
| Severstal PJSC ($SVST) | 8.4% | 6.4% | 8.4% | 7.1% | 7.6% |
| |
|---|
| Median (13 companies) | 6.4% | 6.3% | 5.9% | 5.9% | 6.6% |
|---|
| Norsk Hydro Asa ($NHY) | 4.2% | 6.0% | 8.4% | 6.7% | 4.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Severstal PJSC ($SVST) | 17.7% | 30.3% | 29.7% | 38.8% | 49.5% |
| Cheliabinsk Elektrolit Zink Plant ($CHZN) | 25.6% | 24.4% | 24.3% | 31.0% | |
| Magnitogorsk Iron & Steel Works ($MMK) | 9.1% | 18.1% | 26.7% | 24.4% | |
| Mmc Norilsk Nickel ($MNOD) | 34.1% | 31.7% | 28.7% | 23.8% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | 12.0% | 15.7% | 17.5% | 22.3% | 34.5% |
| |
|---|
| Median (14 companies) | 9.0% | 5.4% | 4.9% | 8.3% | 8.0% |
|---|
| Norsk Hydro Asa ($NHY) | 5.9% | 8.7% | 6.6% | 11.8% | 7.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| First Quantum Minerals ($FQM) | 4.0x | 10.5x | 4.5x | 5.2x | |
| OAO TMK ($TMKS) | 3.8x | 4.3x | 5.2x | 4.8x | |
| Ezz Steel ($AEZD) | 19.4x | 13.3x | 7.8x | 4.5x | |
| Aluminium Bahrain Bsc ($ALBH) | 0.4x | -0.2x | -0.1x | 2.5x | 7.4x |
| Posco ($PIDD) | 3.7x | 3.6x | 3.4x | 2.3x | 2.0x |
| |
|---|
| Median (13 companies) | 1.2x | 1.1x | 0.9x | 1.4x | 0.5x |
|---|
| Norsk Hydro Asa ($NHY) | 0.2x | 0.0x | -0.1x | 0.3x | 0.6x |
