Lonrho (LSE:LONR) Operating Income : £-7.6 Mil (TTM As of Dec. 2012)

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What is Lonrho Operating Income?

Lonrho's Operating Income for the six months ended in Dec. 2012 was £-7.6 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Dec. 2012 was £-7.6 Mil.

Warning Sign:

Lonrho PLC had operating loss over the past 3 years.

Operating Margin % is calculated as Operating Income divided by its Revenue. Lonrho's Operating Income for the six months ended in Dec. 2012 was £-7.6 Mil. Lonrho's Revenue for the six months ended in Dec. 2012 was £83.6 Mil. Therefore, Lonrho's Operating Margin % for the quarter that ended in Dec. 2012 was -9.09%.

Good Sign:

Lonrho PLC operating margin is expanding. Margin expansion is usually a good sign.

Lonrho's 5-Year average Growth Rate for Operating Margin % was 53.50% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Lonrho's annualized ROC % for the quarter that ended in Dec. 2012 was -5.01%. Lonrho's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2012 was -26.04%.

Lonrho Operating Income Historical Data

The historical data trend for Lonrho's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Lonrho Operating Income Chart

Lonrho Annual Data

Trend

Sep03

Sep04

Sep05

Sep06

Sep07

Sep08

Sep09

Sep10

Sep11

Dec12

Operating Income

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-18.50

-17.50

-4.70

-3.30

-7.60

Lonrho Semi-Annual Data
	Mar02	Sep02	Mar03	Sep03	Mar05	Sep05	Mar06	Sep06	Mar07	Sep07	Mar08	Sep08	Mar09	Sep09	Mar10	Sep10	Mar11	Sep11	Jun12	Dec12
Operating Income	Get a 7-Day Free Trial															1.10	-0.20	-3.10	-	-7.60

Lonrho Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Dec. 2012 adds up the semi-annually data reported by the company within the most recent 12 months, which was £-7.6 Mil.

Lonrho (LSE:LONR) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Lonrho's annualized ROC % for the quarter that ended in Dec. 2012 is calculated as:

	ROC % (Q: Dec. 2012 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2012 )	+	Invested Capital (Q: Dec. 2012 ))	/ count )
=	-15.2 * ( 1 - 1.66% )	/	( (304.5	+	292.3)	/ 2 )
=	-14.94768	/	298.4
=	-5.01 %

where

	Invested Capital		(Q: Jun. 2012 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	352.5	-	35.5	-	( 12.5	-	max(0, 51.7	-	80.7	+	12.5	))
=	304.5

	Invested Capital		(Q: Dec. 2012 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	328.5	-	19.5	-	( 17	-	max(0, 67.6	-	84.3	+	17	))
=	292.3

Note: The Operating Income data used here is two times the semi-annual (Dec. 2012) data.

2. Joel Greenblatt's definition of Return on Capital:

Lonrho's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2012 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Dec. 2012 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Jun. 2012		Q: Dec. 2012
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	-47.6	/	( ( (173.2 + max(32.7, 0))	+	(130 + max(29.7, 0)) )	/	2 )
=	-47.6	/	( ( 205.9	+	159.7 )	/	2 )
=	-47.6	/	182.8
=	-26.04 %

where Working Capital is:

	Working Capital		(Q: Jun. 2012 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(46.7	+	21.5	+	0)	-	(35.5	+	0	+	0)
=	32.7

	Working Capital		(Q: Dec. 2012 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(27.3	+	23.1	+	16.9)	-	(19.5	+	0	+	18.1)
=	29.7

When net working capital is negative, 0 is used.

Note: The EBIT data used here is two times the semi-annual (Dec. 2012) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Lonrho's Operating Margin % for the quarter that ended in Dec. 2012 is calculated as:

Operating Margin %	=	Operating Income (Q: Dec. 2012 )	/	Revenue (Q: Dec. 2012 )
	=	-7.6	/	83.6
	=	-9.09 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Lonrho Operating Income Related Terms

Thank you for viewing the detailed overview of Lonrho's Operating Income provided by GuruFocus.com. Please click on the following links to see related term pages.

Lonrho (LSE:LONR) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Conglomerates » Lonrho PLC (LSE:LONR) » Definitions » Operating Income

Traded in Other Exchanges

N/A

Address

Level 2, 25 Berkeley Square, London, GBR, W1J 6HB

Website

http://www.lonrho.com

Lonrho PLC is engaged in providing the infrastructure and services required for the growing oil, mineral and agricultural sectors in Africa. The Company has a diverse portfolio of investments across Sub-Saharan Africa in four core operating sectors: Agribusiness, Infrastructure, Hotels and Support Services. Agribusiness vertically integrates the production, sourcing, logistics, processing and distribution of agricultural products from Sub-Saharan Africa to the consumer. The division supplies to its retailers in Sub-Saharan Africa, Europe, the USA, Middle East, Scandinavia and the Far East. The division also distributes agricultural and heavy machinery. Infrastructure division develops and manages oil logistics terminals. Luba Freeport, the oil service terminal in the Gulf of Guinea, has attracted oil service companies to be long term tenants at the port to service oï¬€shore exploration and production rigs. The Company's Hotel division includes hotels centred on the commercial, conference and business related markets across the Continent. It owns or manages hotels in Lubumbashi and Kinshasa in the Democratic Republic of the Congo, Maputo in Mozambique, Gaborone in Botswana and Mutare in Zimbabwe. IT business is a full systems integrator and manager that designs, builds, develops and integrates IT solutions for large corporate clients, banks and governments and then undertakes management contracts to run and manage installations. The IT division is a distributor for Cisco, Microsoft, Dell and Hewlett Packard systems and equipment.

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