First Quantum Minerals Net Income dropped on 113% and EBITDA Margin decreased on 8.2 pp from 42.2% to 34.0%
13 Feb 2020 • About First Quantum Minerals (
$FQM) • By InTwits
First Quantum Minerals reported 2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- First Quantum Minerals has high CAPEX intensity: 5 year average CAPEX/Revenue was 60.0%. At the same time it's a lot of higher than industry average of 15.7%.
- CAPEX is quite volatile: $1,157m in 2019, $653m in 2018, $560m in 2017, $494m in 2016, $412m in 2015
- The company has potentially unprofitable business model: ROIC is 2.4%
- It operates with high leverage: Net Debt/EBITDA is 5.6x while industry average is 1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
First Quantum Minerals's Revenue increased on 2.5%. During 2015-2019 Revenue growth topped in 2017 at 23.8% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.0 pp from 36.9% to 40.0% in 2019.
Gross Margin decreased on 5.2 pp from 24.7% to 19.4% in 2019. SG&A as a % of Revenue showed almost no change in 2019. SG&A as a % of Revenue stuck to a declining trend at -0.33 pp per annum in 2015-2019.
Net Income margin dropped on 12.5 pp from 11.1% to -1.4% in 2019.
Investments (CAPEX, working capital and M&A)
In 2019 First Quantum Minerals had CAPEX/Revenue of 45.3%. CAPEX/Revenue dropped on 10.7 pp from 56.0% in 2016 to 45.3% in 2019. It's average level of CAPEX/Revenue for the last three years was 57.1%. The company maintained rich investment policy and has spent a lot to CAPEX (133% of EBITDA).
Return on investment
The company operates at low but positive ROIC (2.4%) and negative ROE (-0.6%). ROIC decreased slightly on 1.9 pp from 4.3% to 2.4% in 2019. ROE decreased on 5.4 pp from 4.8% to -0.60% in 2019.
Leverage (Debt)
Company's Net Debt / EBITDA is 5.6x and Debt / EBITDA is 6.4x. Net Debt / EBITDA jumped on 1.7x from 3.9x to 5.6x in 2019. Debt surged on 13.7% while cash decreased on 9.3%.
First Quantum Minerals has short term refinancing risk: cash is only 78.3% of short term debt.
Management team
Philip Kelvin Rodda Pascall is a First Quantum Minerals's CEO. Philip Kelvin Rodda Pascall is a founder and has spent 23 years with the company. The company's CFO is Hannes Otto Meyer. Hannes Otto Meyer has 7 years tenure at the company.
Financial and operational results
FY ended 31 Dec 2019
First Quantum Minerals ($FQM) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 2,511 | 2,673 | 3,310 | 3,966 | 4,067 | 2.5% |
| Gross Profit | 287 | 339 | 335 | 978 | 790 | -19.2% |
| SG&A | 83 | 70 | 74 | 74 | 82 | 10.8% |
| EBITDA | 447 | 966 | 1,077 | 1,673 | 1,381 | -17.5% |
| EBIT | | | | 809 | | |
| Interest expence | | | | 677 | | |
| Tax | | | | 283 | | |
| Net Income | -496 | -45 | -316 | 441 | -57 | -112.9% |
| Stock Based Compensation | | | | 16 | | |
Balance Sheet
|
|---|
| Cash | 1,178 | 1,463 | 1,296 | 1,255 | 1,138 | -9.3% |
| Inventory | | | | 1,196 | | |
| Short Term Debt | 1,199 | 1,283 | 910 | 641 | 1,453 | 126.7% |
| Long Term Debt | 4,675 | 4,561 | 5,961 | 7,111 | 7,360 | 3.5% |
Cash flow
|
|---|
| Capex | 1,820 | 1,497 | 2,017 | 2,584 | 1,843 | -28.7% |
| Dividends | | | | 5 | | |
| Acquisitions | | | | 185 | | |
Ratios
|
|---|
| Revenue growth | -29.1% | 6.5% | 23.8% | 19.8% | 2.5% | |
| EBITDA growth | -68.4% | 116.1% | 11.5% | 55.3% | -17.5% | |
|
|---|
| Gross Margin | 11.4% | 12.7% | 10.1% | 24.7% | 19.4% | -5.2% |
| EBITDA Margin | 17.8% | 36.1% | 32.5% | 42.2% | 34.0% | -8.2% |
| EBIT Margin | | | | 20.4% | |
| SG&A, % of revenue | 3.3% | 2.6% | 2.2% | 1.9% | 2.0% | 0.2% |
| SBC, % of revenue | | | | 0.4% | |
| Net Income Margin | -19.8% | -1.7% | -9.5% | 11.1% | -1.4% | -12.5% |
| CAPEX, % of revenue | 72.5% | 56.0% | 60.9% | 65.2% | 45.3% | -19.8% |
|
|---|
| ROIC | -0.4% | 1.6% | 1.1% | 4.3% | 2.4% | -1.9% |
| ROE | -5.3% | -0.5% | -3.5% | 4.8% | -0.6% | -5.4% |
| Net Debt/EBITDA | 10.5x | 4.5x | 5.2x | 3.9x | 5.6x | 1.7x |
| Interest coverage ratio (ICR) | | | | 1.2x | |
| Interest expence / Average debt | | | | 9.3% | | |
People
|
|---|
| Insider ownership | | | | 1.4% | | |
Peers in Industrial Metals & Mining
Below you can find First Quantum Minerals benchmarking vs. other companies in Industrial Metals & Mining 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 |
|---|
| Norsk Hydro Asa ($NHY) | | -6.5% | 33.3% | 45.9% | -6.0% |
| Base Resources Ltd ($BSE) | 444.2% | 16.2% | -3.9% | 22.4% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | | -4.6% | 31.8% | 19.7% | -12.4% |
| Severstal PJSC ($SVST) | | -7.5% | 32.7% | 9.3% | -4.9% |
| Posco ($PIDD) | | -8.8% | 14.3% | 7.1% | -0.9% |
| |
|---|
| Median (7 companies) | -11.6% | -4.6% | 31.6% | 9.3% | -4.9% |
|---|
| First Quantum Minerals ($FQM) | | 6.5% | 23.8% | 19.8% | 2.5% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Severstal PJSC ($SVST) | 40.4% | 39.6% | 39.7% | 42.7% | 39.8% |
| Base Resources Ltd ($BSE) | 21.2% | 21.0% | 35.9% | 39.7% | |
| Novolipetsk Iron And Steel Corp ($NLMK) | 31.4% | 33.6% | 32.5% | 36.2% | 30.8% |
| Posco ($PIDD) | 11.2% | 12.6% | 13.8% | 12.3% | 9.7% |
| Aluminium Bahrain Bsc ($ALBH) | 13.5% | 12.3% | 15.7% | 9.3% | 8.8% |
| |
|---|
| Median (6 companies) | 20.5% | 21.0% | 27.9% | 24.3% | 20.3% |
|---|
| First Quantum Minerals ($FQM) | 11.4% | 12.7% | 10.1% | 24.7% | 19.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Base Resources Ltd ($BSE) | 37.7% | 35.8% | 50.9% | 54.9% | |
| Severstal PJSC ($SVST) | 32.4% | 31.2% | 32.6% | 36.1% | 34.0% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 24.3% | 25.4% | 26.4% | 29.8% | 24.3% |
| Posco ($PIDD) | 9.7% | 11.4% | 13.1% | 13.6% | |
| Aluminium Bahrain Bsc ($ALBH) | 17.3% | 18.4% | 18.4% | 11.2% | 10.1% |
| |
|---|
| Median (7 companies) | 14.6% | 16.8% | 18.4% | 13.6% | 17.2% |
|---|
| First Quantum Minerals ($FQM) | 17.8% | 36.1% | 32.5% | 42.2% | 34.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aluminium Bahrain Bsc ($ALBH) | 6.3% | 16.1% | 54.2% | 57.7% | 29.1% |
| Base Resources Ltd ($BSE) | 6.3% | 2.9% | 4.5% | 55.8% | |
| Severstal PJSC ($SVST) | 6.4% | 8.4% | 7.1% | 7.6% | 14.2% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 7.7% | 7.3% | 5.9% | 5.6% | 10.2% |
| Norsk Hydro Asa ($NHY) | 6.0% | 8.4% | 6.7% | 4.5% | 5.8% |
| |
|---|
| Median (7 companies) | 6.3% | 5.9% | 5.9% | 5.6% | 12.2% |
|---|
| First Quantum Minerals ($FQM) | 72.5% | 56.0% | 60.9% | 65.2% | 45.3% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Severstal PJSC ($SVST) | 30.3% | 29.7% | 38.8% | 49.5% | 39.4% |
| Novolipetsk Iron And Steel Corp ($NLMK) | 15.7% | 17.5% | 22.3% | 34.5% | 23.4% |
| Base Resources Ltd ($BSE) | 2.9% | 2.7% | 13.2% | 17.1% | |
| Posco ($PIDD) | 3.3% | 4.0% | 6.6% | 8.0% | |
| Norsk Hydro Asa ($NHY) | 8.7% | 6.6% | 11.8% | 7.6% | 0.4% |
| |
|---|
| Median (11 companies) | 6.8% | 5.5% | 10.1% | 7.8% | 1.2% |
|---|
| First Quantum Minerals ($FQM) | -0.4% | 1.6% | 1.1% | 4.3% | 2.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aluminium Bahrain Bsc ($ALBH) | -0.2x | -0.1x | 2.5x | 7.4x | 8.9x |
| Posco ($PIDD) | 3.6x | 3.4x | 2.3x | 2.0x | |
| Norsk Hydro Asa ($NHY) | 0.0x | -0.1x | 0.3x | 0.6x | 1.3x |
| Base Resources Ltd ($BSE) | 4.4x | 3.7x | 1.4x | 0.5x | |
| Severstal PJSC ($SVST) | 0.4x | 0.5x | 0.4x | 0.4x | 0.6x |
| |
|---|
| Median (7 companies) | 1.0x | 0.6x | 0.7x | 0.5x | 1.0x |
|---|
| First Quantum Minerals ($FQM) | 10.5x | 4.5x | 5.2x | 3.9x | 5.6x |
