Orange Polska Sa reports 18.1% CAPEX growth in 2018 while 2.5% Revenue decline
20 Feb 2019 • About Orange Polska Sa (
$OPLD) • By InTwits
Orange Polska Sa reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Orange Polska Sa is a company in decline: 2018 revenue growth was -2.5%, 5 years revenue CAGR was -3.0%
- Orange Polska Sa has high CAPEX intensity: 5 year average CAPEX/Revenue was 23.4%. At the same time it's a lot of higher than industry average of 8.7%.
- CAPEX is quite volatile: 2,282 PLNm in 2018, 1,933 PLNm in 2017, 5,169 PLNm in 2016, 1,998 PLNm in 2015, 2,153 PLNm in 2014
- The company has potentially unprofitable business model: ROIC is 2.1%
- It operates with high leverage: Net Debt/EBITDA is 2.4x while industry average is 1.6x
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 decreased on 2.5%. During the last 5 years Revenue growth topped in 2017 at -1.4%. 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. During 2014-2018 EBITDA Margin bottomed in 2016 at 11.9% and was growing since that time.
Net Income margin increased slightly on 0.62 pp from -0.53% to 0.090% in 2018. During 2014-2018 Net Income margin bottomed in 2016 at -15.1% and was growing since that time. The efficient tax rate was 75.0% in 2018.
Investments (CAPEX, working capital and M&A)
Orange Polska Sa's CAPEX/Revenue was 20.6% in 2018. CAPEX/Revenue increased on 3.7 pp from 16.9% in 2015 to 20.6% in 2018. It's average level of CAPEX/Revenue for the last three years was 27.4%. Orange Polska Sa invested a big chunk of EBITDA (79.0%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (2.1%) and ROE (0.1%). ROIC increased slightly on 0.65 pp from 1.4% to 2.1% in 2018. ROE increased slightly on 0.70 pp from -0.60% to 0.098% in 2018. During the last 5 years ROIC bottomed in 2016 at -8.6% and was growing since that time. During 2014-2018 ROE bottomed in 2016 at -15.9% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.4x and Debt / EBITDA is 2.6x. Net Debt / EBITDA increased on 0.1x from 2.3x to 2.4x in 2018. Debt increased on 6.3% while cash decreased on 5.4%.
Orange Polska Sa has questionable short term financial stability: Interest coverage ratio (ICR) is only 1.3x. Orange Polska Sa has short term refinancing risk: cash is only 28.4% of short term debt.
Average interest expence charged on company's debt was 3.7% in 2018.
Management team
Orange Polska Sa's CEO Jean-Francois Fallacher has spent 3 years with the company.
At the end of financial year the company had 13,545 employees. Average revenue per employee in 2018 was 819,564 PLN.
Financial and operational results
FY ended 31 Dec 2018
Orange Polska Sa ($OPLD) key annual financial indicators| mln. PLN | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 12,212 | 11,840 | 11,538 | 11,381 | 11,101 | -2.5% |
| EBITDA | 4,059 | 3,443 | 1,371 | 2,801 | 2,889 | 3.1% |
| EBIT | | | | | 345 | |
| Interest expence | | | | | 275 | |
| Tax | | | | | 30 | |
| Net Income | 535 | 254 | -1,746 | -60 | 10 | |
Balance Sheet
|
|---|
| Cash | 248 | 266 | 262 | 646 | 611 | -5.4% |
| Accounts Receivable | | | | | 2,371 | |
| Inventory | | | | | 240 | |
| Accounts Payable | | | | | 2,469 | |
| Short Term Debt | 1,143 | 1,318 | 41 | 1,529 | 2,150 | 40.6% |
| Long Term Debt | 3,288 | 2,930 | 7,153 | 5,553 | 5,381 | -3.1% |
Cash flow
|
|---|
| Capex | 2,153 | 1,998 | 5,169 | 1,933 | 2,282 | 18.1% |
Ratios
|
|---|
| Revenue growth | -5.5% | -3.0% | -2.6% | -1.4% | -2.5% | |
| EBITDA growth | 4.2% | -15.2% | -60.2% | 104.3% | 3.1% | |
|
|---|
| EBITDA Margin | 33.2% | 29.1% | 11.9% | 24.6% | 26.0% | 1.4% |
| EBIT Margin | | | | | 3.1% |
| Net Income Margin | 4.4% | 2.1% | -15.1% | -0.5% | 0.1% | 0.6% |
| CAPEX, % of revenue | 17.6% | 16.9% | 44.8% | 17.0% | 20.6% | 3.6% |
|
|---|
| ROIC | 6.1% | 3.7% | -8.6% | 1.4% | 2.1% | 0.7% |
| ROE | 4.3% | 2.1% | -15.9% | -0.6% | 0.1% | 0.7% |
| Net Debt/EBITDA | 1.0x | 1.2x | 5.1x | 2.3x | 2.4x | 0.1x |
| Interest coverage ratio (ICR) | | | | | 1.3x |
| Interest expence / Average debt | | | | | 3.7% | |
People
|
|---|
| Employees | | | | | 13,545 | |
| Revenue/Employee, th. PLN | | | | | 820 | |
Peers in Fixed Line Telecommunications
Below you can find Orange Polska Sa benchmarking vs. other companies in Fixed Line Telecommunications 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 |
|---|
| Telecom Egypt ($TEEG) | | 0.2% | 14.5% | 33.1% | |
| BT Group ($BT.A) | | -1.7% | 5.7% | 26.6% | -1.4% |
| Adept Telecom ($ADT) | | 5.8% | 30.9% | 19.2% | 34.8% |
| Kt Corp ($KTCD) | | -4.9% | 2.1% | 2.8% | 0.3% |
| Rostelekom ($RKMD) | | -0.5% | 0.0% | 2.7% | |
| |
|---|
| Median (11 companies) | 72.0% | -0.4% | 0.5% | 0.7% | 0.6% |
|---|
| Orange Polska Sa ($OPLD) | | -3.0% | -2.6% | -1.4% | -2.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Kt Corp ($KTCD) | 77.9% | 77.9% | 78.5% | 83.5% | 83.0% |
| Koninklijke Kpn Nv ($0O8F) | | | 68.7% | 70.4% | |
| Verizon Communications Inc ($VZC) | 60.7% | 60.1% | 59.2% | 59.1% | 57.6% |
| O2 Czech Republic As ($O2CZ) | | | 48.5% | 48.7% | 49.9% |
| Adept Telecom ($ADT) | 36.4% | 37.6% | 40.3% | 42.3% | 49.4% |
| |
|---|
| Median (6 companies) | 43.9% | 41.5% | 48.5% | 53.9% | 53.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ooredoo Qsc ($ORDS) | 37.6% | 39.2% | 39.2% | 40.5% | 36.9% |
| Koninklijke Kpn Nv ($0O8F) | 39.1% | 33.2% | 35.7% | 35.5% | |
| Verizon Communications Inc ($VZC) | 28.4% | 37.3% | 34.1% | 35.2% | 30.3% |
| Hellenic Telecom.Organization S.A. ($OTES) | 35.4% | 31.3% | 32.4% | 32.2% | |
| Telefonica Sa ($TDE) | 31.7% | 24.1% | 29.1% | 31.1% | |
| |
|---|
| Median (11 companies) | 31.7% | 29.9% | 30.6% | 31.0% | 28.5% |
|---|
| Orange Polska Sa ($OPLD) | 33.2% | 29.1% | 11.9% | 24.6% | 26.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telecom Egypt ($TEEG) | 13.0% | 21.4% | 23.7% | 32.8% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 15.4% | 16.9% | 16.7% | 23.8% | |
| Rostelekom ($RKMD) | 19.3% | 21.1% | 20.8% | 19.9% | |
| Telefonica Sa ($TDE) | 19.1% | 18.7% | 17.7% | 17.3% | |
| Verizon Communications Inc ($VZC) | 13.5% | 13.5% | 13.5% | 13.7% | 12.7% |
| |
|---|
| Median (11 companies) | 12.9% | 14.0% | 13.5% | 13.1% | 11.2% |
|---|
| Orange Polska Sa ($OPLD) | 17.6% | 16.9% | 44.8% | 17.0% | 20.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| O2 Czech Republic As ($O2CZ) | 7.2% | 14.5% | 26.8% | 25.8% | 24.3% |
| BT Group ($BT.A) | 34.7% | 37.5% | 20.7% | 13.9% | 15.4% |
| Adept Telecom ($ADT) | 13.2% | 14.3% | 16.5% | 14.2% | 14.1% |
| Verizon Communications Inc ($VZC) | 10.1% | 19.3% | 15.4% | 14.8% | 11.3% |
| Kt Corp ($KTCD) | -1.5% | 5.7% | 6.9% | 6.7% | 6.0% |
| |
|---|
| Median (11 companies) | 8.7% | 8.2% | 7.8% | 8.3% | 12.7% |
|---|
| Orange Polska Sa ($OPLD) | 6.1% | 3.7% | -8.6% | 1.4% | 2.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telefonica Sa ($TDE) | 3.6x | 4.2x | 3.6x | 3.0x | |
| Koninklijke Kpn Nv ($0O8F) | 3.0x | 3.6x | 3.1x | 2.9x | |
| Verizon Communications Inc ($VZC) | 2.8x | 2.1x | 2.4x | 2.6x | 2.8x |
| Adept Telecom ($ADT) | 0.7x | 0.3x | 1.0x | 2.2x | 2.3x |
| Rostelekom ($RKMD) | 1.8x | 1.8x | 1.9x | 2.0x | |
| |
|---|
| Median (11 companies) | 1.6x | 1.3x | 1.5x | 1.8x | 1.9x |
|---|
| Orange Polska Sa ($OPLD) | 1.0x | 1.2x | 5.1x | 2.3x | 2.4x |
