Tongaat Hulett Ltd CAPEX dropped on 47.2% and Revenue increased slightly on 0.51%
10 Dec 2019 • About Tongaat Hulett Ltd (
$THL) • By InTwits
Tongaat Hulett Ltd reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Tongaat Hulett Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.1%. At the same time it's a lot of higher than industry average of 5.8%.
- CAPEX is quite volatile: 1,089 ZARm in FY2019, 2,061 ZARm in FY2018, 1,069 ZARm in FY2017, 1,824 ZARm in FY2016, 808 ZARm in FY2015
- The company has business model with average profitability: ROIC is 11.4%
- It operates with high leverage: Net Debt/EBITDA is 5.6x while industry average is 4.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Tongaat Hulett Ltd's Revenue increased slightly on 0.51%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 3.1 pp from 23.7% to 20.6% in FY2019. During the last 5 years EBITDA Margin topped in FY2017 at 19.3% and was declining since that time.
Gross Margin increased on 6.5 pp from 20.6% to 27.1% in FY2019. SG&A as a % of Revenue increased on 7.4 pp from 13.1% to 20.5% in FY2019.
Net Income margin dropped on 10.4 pp from 4.2% to -6.2% in FY2019.
Investments (CAPEX, working capital and M&A)
In FY2019 Tongaat Hulett Ltd had CAPEX/Revenue of 6.4%. CAPEX/Revenue decreased on 4.6 pp from 10.9% in FY2016 to 6.4% in FY2019. Average CAPEX/Revenue for the last three years was 8.2%. Tongaat Hulett Ltd maintained rich investment policy and has spent a big chunk of EBITDA (58.5%) to CAPEX.
Leverage (Debt)
Debt level is 5.6x Net Debt / EBITDA and 6.1x Debt / EBITDA. Net Debt / EBITDA surged on 3.3x from 2.3x to 5.6x in FY2019. Debt jumped on 19.0% while cash dropped on 63.9%.
Tongaat Hulett Ltd has short term refinancing risk: cash is only 8.4% of short term debt.
Financial and operational results
FY ended 31 Mar 2019
Tongaat Hulett Ltd ($THL) key annual financial indicators| mln. ZAR | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 16,155 | 16,676 | 17,915 | 16,982 | 17,069 | 0.5% |
| Gross Profit | 3,623 | 3,322 | 4,101 | 3,497 | 4,622 | 32.2% |
| SG&A | 1,948 | 2,101 | 2,074 | 2,231 | 3,498 | 56.8% |
| EBITDA | 2,669 | 2,922 | 3,455 | 2,965 | 1,860 | -37.3% |
| Net Income | 989 | 716 | 983 | 713 | -1,063 | -249.1% |
Balance Sheet
|
|---|
| Cash | 1,668 | 1,877 | 2,741 | 2,662 | 962 | -63.9% |
| Short Term Debt | 1,850 | 3,563 | 3,056 | 4,564 | 11,438 | 150.6% |
| Long Term Debt | 4,710 | 4,396 | 4,975 | 5,048 | 0 | -100.0% |
Cash flow
|
|---|
| Capex | 808 | 1,824 | 1,069 | 2,061 | 1,089 | -47.2% |
Ratios
|
|---|
| Revenue growth | 2.8% | 3.2% | 7.4% | -5.2% | 0.5% | |
| EBITDA growth | -10.5% | 9.5% | 18.2% | -14.2% | -37.3% | |
|
|---|
| Gross Margin | 22.4% | 19.9% | 22.9% | 20.6% | 27.1% | 6.5% |
| EBITDA Margin | 16.5% | 17.5% | 19.3% | 17.5% | 10.9% | -6.6% |
| SG&A, % of revenue | 12.1% | 12.6% | 11.6% | 13.1% | 20.5% | 7.4% |
| Net Income Margin | 6.1% | 4.3% | 5.5% | 4.2% | -6.2% | -10.4% |
| CAPEX, % of revenue | 5.0% | 10.9% | 6.0% | 12.1% | 6.4% | -5.8% |
|
|---|
| ROIC | 9.7% | 6.9% | 9.8% | 8.3% | 11.4% | 3.1% |
| ROE | 8.8% | 5.7% | 8.2% | 6.8% | | |
| Net Debt/EBITDA | 1.8x | 2.1x | 1.5x | 2.3x | 5.6x | 3.3x |
Peers in Food Producers
Below we provide Tongaat Hulett Ltd benchmarking against other companies in Food Producers 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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Real Good Food ($RGD) | -5.1% | -4.0% | 7.3% | 20.5% | |
| Wynnstay Group ($WYN) | -8.7% | -2.4% | 6.1% | 18.4% | |
| Carr'S Milling Industries ($CRM) | -22.8% | -4.9% | 9.9% | 16.5% | |
| Zambeef Products ($ZAM) | | 52.8% | 2.5% | 14.2% | 12.7% |
| Cherkizovo Group OJSC ($CHE) | 11.1% | 7.0% | 9.8% | 11.0% | |
| |
|---|
| Median (10 companies) | -1.9% | 0.5% | 7.0% | 8.7% | 12.7% |
|---|
| Tongaat Hulett Ltd ($THL) | | 3.2% | 7.4% | -5.2% | 0.5% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Unilever ($ULVR) | 42.2% | 42.7% | 43.1% | 43.6% | |
| Produce Investments ($PIL) | 36.4% | 37.9% | 35.7% | 37.8% | |
| Zambeef Products ($ZAM) | 43.2% | 36.3% | 32.9% | 35.0% | 34.2% |
| Cherkizovo Group OJSC ($CHE) | 24.9% | 21.7% | 26.0% | 25.0% | |
| Real Good Food ($RGD) | 24.4% | 26.6% | 24.4% | 19.2% | |
| |
|---|
| Median (9 companies) | 24.9% | 26.8% | 26.0% | 19.2% | 34.2% |
|---|
| Tongaat Hulett Ltd ($THL) | 22.4% | 19.9% | 22.9% | 20.6% | 27.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Unilever ($ULVR) | 16.8% | 18.0% | 19.8% | 28.1% | |
| Cherkizovo Group OJSC ($CHE) | 14.7% | 12.0% | 16.7% | 21.6% | |
| Tate & Lyle ($BD15) | 6.1% | 10.3% | 13.9% | 16.4% | |
| Kerry Group ($KYGA) | 13.8% | 13.0% | 12.3% | 13.3% | |
| Zambeef Products ($ZAM) | 14.7% | 9.7% | 5.3% | 8.1% | 9.0% |
| |
|---|
| Median (11 companies) | 10.4% | 10.0% | 12.3% | 5.1% | 9.0% |
|---|
| Tongaat Hulett Ltd ($THL) | 16.5% | 17.5% | 19.3% | 17.5% | 10.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Cherkizovo Group OJSC ($CHE) | 12.2% | 10.4% | 10.9% | 9.1% | |
| Real Good Food ($RGD) | 1.4% | 6.4% | 10.0% | 8.4% | |
| Zambeef Products ($ZAM) | 15.9% | 2.1% | 6.4% | 5.4% | 3.6% |
| Kerry Group ($KYGA) | 4.1% | 3.7% | 4.7% | 4.5% | |
| Tate & Lyle ($BD15) | 5.2% | 7.6% | 4.6% | 4.1% | |
| |
|---|
| Median (11 companies) | 4.1% | 3.5% | 4.6% | 2.8% | 3.6% |
|---|
| Tongaat Hulett Ltd ($THL) | 5.0% | 10.9% | 6.0% | 12.1% | 6.4% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Unilever ($ULVR) | 26.0% | 24.3% | 24.6% | 31.6% | |
| Tate & Lyle ($BD15) | 1.8% | 7.2% | 12.1% | 14.4% | |
| Cherkizovo Group OJSC ($CHE) | 8.9% | 5.6% | 10.2% | 13.3% | |
| Origin Enterprises ($OGN) | 20.1% | 15.3% | 11.1% | 13.0% | |
| Kerry Group ($KYGA) | 15.8% | 12.8% | 11.9% | 11.3% | |
| |
|---|
| Median (13 companies) | 8.9% | 8.1% | 7.3% | 9.9% | 4.2% |
|---|
| Tongaat Hulett Ltd ($THL) | 9.7% | 6.9% | 9.8% | 8.3% | 11.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Cherkizovo Group OJSC ($CHE) | 3.1x | 3.8x | 3.2x | 2.7x | |
| Zambeef Products ($ZAM) | 3.0x | 2.1x | 4.0x | 2.0x | 2.7x |
| Kerry Group ($KYGA) | 2.2x | 1.9x | 1.8x | 2.0x | |
| Unilever ($ULVR) | 1.4x | 1.4x | 2.0x | 1.5x | |
| Tate & Lyle ($BD15) | 4.0x | 1.8x | 1.1x | 0.9x | |
| |
|---|
| Median (8 companies) | 1.6x | 1.4x | 2.0x | 1.2x | 2.7x |
|---|
| Tongaat Hulett Ltd ($THL) | 1.8x | 2.1x | 1.5x | 2.3x | 5.6x |
