Bristol-Myers Squibb Co. (NYSE:BMY)

The financial data reveals significant fluctuations in the company's profitability and capital efficiency over the five-year period analyzed.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures exhibit considerable volatility. In 2020, the company experienced a substantial loss of 6,822 million USD. Following this, 2021 saw a strong recovery with a positive NOPAT of 6,656 million USD. This was followed by a decline in 2022 to 4,571 million USD. The performance improved again in 2023 to 5,869 million USD but deteriorated sharply in 2024 with a deep loss of 9,292 million USD. Overall, there is a lack of consistent upward or downward trend, indicating operational instability or significant external challenges affecting profitability.

Cost of Capital

The cost of capital has remained relatively stable throughout the period, fluctuating within a narrow band from 7.27% to 8.03%. The slight increase observed in 2022 corresponds with a marginally higher risk or changes in the market environment, but the cost decreased somewhat in 2023 and slightly increased again in 2024. This stability suggests consistent financing conditions and risk perception in the market.

Invested Capital

Invested capital shows a steady and notable decline over the period, decreasing from 90,149 million USD in 2020 to 62,654 million USD in 2024. This reduction suggests a deliberate strategy to reduce capital employed, possibly through divestitures, asset sales, or efficiency improvements. The decline in invested capital may also reflect a contraction or restructuring of the company’s asset base.

Economic Profit

The company’s economic profit displays a pattern similar to NOPAT, marked by extreme volatility. There was a large negative economic profit of 13,375 million USD in 2020, followed by a moderate positive figure in 2021 of 539 million USD. The subsequent years show oscillations, with a negative economic profit of 1,188 million USD in 2022, a positive 776 million USD in 2023, and a substantial negative value of 14,038 million USD in 2024. The large negative figures in 2020 and 2024 indicate that the company’s returns did not cover the cost of capital during those years, questioning value creation in these periods.

In summary, the company demonstrates cyclical and unstable profitability with significant operating losses in two out of the five years. Despite maintaining a steady cost of capital, the declining invested capital does not appear to have consistently translated into improved economic profit or operating performance. The financial trends point to operational challenges and potential strategic adjustments required to stabilize and enhance value creation.

Net Earnings (Loss) Attributable to BMS

The net earnings exhibit significant volatility over the five-year period. In 2020, the company experienced a substantial loss of approximately $9.015 billion. This was followed by a strong recovery in 2021, with net earnings turning positive at around $6.994 billion. The positive trend continued through 2022 and 2023, with earnings of $6.327 billion and $8.025 billion, respectively, indicating operational improvements and profitability restoration. However, in 2024, the net earnings again declined sharply to a loss of about $8.948 billion, suggesting potential one-time charges, operational challenges, or market conditions adversely affecting profitability.

Net Operating Profit After Taxes (NOPAT)

The NOPAT values reflect a similar pattern of volatility as net earnings. In 2020, the company reported a significant negative NOPAT of approximately $6.822 billion. The following year showed a substantial positive turnaround with NOPAT reaching $6.656 billion. Despite this improvement, the subsequent years showed a decline in NOPAT, falling to $4.571 billion in 2022 and recovering slightly to $5.869 billion in 2023. In 2024, there was a notable decline to a negative $9.292 billion, aligning with the net earnings loss. This suggests that operational efficiency and tax impacts fluctuated considerably, with a sharp deterioration in 2024 likely driven by operational issues or exceptional expenses.

Overall Trend and Insights

Both net earnings and NOPAT demonstrate a pronounced cyclical pattern, with strong losses in 2020 followed by recovery in the subsequent years up to 2023, and then a substantial reversal back to losses in 2024. This pattern indicates that while the company was able to restore profitability after a difficult 2020, it encountered renewed challenges in 2024. The divergence between earnings and operating profit in some years suggests that non-operating factors, such as extraordinary items or tax effects, may have influenced net profitability. The data points to the necessity for a deeper review of underlying causes behind the 2024 downturn, including potential one-time charges, market dynamics, or changes in operational efficiency.

Income Tax Provision

The income tax provision shows a fluctuating trend over the five-year period. Starting at 2,124 million US dollars in 2020, it declined significantly to 1,084 million in 2021, followed by a moderate increase to 1,368 million in 2022. In the subsequent years, the provision dropped sharply to 400 million in 2023 but experienced a slight rebound to 554 million in 2024. This pattern suggests variability in taxable income or changes in tax strategy or regulations impacting the provision calculation.

Cash Operating Taxes

Cash operating taxes display a different trajectory compared to income tax provisions, indicating potential timing differences or other tax-related factors. The amount nearly doubled from 1,445 million in 2020 to 2,764 million in 2021, followed by a further substantial increase to 4,376 million in 2022. However, in 2023, cash operating taxes declined to 3,947 million and continued to drop to 3,068 million in 2024. Despite the reductions in recent years, cash tax payments remain significantly higher than in 2020. This trend may reflect changes in cash flow management, tax payment scheduling, or adjustments related to tax liabilities and credits.

Overall Insights

The divergence between income tax provision and cash operating taxes is notable. While income tax provisions generally decreased over the period with some volatility, cash operating taxes rose sharply before declining in the last two years but still remained elevated relative to 2020. These contrasting patterns could indicate differences in accounting recognition of tax expenses versus actual cash outflows. The fluctuations in both indicators highlight the importance of analyzing tax-related cash impacts separately from accounting provisions to fully understand the company's tax position and its effect on liquidity and profitability.

Total reported debt & leases

There is a noticeable reduction in total reported debt and leases from 2020 to 2022, falling from approximately $51.7 billion to about $40.7 billion. However, the debt level stabilizes around $41.5 billion in 2023 before increasing significantly to $51.2 billion in 2024, approaching the 2020 debt level once again.

Total BMS shareholders’ equity

The shareholders’ equity shows a consistent declining trend over the five-year period. Starting at around $37.8 billion in 2020, it decreases gradually each year, falling to roughly $16.3 billion in 2024. This decline is particularly pronounced between 2023 and 2024, where equity drops by nearly 45%, indicating potential challenges impacting the company’s net worth.

Invested capital

Invested capital follows a downward trend over the period, beginning at approximately $90.1 billion in 2020 and decreasing steadily every year to around $62.7 billion in 2024. The continuous reduction suggests contraction in the company's asset base or potential divestitures and may relate to the simultaneously falling equity and fluctuating debt levels.

The analysis of the economic profit, invested capital, and economic spread ratio over the five-year period reveals significant fluctuations and an overall downturn in financial performance.

Economic Profit

The economic profit exhibits pronounced volatility, starting with a substantial loss of US$ 13,375 million at the end of 2020. It then sharply improves to a positive figure of US$ 539 million by the end of 2021, followed by a decline back into negative territory at US$ 1,188 million in 2022.

The metric rebounds again in 2023 to US$ 776 million, indicating intermittent recovery phases, but ends with a drastic decline to -US$ 14,038 million in 2024, representing a significant deterioration relative to prior years.

Invested Capital

Invested capital consistently decreases year on year from US$ 90,149 million at the end of 2020 to US$ 62,654 million at the end of 2024. This steady reduction of approximately 30% over the period indicates a contraction in the asset base or capital deployment.

The decline may reflect divestitures, asset sales, or operational changes aimed at optimizing capital efficiency.

Economic Spread Ratio (%)

The economic spread ratio mirrors the volatility seen in economic profit but on a percentage basis. It starts at a deeply negative figure (-14.84%) at the end of 2020, which then improves markedly to 0.67% in 2021, turning slightly positive and indicating some value creation during that year.

However, it reverts to negative at -1.66% in 2022, improves again to 1.15% in 2023, and then suffers a significant decline to -22.41% in 2024. The negative spread in 2024 represents a substantial loss relative to invested capital, signaling poor returns on invested capital in that year.

Overall, the data reveal periods of brief recovery interspersed with persistent challenges in generating positive economic profit and maintaining an efficient allocation of capital. The declining invested capital signals a shrinking asset base, while the worsening economic spread in 2024 highlights increased inefficiency or adverse conditions impacting profitability.

The annual financial data reveals notable fluctuations in both economic profit and revenues over the five-year period analyzed. The economic profit figures display considerable volatility, transitioning between negative and positive values across the years. Specifically, the company experienced significant negative economic profit in 2020 and 2024, with values of -13,375 million US dollars and -14,038 million US dollars respectively. Conversely, positive economic profits were observed in 2021 and 2023, recording 539 million and 776 million US dollars. The year 2022 saw a return to negative economic profit at -1,188 million US dollars.

The economic profit margin mirrors the oscillations seen in economic profit, fluctuating from negative values to modest positive percentages. The margin started at -31.46% in 2020, improved to 1.16% in 2021, declined to -2.57% in 2022, rose again to 1.72% in 2023, and dropped steeply to -29.06% in 2024. This pattern indicates inconsistency in the company’s ability to generate profit relative to its revenues.

Revenues exhibit a different trend, with relatively moderate variability compared to economic profit. Starting at 42,518 million US dollars in 2020, revenues showed a steady increase through 2021, reaching 46,385 million US dollars, followed by a slight decline in 2022 and 2023 to 46,159 million and 45,006 million US dollars respectively. In 2024, revenues increased again to 48,300 million US dollars, marking the highest revenue level in the period.

The juxtaposition of fluctuating economic profit and profit margin with more stable and gradually increasing revenues suggests that while the company’s sales performance has been relatively steady, profitability has not consistently translated into value creation. The repeated shifts between negative and positive economic profit highlight challenges in cost management or investment returns that merit further analysis.

Economic Profit

Highly variable with significant negative values in 2020 and 2024, positive but modest profits in 2021 and 2023, and a negative dip in 2022.

Economic Profit Margin

Consistent with economic profit trends, fluctuates between negative margins around -30% and slightly positive margins up to 1.72%, indicating inconsistent profitability relative to revenues.

Revenues

Generally upward trend with moderate fluctuations, increasing from 42.5 billion to 48.3 billion US dollars over five years, showing relative stability in sales performance.