OCI N.V.'s (AMS:OCI) Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at OCI N.V.'s (AMS:OCI) future prospects. OCI N.V. produces and distributes natural gas-based products and industrial chemicals to agricultural and industrial customers. With the latest financial year loss of US$335m and a trailing-twelve-month loss of US$357m, the €2.4b market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which OCI will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for OCI

According to the 8 industry analysts covering OCI, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$100m in 2021. So, the company is predicted to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 92%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving OCI's growth isn’t the focus of this broad overview, however, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. OCI currently has a debt-to-equity ratio of 164%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on OCI, so if you are interested in understanding the company at a deeper level, take a look at OCI's company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

1. Valuation: What is OCI worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether OCI is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on OCI’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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