Royal Dutch Shell Net Income dropped on 32.2% and Revenue dropped on 11.2%
30 Jan 2020 • About Royal Dutch Shell (
$RDSB) • By InTwits
Royal Dutch Shell reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Royal Dutch Shell is a company in decline: FY2019 revenue growth was -11.2%, 5 years revenue CAGR was -3.9%
- EBITDA Margin is expanding: 15.0% in FY2019 vs. 13.7% in FY2018 vs. 8.9% in FY2015
- Royal Dutch Shell has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.7%. At the same time it's a lot of higher than industry average of 2.3%.
- CAPEX is quite volatile: £39m in FY2019, £28m in FY2018, £22m in FY2017, £28m in FY2016, £8m in FY2015
- The company has business model with low profitability: ROIC is 7.8%
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 dropped on 11.2%. During FY2015-FY2019 Revenue growth topped in FY2017 at 30.6% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.2 pp from 13.7% to 15.0% in FY2019. EBITDA Margin grew at 1.4 pp per annum in the last 5 years.
Gross Margin increased slightly on 1.7 pp from 17.3% to 19.0% in FY2019. SG&A as a % of Revenue showed almost no change in FY2019.
Net Income margin decreased slightly on 1.4 pp from 6.0% to 4.6% in FY2019. Net Income margin stuck to a growing trend at 1.2 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
Royal Dutch Shell's CAPEX/Revenue was 6.7% in FY2019. Royal Dutch Shell's CAPEX/Revenue decreased on 2.8 pp from 9.5% in FY2016 to 6.7% in FY2019. Average CAPEX/Revenue for the last three years was 6.5%. CAPEX as a % of Revenue stuck to a declining trend at -0.99 pp per annum in FY2015-FY2019.
Return on investment
The company operates at low ROIC (7.8%) and ROE (8.2%). ROIC decreased on 3.1 pp from 10.9% to 7.8% in FY2019. ROE decreased on 3.7 pp from 11.9% to 8.2% in FY2019. ROIC grew at 2.9 pp per annum in FY2015-FY2019. During FY2015-FY2019 ROE topped in FY2018 at 11.9%.
Leverage (Debt)
Debt level is 1.5x Net Debt / EBITDA and 1.9x Debt / EBITDA. Net Debt / EBITDA jumped on 0.6x from 0.9x to 1.5x in FY2019. Debt jumped on 25.5% while cash dropped on 32.5%.
Royal Dutch Shell has no short term refinancing risk: cash is higher than short term debt (119.8%).
Valuation and dividends
The company's trades at EV/EBITDA 3.1x and P/E 5.2x.
Management team
Ben Van Beurden is a Royal Dutch Shell's CEO. Ben Van Beurden is a founder and has spent 6 years with the company. The company's CFO is Jessica Uhl. Jessica Uhl has 2 years tenure at the company.
Financial and operational results
FY ended 30 Nov -0001
Royal Dutch Shell ($RDSB) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 264,960 | 233,591 | 305,179 | 388,379 | 344,877 | -11.2% |
| Gross Profit | 42,221 | 42,583 | 55,080 | 67,010 | 65,456 | -2.3% |
| SG&A | 11,956 | 12,101 | 10,509 | 11,360 | 10,493 | -7.6% |
| EBITDA | 23,453 | 27,360 | 41,704 | 53,324 | 51,648 | -3.1% |
| EBIT | | | | 31,189 | | |
| Interest expence | | | | 3,550 | | |
| Tax | | | | 11,715 | | |
| Net Income | 1,939 | 4,575 | 12,977 | 23,352 | 15,843 | -32.2% |
Balance Sheet
|
|---|
| Cash | 31,752 | 19,130 | 20,312 | 26,741 | 18,054 | -32.5% |
| Inventory | | | | 21,117 | | |
| Short Term Debt | 5,530 | 9,484 | 11,795 | 10,134 | 15,064 | 48.6% |
| Long Term Debt | 52,849 | 82,992 | 73,870 | 66,690 | 81,360 | 22.0% |
Cash flow
|
|---|
| Capex | 26,131 | 22,116 | 20,845 | 23,011 | 22,971 | -0.2% |
| Dividends | | | | 15,675 | | |
Ratios
|
|---|
| Revenue growth | -37.1% | -11.8% | 30.6% | 27.3% | -11.2% | |
| EBITDA growth | -47.2% | 16.7% | 52.4% | 27.9% | -3.1% | |
|
|---|
| Gross Margin | 15.9% | 18.2% | 18.0% | 17.3% | 19.0% | 1.7% |
| EBITDA Margin | 8.9% | 11.7% | 13.7% | 13.7% | 15.0% | 1.2% |
| EBIT Margin | | | | 8.0% | |
| SG&A, % of revenue | 4.5% | 5.2% | 3.4% | 2.9% | 3.0% | 0.1% |
| Net Income Margin | 0.7% | 2.0% | 4.3% | 6.0% | 4.6% | -1.4% |
| CAPEX, % of revenue | 9.9% | 9.5% | 6.8% | 5.9% | 6.7% | 0.7% |
|
|---|
| ROIC | -1.5% | 0.9% | 5.5% | 10.9% | 7.8% | -3.1% |
| ROE | 1.2% | 2.6% | 6.8% | 11.9% | 8.2% | -3.7% |
| Net Debt/EBITDA | 1.1x | 2.7x | 1.6x | 0.9x | 1.5x | 0.6x |
| Interest coverage ratio (ICR) | | | | 8.8x | |
| Interest expence / Average debt | | | | 4.4% | | |
People
|
|---|
| Insider ownership | | | | 0.0% | | |
| Employees | | | | 81,000 | | |
| Revenue/Employee, th. $ | | | | 4,795 | | |
Peers in Oil & Gas Producers
Below we provide Royal Dutch Shell benchmarking against other companies in Oil & Gas 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 |
|---|
| Parkmead Group(The) ($PMG) | -24.4% | -44.0% | -60.4% | 69.7% | |
| Turkiye Petrol Rafinerileri A.S. ($TPRD) | -7.1% | -5.5% | 54.8% | 64.1% | |
| Range Resources ($RRL) | -37.9% | -46.3% | 19.4% | 54.8% | |
| Amerisur Resources ($AMER) | | -22.9% | 79.6% | 27.8% | |
| BP ($BP.A) | -37.0% | -17.9% | 31.3% | 24.4% | |
| |
|---|
| Median (7 companies) | -19.5% | -8.9% | 18.5% | 27.8% | |
|---|
| Royal Dutch Shell ($RDSB) | | -11.8% | 30.6% | 27.3% | -11.2% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Oil & Gas Development Co ($OGDC) | 62.7% | 54.0% | 55.3% | 59.2% | |
| Parkmead Group(The) ($PMG) | -111.5% | -44.2% | 28.5% | 57.8% | |
| Amerisur Resources ($AMER) | -20.2% | -1.1% | 21.3% | 28.4% | |
| BP ($BP.A) | 9.5% | 11.9% | 15.1% | 15.4% | |
| Turkiye Petrol Rafinerileri A.S. ($TPRD) | 11.3% | 10.5% | 11.5% | 10.4% | |
| |
|---|
| Median (6 companies) | 11.6% | 12.1% | 18.2% | 21.9% | |
|---|
| Royal Dutch Shell ($RDSB) | 15.9% | 18.2% | 18.0% | 17.3% | 19.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Oil & Gas Development Co ($OGDC) | 62.4% | 53.9% | 55.8% | 59.3% | |
| Amerisur Resources ($AMER) | 0.1% | -35.0% | 20.0% | 28.8% | |
| Total Sa ($TTA) | 11.5% | 13.6% | 15.1% | 16.8% | |
| BP ($BP.A) | 3.0% | 6.3% | 9.1% | 10.1% | |
| Turkiye Petrol Rafinerileri A.S. ($TPRD) | 10.4% | 9.3% | 10.4% | 9.8% | |
| |
|---|
| Median (7 companies) | 18.8% | 13.3% | 17.9% | 10.1% | |
|---|
| Royal Dutch Shell ($RDSB) | 8.9% | 11.7% | 13.7% | 13.7% | 15.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Amerisur Resources ($AMER) | 72.4% | 65.8% | 33.8% | 11.7% | |
| Total Sa ($TTA) | 17.5% | 14.2% | 9.2% | 9.3% | |
| Oil & Gas Development Co ($OGDC) | 31.5% | 26.0% | 23.2% | 8.5% | |
| BP ($BP.A) | 8.4% | 9.1% | 6.9% | 5.6% | |
| Range Resources ($RRL) | 43.4% | 5.7% | 0.1% | 1.9% | |
| |
|---|
| Median (7 companies) | 16.0% | 13.1% | 11.7% | 5.6% | |
|---|
| Royal Dutch Shell ($RDSB) | 9.9% | 9.5% | 6.8% | 5.9% | 6.7% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Turkiye Petrol Rafinerileri A.S. ($TPRD) | 25.4% | 16.8% | 25.6% | 31.2% | |
| Oil & Gas Development Co ($OGDC) | 24.3% | 13.7% | 14.2% | 17.3% | |
| Total Sa ($TTA) | 2.5% | 3.2% | 5.8% | 9.2% | |
| BP ($BP.A) | -6.1% | -1.8% | 3.9% | 8.7% | |
| Amerisur Resources ($AMER) | -11.4% | -13.3% | 0.1% | 5.0% | |
| |
|---|
| Median (18 companies) | 1.3% | 4.7% | 5.5% | 5.0% | -9.3% |
|---|
| Royal Dutch Shell ($RDSB) | -1.5% | 0.9% | 5.5% | 10.9% | 7.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| BP ($BP.A) | 4.0x | 3.0x | 1.7x | 1.4x | |
| Turkiye Petrol Rafinerileri A.S. ($TPRD) | 1.8x | 1.9x | 1.1x | 1.4x | |
| Total Sa ($TTA) | 1.9x | 1.7x | 0.8x | 0.8x | |
| Oil & Gas Development Co ($OGDC) | -0.1x | -0.1x | -0.0x | -0.0x | |
| Amerisur Resources ($AMER) | -622.4x | | -1.8x | -1.1x | |
| |
|---|
| Median (6 companies) | 1.5x | 0.9x | 0.8x | 0.4x | |
|---|
| Royal Dutch Shell ($RDSB) | 1.1x | 2.7x | 1.6x | 0.9x | 1.5x |
