Section 1
Background of C company (the seleced company)
About C Company
C company is an US chemical specialty products manufacturer, listing in NYSE. End-uses of its products are across a wider range of industries, including Automotive, Electronics, Medical device, Home appliance, and so on. The company’s income statements of 2012 through 2014 are as follows:
Overall, both of its sales revenue and gross margin were growing steadily in the period. While emerging market regions such as China are playing the role of growth engine, challenges from rising local competitors are increasing significantly.
Table 1 Income Statements 2012-2014 of C Company
All figures in USD. M: Millions of USD, B: Billions of USD.
Fiscal year is Jan - Dec. | 2014 | 2013 | 2012 |
Net Sales or Revenues | 6.8B | 6.51B | 6.42B |
Cost Of Goods Sold (COGS) | 5.19B | 5.15B | 5.23B |
Gross Profit | 1.62B | 1.37B | 1.19B |
Research & Development Expense | 86M | 85M | 102M |
Selling General & Admin Expense | 752M | -260M | 528M |
Income Before Depreciation Depletion Amortization | 778M | 1.54B | 562M |
Depreciation Depletion Amortization | 20M | 32M | 51M |
Non Operating Income | 330M | 273M | 331M |
Interest Expense | 147M | 172M | 185M |
Pretax Income | 941M | 1.61B | 657M |
Provision for Income Taxes | 314M | 508M | 48M |
Minority Interest | -4M | - | - |
Income Before Extraordinaries & Disc Operations | 627M | 1.1B | 609M |
Extraordinary Items & Discontinued Operations | -7M | - | -4M |
Net Income (Profit/Loss) | 624M | 1.1B | 605M |
Dividend Per Share Common | 0.93 | 0.53 | 0.27 |
Competitive Environment
Arena: Material
Industry: Plastic
Market: Thermoplastic for injection molding, compression molding, and extrusion.
Trend in demand and supply sides
On one hand, there’s an increasing trend of plastic overtaking metal in industries including Automotive, Electronics, Medical device and Home appliance, etc., due to the demand for weight reduction and benefits such as corrosion-resistance. On the other hand, competition is increasing as well: Local competitors are growing fast in terms of capacity and quality.
Section 2
Portfolio analysis of C company
The company’s sales revenue comes from 4 major market segments: Automotive, Electronics, Medical device and Home appliance. Finance performance of the four business units is as follows:
Table 2 Finance performance of 4 major BU
All figures in USD. M: Millions of USD, B: Billions of USD.
2012 | 2013 | 2014 | ||
Automotive | Revenue | 3.54 | 3.20 | 2.96 |
% of Total Revenue | 52% | 47% | 43.50% | |
Gross Margin | 0.49 | 0.45 | 0.42 | |
% of Total Gross Margin | 30% | 28% | 26.10% | |
Electronics | Revenue | 1.43 | 1.41 | 1.16 |
% of Total Revenue | 21% | 21% | 17% | |
Gross Margin | 0.41 | 0.39 | 0.26 | |
% of Total Gross Margin | 25% | 24% | 16% | |
Medical | Revenue | 0.48 | 0.75 | 0.88 |
% of Total Revenue | 7% | 11% | 13% | |
Gross Margin | 0.37 | 0.55 | 0.73 | |
% of Total Gross Margin | 23% | 34% | 45% | |
Home Appliance | Revenue | 1.36 | 1.44 | 1.80 |
% of Total Revenue | 20% | 21% | 27% | |
Gross Margin | 0.35 | 0.23 | 0.20 | |
% of Total Gross Margin | 22% | 14% | 13% |