Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
NXP Semiconductors N.V., profitability ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
The profitability profile between 2017 and 2021 is characterized by high resilience in gross margins contrasted with significant volatility in operational and net profitability. A severe contraction in bottom-line performance occurred during 2019 and 2020, followed by a robust recovery in 2021.
- Gross Profitability
- Gross profit margins remained relatively stable and strong throughout the period, fluctuating within a range of 49.18% to 54.84%. The margin reached its peak in 2021 at 54.84%, suggesting that the company maintained strong pricing power and efficient direct cost management despite wider operational challenges.
- Operating and Net Profit Margins
- A sharp divergence is observed between gross and operating margins starting in 2019. The operating profit margin declined from a high of 28.81% in 2018 to 4.85% in 2020. Similarly, the net profit margin collapsed from 23.47% in 2018 to a low of 0.60% in 2020. This indicates a substantial increase in operating expenses or non-operating losses during these two years. However, a strong recovery was realized in 2021, with the operating margin rebounding to 23.35% and the net margin returning to 16.91%.
- Return on Equity (ROE) and Return on Assets (ROA)
- Returns on capital mirror the trend seen in net profit margins. ROE experienced a dramatic decline from 21.02% in 2018 to 0.58% in 2020, before surging to a period high of 28.66% in 2021. ROA followed a nearly identical trajectory, falling from 10.26% in 2018 to 0.26% in 2020, and recovering to 8.97% by the end of 2021. The correlation between these metrics and the net profit margin suggests that the volatility was driven primarily by earnings fluctuations rather than significant changes in the capital structure or asset base.
Overall, the data indicates a period of acute financial pressure in 2019 and 2020 that did not impact gross profitability but severely eroded net income and returns on investment. The 2021 results demonstrate a successful return to historical profitability levels, with ROE exceeding pre-crisis peaks.
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Gross Profit Margin
NXP Semiconductors N.V., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 6,067) | 4,235) | 4,618) | 4,851) | 4,619) | |
| Revenue | 11,063) | 8,612) | 8,877) | 9,407) | 9,256) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 54.84% | 49.18% | 52.02% | 51.57% | 49.90% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 48.25% | — | — | — | — | |
| Analog Devices Inc. | 61.83% | 65.87% | — | — | — | |
| Applied Materials Inc. | 47.32% | 44.72% | — | — | — | |
| Broadcom Inc. | 61.36% | 56.58% | — | — | — | |
| Intel Corp. | 55.45% | — | — | — | — | |
| KLA Corp. | 59.93% | — | — | — | — | |
| Lam Research Corp. | 46.53% | — | — | — | — | |
| Marvell Technology Inc. | 50.13% | — | — | — | — | |
| Micron Technology Inc. | 37.62% | — | — | — | — | |
| NVIDIA Corp. | 62.34% | — | — | — | — | |
| Qualcomm Inc. | 57.51% | 60.67% | — | — | — | |
| Texas Instruments Inc. | 67.47% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
1 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × 6,067 ÷ 11,063 = 54.84%
2 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by a period of relative stability followed by a significant expansion in both scale and profitability in the final year. While revenue and gross profit experienced a contraction between 2019 and 2020, the period concluded with a substantial increase in efficiency and output.
- Revenue and Gross Profit Trends
- Revenue remained relatively stable between 2017 and 2018, followed by a gradual decline through 2020, where it reached a five-year low of US$ 8,612 million. However, 2021 marked a pivot point with revenue surging to US$ 11,063 million. Gross profit mirrored this trajectory, decreasing to US$ 4,235 million in 2020 before rising sharply to US$ 6,067 million in 2021.
- Gross Profit Margin Analysis
- The gross profit margin exhibited fluctuating behavior, starting at 49.90% in 2017 and peaking at 54.84% in 2021. An initial upward trend was observed through 2019, with the margin reaching 52.02%. This suggests a period of successful cost optimization or a shift toward higher-value product offerings.
- Volatility and Recovery
- A notable contraction occurred in 2020, where the gross profit margin fell to 49.18%. This decline coincided with the lowest reported revenue and gross profit levels of the period, indicating increased pressure on cost structures or reduced pricing power. The subsequent recovery in 2021 was aggressive, with the margin expanding by 566 basis points to reach its highest level of 54.84%, demonstrating a strong rebound in operational profitability.
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Operating Profit Margin
NXP Semiconductors N.V., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 2,583) | 418) | 641) | 2,710) | 2,102) | |
| Revenue | 11,063) | 8,612) | 8,877) | 9,407) | 9,256) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 23.35% | 4.85% | 7.22% | 28.81% | 22.71% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 22.20% | — | — | — | — | |
| Analog Devices Inc. | 23.12% | 26.74% | — | — | — | |
| Applied Materials Inc. | 29.87% | 25.37% | — | — | — | |
| Broadcom Inc. | 31.03% | 16.80% | — | — | — | |
| Intel Corp. | 24.62% | — | — | — | — | |
| KLA Corp. | 35.97% | — | — | — | — | |
| Lam Research Corp. | 30.64% | — | — | — | — | |
| Marvell Technology Inc. | -8.70% | — | — | — | — | |
| Micron Technology Inc. | 22.68% | — | — | — | — | |
| NVIDIA Corp. | 27.18% | — | — | — | — | |
| Qualcomm Inc. | 29.16% | 26.58% | — | — | — | |
| Texas Instruments Inc. | 48.84% | — | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 27.90% | — | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Information Technology | 26.58% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
1 2021 Calculation
Operating profit margin = 100 × Operating income ÷ Revenue
= 100 × 2,583 ÷ 11,063 = 23.35%
2 Click competitor name to see calculations.
The operating profit margin exhibited significant volatility between 2017 and 2021, characterized by a period of expansion, a severe contraction, and a subsequent strong recovery.
- Profitability Expansion (2017–2018)
- A positive trend in operational efficiency was observed during the initial two-year period. While revenue increased modestly from 9,256 million US$ to 9,407 million US$, operating income grew more aggressively from 2,102 million US$ to 2,710 million US$. This led to an increase in the operating profit margin from 22.71% to a peak of 28.81%.
- Operational Contraction (2019–2020)
- A sharp decline in profitability occurred starting in 2019. Despite revenue remaining relatively stable, with a slight decrease to 8,612 million US$ by 2020, operating income fell precipitously to 641 million US$ in 2019 and 418 million US$ in 2020. This resulted in the operating profit margin collapsing from 28.81% to 7.22% in 2019, and reaching a five-year low of 4.85% in 2020.
- Performance Recovery (2021)
- A robust rebound was recorded in 2021, with revenue rising to a period high of 11,063 million US$. Operating income saw a corresponding surge to 2,583 million US$, which effectively restored the operating profit margin to 23.35%. This recovery brought profitability levels back to a range consistent with the performance observed in 2017.
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Net Profit Margin
NXP Semiconductors N.V., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to stockholders | 1,871) | 52) | 243) | 2,208) | 2,215) | |
| Revenue | 11,063) | 8,612) | 8,877) | 9,407) | 9,256) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 16.91% | 0.60% | 2.74% | 23.47% | 23.93% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 19.24% | — | — | — | — | |
| Analog Devices Inc. | 19.00% | 21.79% | — | — | — | |
| Applied Materials Inc. | 25.53% | 21.04% | — | — | — | |
| Broadcom Inc. | 24.54% | 12.39% | — | — | — | |
| Intel Corp. | 25.14% | — | — | — | — | |
| KLA Corp. | 30.04% | — | — | — | — | |
| Lam Research Corp. | 26.72% | — | — | — | — | |
| Marvell Technology Inc. | -9.34% | — | — | — | — | |
| Micron Technology Inc. | 21.16% | — | — | — | — | |
| NVIDIA Corp. | 25.98% | — | — | — | — | |
| Qualcomm Inc. | 26.94% | 22.09% | — | — | — | |
| Texas Instruments Inc. | 42.35% | — | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 25.45% | — | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Information Technology | 23.48% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
1 2021 Calculation
Net profit margin = 100 × Net income attributable to stockholders ÷ Revenue
= 100 × 1,871 ÷ 11,063 = 16.91%
2 Click competitor name to see calculations.
The net profit margin exhibited significant volatility between 2017 and 2021, characterized by an initial period of stability, a severe contraction, and a subsequent partial recovery. While revenue remained relatively consistent through 2020, net income experienced a drastic decline during the middle of the period, indicating a period of substantial financial pressure or one-time non-operational charges.
- Initial Stability (2017–2018)
- During this period, the company maintained strong profitability. The net profit margin remained stable, moving from 23.93% in 2017 to 23.47% in 2018, supported by consistent net income levels of approximately 2.2 billion US dollars.
- Profitability Contraction (2019–2020)
- A sharp downward trend is observed starting in 2019. Despite revenue only decreasing slightly to 8,877 million US dollars in 2019 and 8,612 million US dollars in 2020, net income plummeted to 243 million and 52 million US dollars, respectively. This resulted in a collapse of the net profit margin to 2.74% in 2019 and a low of 0.60% in 2020, reflecting a near-total erosion of profitability.
- Recovery and Growth (2021)
- A strong recovery occurred in 2021, with revenue reaching a peak of 11,063 million US dollars. This growth in top-line performance coincided with a significant rebound in net income to 1,871 million US dollars, restoring the net profit margin to 16.91%. Although this represents a substantial improvement over the preceding two years, the margin remained below the levels recorded in 2017 and 2018.
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Return on Equity (ROE)
NXP Semiconductors N.V., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to stockholders | 1,871) | 52) | 243) | 2,208) | 2,215) | |
| Stockholders’ equity | 6,528) | 8,944) | 9,441) | 10,505) | 13,527) | |
| Profitability Ratio | ||||||
| ROE1 | 28.66% | 0.58% | 2.57% | 21.02% | 16.37% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 42.18% | — | — | — | — | |
| Analog Devices Inc. | 3.66% | 10.17% | — | — | — | |
| Applied Materials Inc. | 48.08% | 34.21% | — | — | — | |
| Broadcom Inc. | 26.99% | 12.40% | — | — | — | |
| Intel Corp. | 20.83% | — | — | — | — | |
| KLA Corp. | 61.53% | — | — | — | — | |
| Lam Research Corp. | 64.85% | — | — | — | — | |
| Marvell Technology Inc. | -3.29% | — | — | — | — | |
| Micron Technology Inc. | 13.34% | — | — | — | — | |
| NVIDIA Corp. | 25.64% | — | — | — | — | |
| Qualcomm Inc. | 90.88% | 85.54% | — | — | — | |
| Texas Instruments Inc. | 58.27% | — | — | — | — | |
| ROE, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 24.91% | — | — | — | — | |
| ROE, Industry | ||||||
| Information Technology | 41.64% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
1 2021 Calculation
ROE = 100 × Net income attributable to stockholders ÷ Stockholders’ equity
= 100 × 1,871 ÷ 6,528 = 28.66%
2 Click competitor name to see calculations.
The analysis of the return on equity (ROE) from 2017 to 2021 reveals a period of significant volatility characterized by a sharp contraction in profitability followed by a substantial recovery.
- Net Income Trends
- A severe decline in net income attributable to stockholders occurred between 2018 and 2020, with values dropping from US$ 2,208 million to US$ 52 million. This contraction was the primary driver behind the collapse of the ROE, which reached a period low of 0.58% in 2020.
- Stockholders' Equity Evolution
- A consistent downward trend is observed in stockholders' equity, which decreased steadily from US$ 13,527 million in 2017 to US$ 6,528 million by 2021. The continuous reduction of the equity base served to amplify the percentage fluctuations of the ROE as net income varied.
- Return on Equity Performance
- ROE exhibited extreme variance, shifting from 16.37% in 2017 to a peak of 28.66% in 2021. The surge in 2021 resulted from the combined effect of a strong recovery in net income to US$ 1,871 million and a significantly diminished equity base, indicating a higher efficiency in generating profit from the remaining shareholder investments.
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Return on Assets (ROA)
NXP Semiconductors N.V., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to stockholders | 1,871) | 52) | 243) | 2,208) | 2,215) | |
| Total assets | 20,864) | 19,847) | 20,016) | 21,530) | 24,049) | |
| Profitability Ratio | ||||||
| ROA1 | 8.97% | 0.26% | 1.21% | 10.26% | 9.21% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 25.46% | — | — | — | — | |
| Analog Devices Inc. | 2.66% | 5.69% | — | — | — | |
| Applied Materials Inc. | 22.80% | 16.19% | — | — | — | |
| Broadcom Inc. | 8.91% | 3.90% | — | — | — | |
| Intel Corp. | 11.80% | — | — | — | — | |
| KLA Corp. | 20.23% | — | — | — | — | |
| Lam Research Corp. | 24.59% | — | — | — | — | |
| Marvell Technology Inc. | -2.58% | — | — | — | — | |
| Micron Technology Inc. | 9.96% | — | — | — | — | |
| NVIDIA Corp. | 15.05% | — | — | — | — | |
| Qualcomm Inc. | 21.93% | 14.60% | — | — | — | |
| Texas Instruments Inc. | 31.48% | — | — | — | — | |
| ROA, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 13.29% | — | — | — | — | |
| ROA, Industry | ||||||
| Information Technology | 14.52% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
1 2021 Calculation
ROA = 100 × Net income attributable to stockholders ÷ Total assets
= 100 × 1,871 ÷ 20,864 = 8.97%
2 Click competitor name to see calculations.
The profitability metrics exhibit a period of significant volatility between 2017 and 2021, characterized by a sharp decline in earnings followed by a substantial recovery in asset utilization efficiency.
- Net Income Volatility
- Net income remained stable between 2017 and 2018 at approximately US$ 2.2 billion, followed by a severe contraction in 2019 and 2020, reaching a low of US$ 52 million. A strong recovery occurred in 2021, with net income rising to US$ 1.871 billion, signaling a return to near-previous profitability levels.
- Asset Base Stability
- Total assets demonstrated a gradual downward trend from US$ 24.049 billion in 2017 to a low of US$ 19.847 billion in 2020, before increasing slightly to US$ 20.864 billion in 2021. The relative stability of the asset base indicates that the fluctuations in profitability were primarily driven by income volatility rather than significant changes in the scale of the asset portfolio.
- Return on Assets (ROA) Analysis
- The ROA mirrored the trajectory of net income, peaking at 10.26% in 2018 before dropping precipitously to 1.21% in 2019 and reaching a nadir of 0.26% in 2020. The rebound to 8.97% in 2021 suggests a restoration of the company's ability to generate earnings from its assets, effectively recovering the operational efficiency observed at the start of the analyzed period.
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