Centrica EBITDA dropped on 10.1% and EBITDA Margin decreased slightly on 1.2 pp from 8.0% to 6.8%
21 Feb 2019 • About Centrica (
$CNA) • By InTwits
Centrica reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 6.8% in 2018, 8.0% in 2017, 13.3% in 2016, 1.9% in 2015, 6.1% in 2014
- Centrica has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.5%. At the same time it's a lot of higher than industry average of 78.6%.
- CAPEX is quite volatile: 38 m in 2018, 30 m in 2017, 37 m in 2016, 42 m in 2015, 84 m in 2014
- The company has business model with average profitability: ROIC is 10.9%
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 5.9%. During 2014-2018 Revenue growth bottomed in 2015 at -4.9% and was accelerating since that time. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.2 pp from 8.0% to 6.8% in 2018.
Gross Margin decreased slightly on 1.3 pp from 14.9% to 13.7% in 2018. During the last 5 years Gross Margin topped in 2016 at 20.1% and was declining since that time.
Net Income margin decreased slightly on 0.55 pp from 1.2% to 0.62% in 2018. During 2014-2018 Net Income margin topped in 2016 at 6.2% and was declining since that time.
Investments (CAPEX, working capital and M&A)
Centrica's CAPEX/Revenue was 3.1% in 2018. Centrica's CAPEX/Revenue showed almost no change from 2015 to 2018. It's average CAPEX/Revenue for the last three years was 3.1%.
Return on investment
The company operates at low ROIC (10.9%) and ROE (6.3%). ROIC increased on 6.0 pp from 4.9% to 10.9% in 2018. ROE decreased on 6.0 pp from 12.2% to 6.3% in 2018.
Leverage (Debt)
Debt level is 1.7x Net Debt / EBITDA and 2.3x Debt / EBITDA. Net Debt / EBITDA surged on 0.2x from 1.5x to 1.7x in 2018. Debt dropped on 24.4% while cash dropped on 55.7%.
Centrica has no short term refinancing risk: cash is higher than short term debt (438.8%).
Valuation and dividends
The company's trades at EV/EBITDA 5.2x and P/E 38.8x.
Management team
Iain C Conn is a Centrica's CEO. Iain C Conn is a founder and has spent 5 years with the company. Centrica's CFO Chris O'Shea has spent 1 year with the company.
Financial and operational results
FY ended 31 Dec 2018
Centrica ($CNA) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 29,408 | 27,971 | 27,102 | 28,035 | 29,686 | 5.9% |
| Gross Profit | 3,231 | 4,353 | 5,449 | 4,190 | 4,053 | -3.3% |
| EBITDA | 1,805 | 542 | 3,613 | 2,252 | 2,025 | -10.1% |
| Net Income | -1,012 | -747 | 1,672 | 328 | 183 | -44.2% |
Balance Sheet
|
|---|
| Cash | 621 | 1,158 | 2,036 | 2,864 | 1,268 | -55.7% |
| Short Term Debt | 1,532 | 653 | 277 | 587 | 289 | -50.8% |
| Long Term Debt | 5,351 | 5,993 | 6,130 | 5,591 | 4,380 | -21.7% |
Cash flow
|
|---|
| Capex | 1,456 | 970 | 829 | 882 | 926 | 5.0% |
Ratios
|
|---|
| Revenue growth | 10.7% | -4.9% | -3.1% | 3.4% | 5.9% | |
| EBITDA growth | -41.8% | -70.0% | 566.6% | -37.7% | -10.1% | |
|
|---|
| Gross Margin | 11.0% | 15.6% | 20.1% | 14.9% | 13.7% | -1.3% |
| EBITDA Margin | 6.1% | 1.9% | 13.3% | 8.0% | 6.8% | -1.2% |
| Net Income Margin | -3.4% | -2.7% | 6.2% | 1.2% | 0.6% | -0.6% |
| CAPEX, % of revenue | 5.0% | 3.5% | 3.1% | 3.1% | 3.1% | -0.0% |
|
|---|
| ROIC | -11.1% | -11.7% | 28.5% | 4.9% | 10.9% | 6.0% |
| ROE | -25.5% | -38.2% | 87.0% | 12.2% | 6.3% | -6.0% |
| Net Debt/EBITDA | 3.5x | 10.1x | 1.2x | 1.5x | 1.7x | 0.2x |
Peers in Gas, Water & Multiutilities
Below you can find Centrica benchmarking vs. other companies in Gas, Water & Multiutilities 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| United Utilities Group ($UU.) | | 1.9% | 0.6% | -1.5% | 1.9% |
| Dee Valley Group ($DVW) | | 3.4% | -5.9% | 16.2% | 1.6% |
| National Grid ($NG.) | | 2.6% | -13.1% | 13.8% | 1.4% |
| |
|---|
| Median (3 companies) | 11.9% | 3.0% | -2.7% | 9.7% | 1.6% |
|---|
| Centrica ($CNA) | | -4.9% | -3.1% | 3.4% | 5.9% |
Top companies by EBITDA margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| United Utilities Group ($UU.) | 57.3% | 58.5% | 53.8% | 56.9% | 58.4% |
| Dee Valley Group ($DVW) | 50.5% | 49.2% | 49.1% | 31.8% | 41.5% |
| National Grid ($NG.) | 34.8% | 34.7% | 34.3% | 31.2% | 32.9% |
| |
|---|
| Median (3 companies) | 42.6% | 42.0% | 41.7% | 31.5% | 41.5% |
|---|
| Centrica ($CNA) | 6.1% | 1.9% | 13.3% | 8.0% | 6.8% |
Top companies by CAPEX/Revenue, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| United Utilities Group ($UU.) | 39.2% | 38.7% | 36.7% | 39.5% | 40.2% |
| Dee Valley Group ($DVW) | 28.1% | 27.3% | 24.3% | 33.3% | |
| National Grid ($NG.) | 19.9% | 20.2% | 21.6% | 21.9% | 24.5% |
| Inter RAO JSC ($IRAO) | 4.9% | 3.5% | 4.0% | 3.4% | |
| |
|---|
| Median (4 companies) | 24.0% | 23.8% | 23.0% | 27.6% | 32.4% |
|---|
| Centrica ($CNA) | 5.0% | 3.5% | 3.1% | 3.1% | 3.1% |
Top companies by ROIC, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| National Grid ($NG.) | 8.9% | 9.0% | 7.3% | 6.4% | 6.8% |
| United Utilities Group ($UU.) | 6.8% | 6.7% | 5.4% | 5.5% | 5.5% |
| Dee Valley Group ($DVW) | 7.5% | 7.4% | 6.4% | 3.4% | 5.1% |
| |
|---|
| Median (3 companies) | 7.1% | 7.0% | 6.8% | 6.0% | 5.5% |
|---|
| Centrica ($CNA) | -11.1% | -11.7% | 28.5% | 4.9% | 10.9% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| United Utilities Group ($UU.) | 6.1x | 6.4x | 7.3x | 7.4x | 7.3x |
| Dee Valley Group ($DVW) | 4.2x | 4.2x | 4.4x | 6.5x | 5.5x |
| National Grid ($NG.) | 5.0x | 4.9x | 6.2x | 5.9x | 5.2x |
| |
|---|
| Median (3 companies) | 4.6x | 4.5x | 5.3x | 6.2x | 5.5x |
|---|
| Centrica ($CNA) | 3.5x | 10.1x | 1.2x | 1.5x | 1.7x |
