Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Dividend Discount Model (DDM)
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Profitability Ratios (Summary)
Albemarle Corp., profitability ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Gross Profit Margin
- The gross profit margin exhibited a declining trend from 36.07% in 2018 to 29.99% in 2021. However, there was a significant rebound in 2022, reaching 42%. This suggests an improvement in core profitability or cost management in the most recent year following a period of decreasing margins.
- Operating Profit Margin
- The operating profit margin decreased from 27.01% in 2018 to a low of 16.17% in 2020. It recovered moderately to 23.99% in 2021 and then showed a strong increase to 33.74% in 2022. The trend indicates volatility but ultimately a substantial improvement in operating efficiency or expense control by 2022.
- Net Profit Margin
- Net profit margin followed a downward trajectory from 20.55% in 2018 to 3.72% in 2021, indicating declining overall profitability over several years. In 2022, there was a remarkable recovery to 36.75%, which surpasses prior levels and points to significant gains in net profitability.
- Return on Equity (ROE)
- Return on equity steadily declined over the first four years from 19.34% in 2018 to a low of 2.2% in 2021, reflecting diminishing shareholder returns. In 2022, ROE surged to 33.7%, representing a dramatic turnaround and enhanced value creation for equity investors.
- Return on Assets (ROA)
- ROA mirrored the downward pattern from 9.15% in 2018 to 1.13% in 2021, indicating reduced efficiency in utilizing assets to generate profits. This metric experienced a strong rebound to 17.4% in 2022, suggesting improved asset utilization and profitability.
- Overall Observations
- The financial ratios collectively reveal a period of declining profitability and efficiency from 2018 through 2021. The most notable pattern is a pronounced turnaround in 2022, with all key profitability and return metrics sharply increasing, reflecting improved operational performance, cost management, and likely favorable market or company-specific factors impacting financial outcomes.
Return on Sales
Return on Investment
Gross Profit Margin
Albemarle Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Gross Profit
- The gross profit demonstrated fluctuation over the five-year period. Beginning at approximately 1.22 billion USD in 2018, it saw a modest increase to roughly 1.26 billion USD in 2019, followed by a decline in 2020 and 2021 to just under 1 billion USD each year. Notably, in 2022, gross profit experienced a significant increase, reaching over 3 billion USD, marking a substantial recovery and growth compared to prior years.
- Net Sales
- Net sales followed a somewhat similar trend but with less pronounced decreases in the middle years. Sales increased from about 3.37 billion USD in 2018 to nearly 3.59 billion USD in 2019, then declined in 2020 to approximately 3.13 billion USD and saw a slight recovery in 2021 with about 3.33 billion USD. In 2022, net sales surged markedly to over 7.3 billion USD, more than doubling the amount from the previous year and indicating strong business expansion or increased market demand.
- Gross Profit Margin
- The gross profit margin exhibited a downward trend from 2018 to 2021, decreasing from 36.07% to 29.99%. This indicates that the profitability on sales was under pressure during these years despite the overall sales volume remaining relatively stable. However, in 2022 there was a notable rebound in margin to 42%, suggesting improved cost management, pricing power, or changes in the product mix resulting in higher profitability per unit of sale.
- Overall Analysis
- The data reflects a challenging period from 2019 through 2021 with declining gross profit margins and reduced gross profit and sales values after peaking in 2019. This could be attributable to market conditions, cost pressures, or other operational challenges. The marked improvement in 2022 in all three indicators—gross profit, net sales, and gross profit margin—signals a strong recovery and enhanced financial performance, likely driven by strategic initiatives, increased demand, or favorable market dynamics. The significant jump in both sales and profitability margin in 2022 stands out as a key positive development in the recent financial history.
Operating Profit Margin
Albemarle Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating profit | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| Operating Profit Margin, Sector | ||||||
| Chemicals | ||||||
| Operating Profit Margin, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Operating profit margin = 100 × Operating profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Profit
- The operating profit demonstrates a fluctuation over the analyzed periods. Starting at approximately $911.5 million in 2018, it experienced a decline in 2019 and 2020, reaching around $666.1 million and $505.8 million respectively. However, 2021 saw a recovery to nearly $798.4 million, followed by a substantial increase in 2022, where operating profit surged to approximately $2.47 billion. This indicates a significant improvement in operating efficiency or favorable business conditions in the latest year.
- Net Sales
- Net sales exhibited a moderate upward trend initially, moving from about $3.37 billion in 2018 to around $3.59 billion in 2019. There was a decline in 2020 to approximately $3.13 billion, followed by a slight rebound in 2021 to nearly $3.33 billion. In 2022, net sales dramatically increased to approximately $7.32 billion, more than doubling the previous year's figure, suggesting either a substantial growth in demand, expansion of market presence, or significant pricing changes.
- Operating Profit Margin
- The operating profit margin revealed a downward trend from 27.01% in 2018 to 16.17% in 2020, signifying declining profitability relative to sales during that period. Subsequently, there was a noteworthy recovery to 23.99% in 2021. The margin peaked in 2022 at 33.74%, the highest in the reported timeframe, reflecting improved cost management, pricing power, or other positive operational drivers enhancing profitability.
- Overall Analysis
- The data indicates a period of initial contraction in profitability and sales from 2018 through 2020, followed by a strong recovery and remarkable growth in 2022. Both operating profit and net sales more than doubled between 2021 and 2022, accompanied by a significant increase in operating margin. This pattern suggests a positive shift in business dynamics and operational performance during the latest year. The earlier declines could be linked to challenging market conditions or internal factors that were subsequently addressed successfully.
Net Profit Margin
Albemarle Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Albemarle Corporation | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| Net Profit Margin, Sector | ||||||
| Chemicals | ||||||
| Net Profit Margin, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net profit margin = 100 × Net income attributable to Albemarle Corporation ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations in the company’s performance over the five-year period. Net income attributable to the company demonstrates a declining trend from 2018 through 2021, followed by a pronounced increase in 2022. Specifically, net income started at 693,562 thousand USD in 2018, decreased consecutively each year to a low of 123,672 thousand USD in 2021, and then surged dramatically to 2,689,816 thousand USD in 2022.
Net sales exhibited a moderately volatile pattern. After increasing from approximately 3,374,950 thousand USD in 2018 to 3,589,427 thousand USD in 2019, sales declined to 3,128,909 thousand USD in 2020. This was followed by a modest recovery to 3,327,957 thousand USD in 2021 and a substantial jump to 7,320,104 thousand USD in 2022, more than doubling the previous year’s figure.
The net profit margin mirrored the trends in net income, showing a decreasing trajectory from 20.55% in 2018 to a low point of 3.72% in 2021. This illustrates a significant compression in profitability during these years. However, the margin rebounded sharply in 2022 to 36.75%, indicating a marked improvement in profitability relative to sales.
Overall, the data suggests that the company experienced a period of declining profitability and earnings from 2018 through 2021, despite some fluctuations in net sales. The sharp increase in both net income and net sales in 2022, accompanied by a substantially improved profit margin, points to a strong recovery or possible structural changes leading to enhanced financial performance.
- Net Income Trend
- Declined steadily from 2018 to 2021, then surged sharply in 2022.
- Net Sales Trend
- Increased in 2019, declined in 2020, modestly recovered in 2021, and more than doubled in 2022.
- Profitability (Net Profit Margin)
- Decreased significantly from 2018 to 2021, reaching a low in 2021; experienced a dramatic increase in 2022.
- Insight
- The company’s financial results indicate a phase of underperformance followed by a substantial recovery, implying either operational improvements, market conditions favoring the company, or other impactful factors driving improved earnings and sales in the latest year.
Return on Equity (ROE)
Albemarle Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Albemarle Corporation | ||||||
| Total Albemarle Corporation shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| ROE, Sector | ||||||
| Chemicals | ||||||
| ROE, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROE = 100 × Net income attributable to Albemarle Corporation ÷ Total Albemarle Corporation shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income attributable to the corporation exhibited a fluctuating trend over the analyzed period. Starting at 693.6 million USD in 2018, it declined steadily for the next three years, reaching a low of 123.7 million USD in 2021. However, in 2022, there was a significant recovery, with net income surging to approximately 2.69 billion USD, marking the highest value in the provided timeframe.
- Shareholders’ Equity
- Shareholders’ equity showed a consistent upward trajectory throughout the period. Beginning at roughly 3.59 billion USD in 2018, it increased each year, reaching 7.98 billion USD by the end of 2022. This steady growth indicates an expansion of the company’s net assets and potentially signals retained earnings or additional capital contributions.
- Return on Equity (ROE)
- The return on equity started at a relatively strong level of 19.34% in 2018 but declined successively over the next three years, bottoming out at 2.2% in 2021. In 2022, the ROE experienced a sharp rebound to 33.7%, the highest in the observed period. This resurgence is consistent with the sharp increase in net income and suggests a significantly improved profitability relative to shareholders’ equity during the latest year.
- Overall Insights
- The period under review demonstrates an initial phase of declining profitability and net income, despite growing equity levels, possibly indicating increased investment or costs that impacted earnings. The remarkable turnaround in 2022, with both net income and ROE reaching peak values, points to a successful strategic or operational shift leading to enhanced financial performance. The continuous growth in shareholders’ equity alongside the recent profitability gains suggests an overall strengthening of the company's financial position by the end of the period.
Return on Assets (ROA)
Albemarle Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Albemarle Corporation | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| ROA, Sector | ||||||
| Chemicals | ||||||
| ROA, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROA = 100 × Net income attributable to Albemarle Corporation ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to Albemarle Corporation
- The net income experienced a significant fluctuation over the five-year period. It declined steadily from 693,562 thousand US dollars in 2018 to 123,672 thousand US dollars in 2021. However, in 2022, there was a remarkable recovery, with net income rising sharply to 2,689,816 thousand US dollars, indicating a substantial improvement in profitability.
- Total Assets
- The total assets of the company showed a consistent upward trend throughout the five years. Starting at 7,581,674 thousand US dollars in 2018, assets increased steadily each year, reaching 15,456,522 thousand US dollars in 2022. This represents more than a doubling of total assets over the period, suggesting significant asset growth and potential expansion of operations.
- Return on Assets (ROA)
- The ROA demonstrated a declining trend from 9.15% in 2018 to a low of 1.13% in 2021, reflecting reduced efficiency in generating profit from assets during this time frame. However, in 2022, ROA rebounded sharply to 17.4%, surpassing the initial level in 2018. This recovery in ROA corresponds with the strong increase in net income and indicates an improved effectiveness in asset utilization during the final year observed.