Kerry Group reports 12.0% EBITDA growth in 2018 and 1.1 pp EBITDA Margin growth from 12.3% to 13.3%
19 Feb 2019 • About Kerry Group (
$KYGA) • By InTwits
Kerry Group reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is relatively stable: 13.3% in 2018 vs. 12.3% in 2017 vs. 12.5% in 2014
- Kerry Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.3%. At the same time it's a lot of higher than industry average of 4.1%.
- CAPEX is quite volatile: 226 TRYm in 2018, 164 TRYm in 2017, 180 TRYm in 2016, 240 TRYm in 2015, 717 TRYm in 2014
- The company has business model with average profitability: ROIC is 11.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 3.1%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.4 pp from 24.6% to 26.0% in 2018.
Net Income margin decreased slightly on 1.0 pp from 9.2% to 8.2% in 2018. During the last 5 years Net Income margin topped in 2017 at 9.2%. The efficient tax rate was 12.5% in 2018.
Investments (CAPEX, working capital and M&A)
Kerry Group's CAPEX/Revenue was 4.5% in 2018. CAPEX/Revenue showed almost no change from 2015 to 2018. For the last three years the average CAPEX/Revenue was 4.3%.
Return on investment
The company operates at good ROE (14.2%) while ROIC is low (11.3%). ROIC decreased slightly on 0.66 pp from 11.9% to 11.3% in 2018. ROE decreased on 3.4 pp from 17.7% to 14.2% in 2018. ROIC declined at -1.4 pp per annum in 2014-2018. ROE declined at -2.1 pp per annum in 2014-2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.0x and Debt / EBITDA is 2.4x. Net Debt / EBITDA surged on 0.1x from 1.8x to 2.0x in 2018. Debt surged on 22.5% while cash surged on 32.4%.
Kerry Group has good short term financial stability: Interest coverage ratio (ICR) is 10.4x. Kerry Group has no short term refinancing risk: cash is higher than short term debt (2,998.6%).
Average interest expence charged on company's debt was 3.1% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 2.1x and P/E 0.3x.
The company paid 21.1% of Net Income as dividends in 2018.
Management team
Kerry Group's CEO Edmond Scanlon has spent 2 years with the company. CEO total compensation was €2,577,000 in 2018 which included €1,050,000 salary and €948,000 annual bonus. The company's CFO Marguerite Larkin has spent 1 year with the company.
At the end of financial year the company had 0.074% shares owned by insiders.
The company has 25,255 employees. Average revenue per employee in 2018 was €261,635.
Financial and operational results
FY ended 31 Dec 2018
Kerry Group ($KYGA) key annual financial indicators| mln. € | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 5,757 | 6,105 | 6,131 | 6,408 | 6,608 | 3.1% |
| EBITDA | 720 | 840 | 798 | 785 | 879 | 12.0% |
| EBIT | | | | | 691 | |
| Interest expence | | | | | 66 | |
| Tax | | | | | 77 | |
| Net Income | 480 | 525 | 533 | 589 | 541 | -8.2% |
| Stock Based Compensation | | | | | 12 | |
Balance Sheet
|
|---|
| Cash | 284 | 236 | 565 | 313 | 414 | 32.4% |
| Accounts Receivable | | | | | 968 | |
| Inventory | | | | | 878 | |
| Accounts Payable | | | | | 1,482 | |
| Short Term Debt | 303 | 38 | 193 | 13 | 14 | 3.8% |
| Long Term Debt | 1,271 | 2,012 | 1,867 | 1,728 | 2,120 | 22.6% |
Cash flow
|
|---|
| Capex | 274 | 252 | 224 | 301 | 296 | -1.7% |
| Dividends | | | | | 114 | |
Ratios
|
|---|
| Revenue growth | -1.4% | 6.1% | 0.4% | 4.5% | 3.1% | |
| EBITDA growth | 144.5% | 16.7% | -5.0% | -1.6% | 12.0% | |
|
|---|
| EBITDA Margin | 12.5% | 13.8% | 13.0% | 12.3% | 13.3% | 1.1% |
| EBIT Margin | | | | | 10.5% |
| SBC, % of revenue | | | | | 0.2% |
| Net Income Margin | 8.3% | 8.6% | 8.7% | 9.2% | 8.2% | -1.0% |
| CAPEX, % of revenue | 4.8% | 4.1% | 3.7% | 4.7% | 4.5% | -0.2% |
|
|---|
| ROIC | 16.6% | 15.8% | 12.8% | 11.9% | 11.3% | -0.7% |
| ROE | 22.8% | 20.9% | 18.1% | 17.7% | 14.2% | -3.4% |
| Net Debt/EBITDA | 1.8x | 2.2x | 1.9x | 1.8x | 2.0x | 0.1x |
| Interest expence / Average debt | | | | | 3.1% | |
People
|
|---|
| Insider ownership | | | | | 0.1% | |
| Employees | | | | | 25,255 | |
| Revenue/Employee, th. € | | | | | 262 | |
Peers in Food Producers
Below you can find Kerry Group benchmarking vs. other companies in Food Producers 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 |
|---|
| 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 ($MHPC) | | -14.2% | -4.0% | 13.4% | |
| |
|---|
| Median (19 companies) | 4.3% | -5.1% | 0.6% | 7.3% | 8.7% |
|---|
| Kerry Group ($KYGA) | | 6.1% | 0.4% | 4.5% | 3.1% |
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 ($KAKU) | 33.0% | 49.2% | 46.4% | 44.7% | |
| Unilever ($ULVR) | 41.4% | 42.2% | 42.7% | 43.1% | 43.6% |
| Produce Investments ($PIL) | 33.5% | 36.4% | 37.9% | 35.7% | 37.8% |
| |
|---|
| Median (18 companies) | 32.5% | 24.6% | 26.6% | 25.2% | 19.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Narborough Plantations ($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 ($RE.B) | 33.2% | 31.1% | 22.9% | 20.7% | |
| Unilever ($ULVR) | 19.4% | 16.8% | 18.0% | 19.8% | 28.1% |
| |
|---|
| Median (19 companies) | 8.9% | 10.4% | 10.0% | 13.7% | 5.1% |
|---|
| Kerry Group ($KYGA) | 12.5% | 13.8% | 13.0% | 12.3% | 13.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| R.E.A.Hldgs ($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% | 9.1% |
| 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) | 4.1% | 5.0% | 4.9% | 4.6% | 2.8% |
|---|
| Kerry Group ($KYGA) | 4.8% | 4.1% | 3.7% | 4.7% | 4.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Unilever ($ULVR) | 29.9% | 26.0% | 24.3% | 24.6% | 31.6% |
| Mhp Sa ($MHPC) | 17.6% | 17.6% | 16.1% | 17.6% | |
| Kakuzi ($KAKU) | 4.3% | 17.4% | 15.8% | 15.6% | |
| Tate & Lyle ($BD15) | 13.2% | 1.8% | 7.2% | 12.1% | 14.4% |
| Origin Enterprises ($OGN) | 16.9% | 20.1% | 15.3% | 11.1% | 13.0% |
| |
|---|
| Median (20 companies) | 11.6% | 8.9% | 7.9% | 7.3% | 8.4% |
|---|
| Kerry Group ($KYGA) | 16.6% | 15.8% | 12.8% | 11.9% | 11.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Avangardco Investments Public Ltd ($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) | 1.4x | 1.6x | 1.4x | 2.0x | 1.2x |
|---|
| Kerry Group ($KYGA) | 1.8x | 2.2x | 1.9x | 1.8x | 2.0x |
