Astrazeneca Net Income dropped on 28.2% and Revenue decreased slightly on 1.7%
14 Feb 2019 • About Astrazeneca (
$AZN) • By InTwits
Astrazeneca reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Astrazeneca has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.2%. At the same time it's a lot of higher than industry average of 75.1%.
- CAPEX is quite volatile: £102m in 2018, £75m in 2017, £97m in 2016, £29m in 2015, £55m in 2014
- The company has business model with low profitability: ROIC is 9.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.0x while industry average is 2.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Astrazeneca's Revenue decreased slightly on 1.7%. During the last 5 years Revenue growth bottomed in 2015 at -6.9% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.9 pp from 29.9% to 32.8% in 2018.
Gross Margin decreased on 3.1 pp from 80.8% to 77.7% in 2018. During the last 5 years Gross Margin topped in 2016 at 82.1% and was declining since that time. SG&A as a % of Revenue showed almost no change in 2018.
Net Income margin decreased on 3.6 pp from 13.4% to 9.8% in 2018. During 2014-2018 Net Income margin topped in 2016 at 15.2% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 4.7% in 2018. CAPEX/Revenue decreased slightly on 0.65 pp from 5.4% in 2015 to 4.7% in 2018. It's average level of CAPEX/Revenue for the last three years was 5.6%. During 2014-2018 CAPEX as a % of Revenue topped in 2016 at 6.3% and was declining since that time.
Return on investment
The company operates at good ROE (15.7%) while ROIC is low (9.5%). ROIC showed almost no change in 2018. ROE decreased on 4.4 pp from 20.1% to 15.7% in 2018. During the last 5 years ROIC topped in 2016 at 13.7% and was declining since that time. During the last 5 years ROE topped in 2016 at 21.0% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.0x and Debt / EBITDA is 2.6x. Net Debt / EBITDA dropped on 0.2x from 2.2x to 2.0x in 2018. Debt increased on 7.3% while cash surged on 45.3%. Net Debt/EBITDA followed a growing trend at 0.3x per annum in the last 5 years.
Astrazeneca has no short term refinancing risk: cash is higher than short term debt (275.4%).
Valuation and dividends
The company's trades at EV/EBITDA 12.6x and P/E 35.8x.
Management team
The company's CEO is Pascal Soriot. Pascal Soriot is a founder and has 7 years tenure with the company. Marc Dunoyer is a the company's CFO. Marc Dunoyer has spent 6 years at the company.
Financial and operational results
FY ended 31 Dec 2018
Astrazeneca ($AZN) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 26,547 | 24,708 | 23,002 | 22,465 | 22,090 | -1.7% |
| Gross Profit | 20,705 | 20,062 | 18,876 | 18,147 | 17,154 | -5.5% |
| SG&A | 13,324 | 11,451 | 9,739 | 10,543 | 10,362 | -1.7% |
| EBITDA | 5,517 | 6,988 | 7,475 | 6,719 | 7,240 | 7.8% |
| Net Income | 1,233 | 2,825 | 3,499 | 3,001 | 2,155 | -28.2% |
Balance Sheet
|
|---|
| Cash | 6,360 | 6,240 | 5,018 | 3,324 | 4,831 | 45.3% |
| Short Term Debt | 2,446 | 916 | 2,307 | 2,247 | 1,754 | -21.9% |
| Long Term Debt | 8,397 | 14,137 | 14,501 | 15,560 | 17,359 | 11.6% |
Cash flow
|
|---|
| Capex | 1,012 | 1,328 | 1,446 | 1,326 | 1,043 | -21.3% |
Ratios
|
|---|
| Revenue growth | 3.3% | -6.9% | -6.9% | -2.3% | -1.7% | |
| EBITDA growth | -33.5% | 26.7% | 7.0% | -10.1% | 7.8% | |
|
|---|
| Gross Margin | 78.0% | 81.2% | 82.1% | 80.8% | 77.7% | -3.1% |
| EBITDA Margin | 20.8% | 28.3% | 32.5% | 29.9% | 32.8% | 2.9% |
| SG&A, % of revenue | 50.2% | 46.3% | 42.3% | 46.9% | 46.9% | -0.0% |
| Net Income Margin | 4.6% | 11.4% | 15.2% | 13.4% | 9.8% | -3.6% |
| CAPEX, % of revenue | 3.8% | 5.4% | 6.3% | 5.9% | 4.7% | -1.2% |
|
|---|
| ROIC | 6.2% | 11.8% | 13.7% | 9.7% | 9.5% | -0.2% |
| ROE | 5.8% | 14.8% | 21.0% | 20.1% | 15.7% | -4.4% |
| Net Debt/EBITDA | 0.8x | 1.3x | 1.6x | 2.2x | 2.0x | -0.2x |
Peers in Pharmaceuticals & Biotechnology
Below you can find Astrazeneca benchmarking vs. other companies in Pharmaceuticals & Biotechnology 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 |
|---|
| Evocutis ($EVO) | | 57.3% | 51.2% | 54.5% | 37.6% |
| Benchmark Hldgs ($BMK) | | 25.0% | 147.5% | 28.2% | 8.1% |
| Quantum Pharma ($QP.) | 10.8% | 15.4% | 13.4% | 26.8% | |
| Ixico ($IXI) | | | 4.9% | 25.8% | 31.2% |
| Ergomed ($ERGO) | 39.7% | 42.7% | 30.0% | 21.4% | |
| |
|---|
| Median (14 companies) | 6.8% | 4.5% | 8.1% | 10.4% | 8.1% |
|---|
| Astrazeneca ($AZN) | | -6.9% | -6.9% | -2.3% | -1.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| C4X Discovery Hldg ($C4XD) | 96.3% | | 95.7% | 97.9% | |
| Indivior ($INDV) | 91.5% | 90.4% | 89.9% | 90.5% | 87.3% |
| Pfizer Inc ($PFZ) | 80.7% | 80.3% | 76.7% | 78.6% | 79.0% |
| GlaxoSmithKline ($GSK) | 68.2% | 63.0% | 66.7% | 65.7% | 66.8% |
| Ixico ($IXI) | | | 48.6% | 56.5% | 58.8% |
| |
|---|
| Median (13 companies) | 46.3% | 44.9% | 47.7% | 49.1% | 66.8% |
|---|
| Astrazeneca ($AZN) | 78.0% | 81.2% | 82.1% | 80.8% | 77.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evocutis ($EVO) | 35.0% | 35.4% | 38.6% | 45.2% | 43.9% |
| Pfizer Inc ($PFZ) | 37.9% | 34.8% | 33.6% | 37.9% | 38.0% |
| Beximco Pharmaceuticals ($BXP) | 27.2% | 26.6% | 28.9% | 27.3% | |
| Eastpharma Ltd ($EAST) | 16.1% | 23.3% | 23.9% | 22.9% | |
| Animalcare Group ($ANCR) | 24.5% | 25.4% | 23.5% | 20.9% | |
| |
|---|
| Median (14 companies) | 18.5% | 21.9% | 15.4% | 16.6% | 24.1% |
|---|
| Astrazeneca ($AZN) | 20.8% | 28.3% | 32.5% | 29.9% | 32.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| C4X Discovery Hldg ($C4XD) | 1.1% | | 15.1% | 28.0% | 0.6% |
| Benchmark Hldgs ($BMK) | 10.9% | 31.8% | 17.1% | 23.4% | 16.6% |
| Beximco Pharmaceuticals ($BXP) | 24.8% | 19.4% | 13.5% | 19.4% | |
| Eastpharma Ltd ($EAST) | 7.1% | 6.2% | 6.7% | 10.3% | |
| Cathay International Hldgs Ltd ($CTI) | 4.0% | 5.5% | 6.2% | 8.2% | |
| |
|---|
| Median (14 companies) | 3.5% | 5.3% | 4.6% | 4.4% | 3.8% |
|---|
| Astrazeneca ($AZN) | 3.8% | 5.4% | 6.3% | 5.9% | 4.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Indivior ($INDV) | | 172.1% | 85.9% | 107.2% | 110.6% |
| Evocutis ($EVO) | 68.6% | 62.4% | 59.8% | 70.1% | 53.2% |
| GlaxoSmithKline ($GSK) | 15.2% | 42.9% | 10.9% | 20.2% | 23.3% |
| Animalcare Group ($ANCR) | 14.2% | 14.8% | 13.8% | 12.0% | |
| Beximco Pharmaceuticals ($BXP) | 8.7% | 9.6% | 10.9% | 11.2% | |
| |
|---|
| Median (14 companies) | 8.5% | 14.2% | 9.2% | 10.9% | 12.3% |
|---|
| Astrazeneca ($AZN) | 6.2% | 11.8% | 13.7% | 9.7% | 9.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cathay International Hldgs Ltd ($CTI) | 6.3x | 12.7x | 20.5x | 21.7x | |
| Quantum Pharma ($QP.) | 15.5x | 0.8x | 2.8x | 4.2x | |
| GlaxoSmithKline ($GSK) | 2.9x | 0.9x | 3.1x | 2.1x | 3.0x |
| Pfizer Inc ($PFZ) | 1.8x | 2.1x | 2.2x | 2.1x | 2.0x |
| Eastpharma Ltd ($EAST) | 4.3x | 2.7x | 1.8x | 2.1x | |
| |
|---|
| Median (11 companies) | 0.8x | 0.7x | 0.3x | 1.5x | 2.0x |
|---|
| Astrazeneca ($AZN) | 0.8x | 1.3x | 1.6x | 2.2x | 2.0x |
