Astrazeneca reports 38.1% Net Income decline in 2019 while 10.4% Revenue growth
14 Feb 2020 • About Astrazeneca (
$AZN) • By InTwits
Astrazeneca reported FY2019 financial results today. Here are the key drivers of the company's long term financial model:
- Astrazeneca has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.3%. At the same time it's a lot of higher than industry average of 2.3%.
- CAPEX is quite volatile: £0m in FY2019, £0m in FY2018, £0m in FY2017, £0m in FY2016, £0m in FY2015
- The company has business model with low profitability: ROIC is 8.4%
- It operates with high leverage: Net Debt/EBITDA is 1.9x while industry average is 1.3x
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 jumped on 10.4%. Revenue decline was slowing down on average by 4.0 pp per annum in FY2015-FY2019. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 16.0 pp from 70.2% to 54.2% in FY2019.
Gross Margin increased on 2.2 pp from 77.7% to 79.8% in FY2019. SG&A as a % of Revenue increased on 2.4 pp from 46.9% to 49.3% in FY2019.
Net Income margin decreased on 4.3 pp from 9.8% to 5.5% in FY2019. During FY2015-FY2019 Net Income margin topped in FY2016 at 15.2% and was declining since that time.
Investments (CAPEX, working capital and M&A)
Astrazeneca's CAPEX/Revenue was 4.0% in FY2019. Astrazeneca's CAPEX/Revenue decreased on 2.3 pp from 6.3% in FY2016 to 4.0% in FY2019. It's average level of CAPEX/Revenue for the last three years was 4.9%. During the last 5 years CAPEX as a % of Revenue topped in FY2016 at 6.3% and was declining since that time.
Return on investment
The company operates at low ROIC (8.4%) and ROE (10.4%). ROIC decreased slightly on 1.1 pp from 9.5% to 8.4% in FY2019. ROE decreased on 5.3 pp from 15.7% to 10.4% in FY2019. During FY2015-FY2019 ROIC topped in FY2016 at 13.7% and was declining since that time. During FY2015-FY2019 ROE topped in FY2016 at 21.0% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.9x and Debt / EBITDA is 2.7x. Net Debt / EBITDA decreased on 0.050x from 2.0x to 1.9x in FY2019. Debt decreased on 4.6% while cash jumped on 11.1%. During the last 5 years Net Debt/EBITDA topped in FY2017 at 2.2x and was declining since that time.
Astrazeneca has no short term refinancing risk: cash is higher than short term debt (267.1%).
Valuation and dividends
The company's trades at EV/EBITDA 16.2x and P/E 71.7x.
Management team
Pascal Soriot is a the company's CEO. Pascal Soriot is a founder and has spent 7 years with the company. Astrazeneca's CFO Marc Dunoyer has spent 6 years with the company.
Financial and operational results
FY ended 30 Nov -0001
Astrazeneca ($AZN) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 24,708 | 23,002 | 22,465 | 22,090 | 24,384 | 10.4% |
| Gross Profit | 20,062 | 18,876 | 18,147 | 17,154 | 19,463 | 13.5% |
| SG&A | 11,451 | 9,739 | 10,543 | 10,362 | 12,021 | 16.0% |
| EBITDA | 6,988 | 7,475 | 6,719 | 7,240 | 6,686 | -7.7% |
| Net Income | 2,825 | 3,499 | 3,001 | 2,155 | 1,335 | -38.1% |
Balance Sheet
|
|---|
| Cash | 6,240 | 5,018 | 3,324 | 4,831 | 5,369 | 11.1% |
| Short Term Debt | 916 | 2,307 | 2,247 | 1,754 | 2,010 | 14.6% |
| Long Term Debt | 14,137 | 14,501 | 15,560 | 17,359 | 16,217 | -6.6% |
Cash flow
|
|---|
| Capex | 1,328 | 1,446 | 1,326 | 1,043 | 979 | -6.1% |
Ratios
|
|---|
| Revenue growth | -6.9% | -6.9% | -2.3% | -1.7% | 10.4% | |
| EBITDA growth | 26.7% | 7.0% | -10.1% | 7.8% | -7.7% | |
|
|---|
| Gross Margin | 81.2% | 82.1% | 80.8% | 77.7% | 79.8% | 2.2% |
| EBITDA Margin | 28.3% | 32.5% | 29.9% | 32.8% | 27.4% | -5.4% |
| SG&A, % of revenue | 46.3% | 42.3% | 46.9% | 46.9% | 49.3% | 2.4% |
| Net Income Margin | 11.4% | 15.2% | 13.4% | 9.8% | 5.5% | -4.3% |
| CAPEX, % of revenue | 5.4% | 6.3% | 5.9% | 4.7% | 4.0% | -0.7% |
|
|---|
| ROIC | 11.8% | 13.7% | 9.7% | 9.5% | 8.4% | -1.1% |
| ROE | 14.8% | 21.0% | 20.1% | 15.7% | 10.4% | -5.3% |
| Net Debt/EBITDA | 1.3x | 1.6x | 2.2x | 2.0x | 1.9x | -0.0x |
Peers in Pharmaceuticals & Biotechnology
Below you can find Astrazeneca benchmarking vs. other companies in Pharmaceuticals & Biotechnology 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 |
|---|
| Evocutis ($EVO) | | 51.2% | 54.5% | 37.6% | 49.0% |
| Ixico ($IXI) | | 4.9% | 25.8% | 31.2% | 40.2% |
| GlaxoSmithKline ($GSK) | | 16.6% | 8.2% | 2.1% | 9.5% |
| Pfizer Inc ($PFZ) | | 8.1% | -0.5% | 2.1% | -3.5% |
| Benchmark Hldgs ($BMK) | | 147.5% | 28.2% | 8.1% | -15.9% |
| |
|---|
| Median (6 companies) | 5.1% | 8.1% | 10.4% | 8.1% | 3.0% |
|---|
| Astrazeneca ($AZN) | | -6.9% | -2.3% | -1.7% | 10.4% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Indivior ($INDV) | 90.4% | 89.9% | 90.5% | 87.3% | |
| Pfizer Inc ($PFZ) | 80.3% | 76.7% | 78.6% | 79.0% | 80.3% |
| GlaxoSmithKline ($GSK) | 63.0% | 66.7% | 65.7% | 66.8% | 64.9% |
| Ixico ($IXI) | | 48.6% | 56.5% | 58.8% | 65.4% |
| Benchmark Hldgs ($BMK) | 36.4% | 46.5% | 44.5% | 48.9% | |
| |
|---|
| Median (5 companies) | 44.9% | 47.7% | 49.1% | 66.8% | 65.4% |
|---|
| Astrazeneca ($AZN) | 81.2% | 82.1% | 80.8% | 77.7% | 79.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Evocutis ($EVO) | 35.4% | 38.6% | 45.2% | 43.9% | 50.0% |
| Pfizer Inc ($PFZ) | 34.8% | 33.6% | 37.9% | 38.0% | |
| Indivior ($INDV) | 37.3% | 15.4% | 18.8% | 33.0% | |
| GlaxoSmithKline ($GSK) | 50.2% | 15.9% | 20.6% | 24.1% | 29.5% |
| Benchmark Hldgs ($BMK) | -9.4% | -5.1% | 11.1% | 10.7% | |
| |
|---|
| Median (7 companies) | 21.9% | 15.4% | 16.6% | 24.1% | 29.5% |
|---|
| Astrazeneca ($AZN) | 28.3% | 32.5% | 29.9% | 32.8% | 27.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Benchmark Hldgs ($BMK) | 31.8% | 17.1% | 23.4% | 16.6% | |
| Evocutis ($EVO) | 6.3% | 18.2% | 5.8% | 7.3% | 5.2% |
| GlaxoSmithKline ($GSK) | 5.8% | 5.5% | 5.1% | 4.4% | 3.7% |
| Pfizer Inc ($PFZ) | 2.9% | 3.5% | 3.7% | 3.8% | |
| Ixico ($IXI) | | 0.7% | 1.2% | 1.4% | 2.9% |
| |
|---|
| Median (7 companies) | 5.3% | 4.6% | 4.4% | 3.8% | 3.7% |
|---|
| Astrazeneca ($AZN) | 5.4% | 6.3% | 5.9% | 4.7% | 4.0% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Evocutis ($EVO) | 62.4% | 59.8% | 70.1% | 53.2% | 52.0% |
| GlaxoSmithKline ($GSK) | 42.9% | 10.9% | 20.2% | 23.3% | 18.0% |
| Ixico ($IXI) | | -63.3% | -50.5% | -14.9% | 5.0% |
| C4X Discovery Hldg ($C4XD) | | -110.6% | -127.1% | -29.4% | -179.6% |
| Indivior ($INDV) | 172.1% | 85.9% | 107.2% | 110.6% | |
| |
|---|
| Median (7 companies) | 14.2% | 9.2% | 10.9% | 12.3% | 11.5% |
|---|
| Astrazeneca ($AZN) | 11.8% | 13.7% | 9.7% | 9.5% | 8.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Benchmark Hldgs ($BMK) | | | 1.5x | 3.4x | |
| GlaxoSmithKline ($GSK) | 0.9x | 3.1x | 2.1x | 3.0x | 2.6x |
| Pfizer Inc ($PFZ) | 2.1x | 2.2x | 2.1x | 2.0x | |
| Evocutis ($EVO) | -0.7x | -0.4x | -0.5x | -0.7x | -0.9x |
| Indivior ($INDV) | 0.4x | -1.0x | -1.8x | -2.1x | |
| |
|---|
| Median (5 companies) | 0.7x | 0.3x | 1.5x | 2.0x | -0.9x |
|---|
| Astrazeneca ($AZN) | 1.3x | 1.6x | 2.2x | 2.0x | 1.9x |
