Unilever reports 40.1% Net Income decline in 2019 and 7.5 pp EBITDA Margin decline from 28.1% to 20.6%
30 Jan 2020 • About Unilever (
$ULVR) • By InTwits
Unilever reported 2019 financial results today. Here are the key drivers of the company's long term financial model:
- Unilever has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.0%. At the same time it's a lot of higher than industry average of 4.0%.
- CAPEX is quite volatile: $5,429m in FY2019, $3,749m in FY2018, $2,944m in FY2017, $3,062m in FY2016, $2,294m in FY2015
- The company has highly profitable business model: ROIC is 20.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased slightly on 2.0%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.8 pp from 27.5% to 30.3% in FY2019. During the last 5 years EBITDA Margin topped in 2018 at 28.1%.
Net Income margin decreased on 7.6 pp from 18.4% to 10.8% in 2019. During the last 5 years Net Income margin topped in 2018 at 18.4%.
Investments (CAPEX, working capital and M&A)
In 2019 Unilever had CAPEX/Revenue of 2.7%. CAPEX/Revenue decreased slightly on 0.67 pp from 3.4% in 2016 to 2.7% in 2019. It's average CAPEX/Revenue for the last three years was 2.7%. CAPEX as a % of Revenue stuck to a declining trend at -0.23 pp per annum in 2015-2019.
Return on investment
The company operates at high and attractive ROIC (20.7%) and ROE (45.4%). ROIC dropped on 10.9 pp from 31.6% to 20.7% in 2019. ROE dropped on 29.1 pp from 74.5% to 45.4% in 2019.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.3x and Debt / EBITDA is 2.6x. Net Debt / EBITDA jumped on 0.7x from 1.5x to 2.3x in 2019. Debt jumped on 14.1% while cash jumped on 29.6%.
Unilever has short term refinancing risk: cash is only 89.2% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 7.4x and P/E 9.7x.
Management team
Alan Jope is a the company's CEO. Alan Jope is a founder and has spent 1 year with the company. Graeme David Pitkethly is a the company's CFO. Graeme David Pitkethly has spent 3 years at the company.
Financial and operational results
FY ended 31 Dec 2019
Unilever ($ULVR) key annual financial indicators| mln. € | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 53,272 | 52,713 | 53,715 | 50,982 | 51,980 | 2.0% |
| Gross Profit | 22,464 | 22,484 | 23,168 | 22,213 | | |
| SG&A | 13,944 | 13,705 | 16,652 | 11,876 | | |
| EBITDA | 8,972 | 9,474 | 10,609 | 14,331 | 10,690 | -25.4% |
| Net Income | 4,909 | 5,184 | 6,053 | 9,389 | 5,625 | -40.1% |
Balance Sheet
|
|---|
| Cash | 2,302 | 3,382 | 3,317 | 3,230 | 4,185 | 29.6% |
| Short Term Debt | 4,671 | 5,275 | 8,156 | 3,383 | 4,691 | 38.7% |
| Long Term Debt | 10,121 | 11,135 | 16,127 | 21,374 | 23,566 | 10.3% |
Cash flow
|
|---|
| Capex | 1,867 | 1,804 | 1,509 | 1,329 | 1,429 | 7.5% |
Ratios
|
|---|
| Revenue growth | 10.0% | -1.0% | 1.9% | -5.1% | 2.0% | |
| EBITDA growth | -4.7% | 5.6% | 12.0% | 35.1% | -25.4% | |
|
|---|
| Gross Margin | 42.2% | 42.7% | 43.1% | 43.6% | | |
| EBITDA Margin | 16.8% | 18.0% | 19.8% | 28.1% | 20.6% | -7.5% |
| SG&A, % of revenue | 26.2% | 26.0% | 31.0% | 23.3% | | |
| Net Income Margin | 9.2% | 9.8% | 11.3% | 18.4% | 10.8% | -7.6% |
| CAPEX, % of revenue | 3.5% | 3.4% | 2.8% | 2.6% | 2.7% | 0.1% |
|
|---|
| ROIC | 26.0% | 24.3% | 24.6% | 31.6% | 20.7% | -10.9% |
| ROE | 33.8% | 32.6% | 40.4% | 74.5% | 45.4% | -29.1% |
| Net Debt/EBITDA | 1.4x | 1.4x | 2.0x | 1.5x | 2.3x | 0.7x |
Peers in Food Producers
Below you can find Unilever 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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Real Good Food ($RGD) | -5.1% | -4.0% | 7.3% | 20.5% | |
| Wynnstay Group ($WYN) | | -2.4% | 6.1% | 18.4% | 6.0% |
| 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 ($CHE) | 11.1% | 7.0% | 9.8% | 11.0% | |
| |
|---|
| Median (10 companies) | -1.9% | 0.6% | 7.3% | 8.7% | 6.0% |
|---|
| Unilever ($ULVR) | | -1.0% | 1.9% | -5.1% | 2.0% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| 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 ($CHE) | 24.9% | 21.7% | 26.0% | 25.0% | |
| Tongaat Hulett Ltd ($THL) | 22.4% | 19.9% | 22.9% | 20.6% | 27.1% |
| Real Good Food ($RGD) | 24.4% | 26.6% | 24.4% | 19.2% | |
| |
|---|
| Median (9 companies) | 24.4% | 24.1% | 24.4% | 19.2% | 27.1% |
|---|
| Unilever ($ULVR) | 42.2% | 42.7% | 43.1% | 43.6% | |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Cherkizovo Group OJSC ($CHE) | 14.7% | 12.0% | 16.7% | 21.6% | |
| Tongaat Hulett Ltd ($THL) | 16.5% | 17.5% | 19.3% | 17.5% | 10.9% |
| Tate & Lyle ($BD15) | 6.1% | 10.3% | 13.9% | 16.4% | |
| Kerry Group ($KYGA) | 13.8% | 13.0% | 12.3% | 13.3% | |
| Zambeef Products ($ZAM) | 14.7% | 9.7% | 5.3% | 8.1% | 9.0% |
| |
|---|
| Median (11 companies) | 10.4% | 10.0% | 12.3% | 5.1% | 9.0% |
|---|
| Unilever ($ULVR) | 16.8% | 18.0% | 19.8% | 28.1% | 20.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Tongaat Hulett Ltd ($THL) | 5.0% | 10.9% | 6.0% | 12.1% | 6.4% |
| Cherkizovo Group OJSC ($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 ($KYGA) | 4.1% | 3.7% | 4.7% | 4.5% | |
| |
|---|
| Median (11 companies) | 5.0% | 5.0% | 4.7% | 4.1% | 3.6% |
|---|
| Unilever ($ULVR) | 3.5% | 3.4% | 2.8% | 2.6% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| 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% | |
| Wynnstay Group ($WYN) | 9.7% | 8.0% | 8.3% | 9.9% | 7.3% |
| |
|---|
| Median (13 companies) | 8.9% | 7.9% | 7.3% | 8.4% | 7.3% |
|---|
| Unilever ($ULVR) | 26.0% | 24.3% | 24.6% | 31.6% | 20.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Cherkizovo Group OJSC ($CHE) | 3.1x | 3.8x | 3.2x | 2.7x | |
| Tongaat Hulett Ltd ($THL) | 1.8x | 2.1x | 1.5x | 2.3x | 5.6x |
| Zambeef Products ($ZAM) | 3.0x | 2.1x | 4.0x | 2.0x | 2.7x |
| Kerry Group ($KYGA) | 2.2x | 1.9x | 1.8x | 2.0x | |
| Tate & Lyle ($BD15) | 4.0x | 1.8x | 1.1x | 0.9x | |
| |
|---|
| Median (8 companies) | 1.8x | 1.8x | 1.8x | 1.4x | 2.7x |
|---|
| Unilever ($ULVR) | 1.4x | 1.4x | 2.0x | 1.5x | 2.3x |
