Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Carrier Global 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).
- Gross Profit Margin
- The gross profit margin demonstrates a declining trend over the three-year period, decreasing from 29.27% in 2020 to 26.76% in 2022. This indicates a reduction in the company's efficiency in managing production costs relative to revenue.
- Operating Profit Margin
- The operating profit margin shows volatility, initially decreasing from 17.66% in 2020 to 12.83% in 2021, followed by a significant recovery to 22.11% in 2022. This suggests improved operational efficiency or cost control in the most recent year.
- Net Profit Margin
- The net profit margin follows a similar pattern to the operating margin but with an overall lower percentage. It declines from 11.35% in 2020 to 8.07% in 2021, then substantially increases to 17.31% in 2022. This reflects improved profitability after accounting for all expenses and taxes in the latest year.
- Return on Equity (ROE)
- Return on equity declines steeply from 31.7% in 2020 to 24.59% in 2021, then experiences a strong rebound to 45.55% in 2022. The increase in 2022 suggests enhanced effectiveness in generating profits from shareholders’ equity.
- Return on Assets (ROA)
- Return on assets exhibits a decline from 7.9% in 2020 to 6.36% in 2021, followed by a notable increase to 13.55% in 2022. This indicates improved asset utilization and profitability in the most recent period.
Return on Sales
Return on Investment
Gross Profit Margin
Carrier Global Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Gross margin | 5,464) | 5,980) | 5,109) | |
| Net sales | 20,421) | 20,613) | 17,456) | |
| Profitability Ratio | ||||
| Gross profit margin1 | 26.76% | 29.01% | 29.27% | |
| Benchmarks | ||||
| Gross Profit Margin, Competitors2 | ||||
| Boeing Co. | 5.26% | 4.84% | -9.78% | |
| Caterpillar Inc. | 26.91% | 26.30% | 25.47% | |
| Eaton Corp. plc | 33.19% | 32.28% | 30.52% | |
| GE Aerospace | 24.55% | 24.19% | 17.26% | |
| Honeywell International Inc. | 36.99% | 35.85% | 32.07% | |
| Lockheed Martin Corp. | 12.56% | 13.52% | 13.23% | |
| RTX Corp. | 20.38% | 19.40% | 15.08% | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2022 Calculation
Gross profit margin = 100 × Gross margin ÷ Net sales
= 100 × 5,464 ÷ 20,421 = 26.76%
2 Click competitor name to see calculations.
- Net sales
- There was a notable increase in net sales from 17,456 million US dollars in 2020 to 20,613 million in 2021, representing significant growth. However, net sales slightly decreased to 20,421 million in 2022, suggesting a plateau or minor decline after the sharp rise the previous year.
- Gross margin
- Gross margin followed a similar pattern to net sales, increasing from 5,109 million US dollars in 2020 to 5,980 million in 2021. Subsequently, gross margin decreased to 5,464 million in 2022. This indicates that while absolute profitability grew initially, there was a reduction in gross margin value in the last year observed.
- Gross profit margin
- The gross profit margin percentage decreased consistently over the three years. It was 29.27% in 2020 and slightly fell to 29.01% in 2021, followed by a more pronounced decline to 26.76% in 2022. This trend signifies a gradual erosion in profitability relative to net sales, implying increasing costs or pricing pressures that impacted the company's efficiency in generating gross profit.
- Overall Analysis
- The financial data reveals growth in both net sales and gross margin in 2021, followed by a modest decline in 2022. Despite the initial gains, the declining gross profit margin percentage over the entire period points to weakening profitability at the gross level. This could indicate challenges such as rising production costs, competitive pricing environments, or other factors negatively affecting profit margins. The data suggests a need for management to address cost controls or pricing strategies to restore or improve gross profitability.
Operating Profit Margin
Carrier Global Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Operating profit | 4,515) | 2,645) | 3,083) | |
| Net sales | 20,421) | 20,613) | 17,456) | |
| Profitability Ratio | ||||
| Operating profit margin1 | 22.11% | 12.83% | 17.66% | |
| Benchmarks | ||||
| Operating Profit Margin, Competitors2 | ||||
| Boeing Co. | -5.33% | -4.66% | -21.95% | |
| Caterpillar Inc. | 13.97% | 14.27% | 11.67% | |
| Eaton Corp. plc | 14.55% | 15.69% | 11.45% | |
| GE Aerospace | 6.05% | 8.58% | 5.49% | |
| Honeywell International Inc. | 18.12% | 18.03% | 17.45% | |
| Lockheed Martin Corp. | 12.65% | 13.61% | 13.22% | |
| RTX Corp. | 8.07% | 7.70% | -3.34% | |
| Operating Profit Margin, Sector | ||||
| Capital Goods | 8.29% | 9.11% | 3.00% | |
| Operating Profit Margin, Industry | ||||
| Industrials | 9.06% | 9.24% | 3.13% | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2022 Calculation
Operating profit margin = 100 × Operating profit ÷ Net sales
= 100 × 4,515 ÷ 20,421 = 22.11%
2 Click competitor name to see calculations.
The financial data over the observed period reveals significant fluctuations in key performance indicators. Net sales showed an upward trend from 2020 to 2021, increasing from 17,456 million US dollars to 20,613 million US dollars, demonstrating growth in revenue generation. However, in 2022, net sales slightly declined to 20,421 million US dollars, indicating a minor contraction after the previous year's growth.
Operating profit exhibits a varying pattern throughout the period. In 2021, operating profit decreased to 2,645 million US dollars from 3,083 million US dollars in 2020, marking a notable decline in profitability despite rising sales. Contrarily, in 2022, there was a substantial increase in operating profit to 4,515 million US dollars, surpassing the initial 2020 figure and indicating improved operational efficiency or cost management.
Corroborating these observations, the operating profit margin declined significantly from 17.66% in 2020 to 12.83% in 2021, reflecting a reduction in return on sales and potential margin pressure. A strong recovery was observed in 2022 when the margin rose sharply to 22.11%, suggesting enhanced profitability and a more effective conversion of sales into operating income during that year.
Overall, the data indicates an initial phase of revenue growth coupled with decreasing profitability in 2021, followed by a period of margin recovery and increased operating profit in 2022 despite a slight dip in net sales. This pattern may suggest strategic adjustments or improved operational controls implemented after 2021, leading to better financial performance in the most recent year.
Net Profit Margin
Carrier Global Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Net income attributable to common shareowners | 3,534) | 1,664) | 1,982) | |
| Net sales | 20,421) | 20,613) | 17,456) | |
| Profitability Ratio | ||||
| Net profit margin1 | 17.31% | 8.07% | 11.35% | |
| Benchmarks | ||||
| Net Profit Margin, Competitors2 | ||||
| Boeing Co. | -7.41% | -6.75% | -20.42% | |
| Caterpillar Inc. | 11.85% | 13.47% | 7.68% | |
| Eaton Corp. plc | 11.86% | 10.92% | 7.90% | |
| GE Aerospace | 0.31% | -9.17% | 7.81% | |
| Honeywell International Inc. | 14.00% | 16.11% | 14.64% | |
| Lockheed Martin Corp. | 8.69% | 9.42% | 10.45% | |
| RTX Corp. | 7.75% | 6.00% | -6.22% | |
| Net Profit Margin, Sector | ||||
| Capital Goods | 5.27% | 3.71% | 1.85% | |
| Net Profit Margin, Industry | ||||
| Industrials | 5.04% | 5.85% | 0.09% | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2022 Calculation
Net profit margin = 100 × Net income attributable to common shareowners ÷ Net sales
= 100 × 3,534 ÷ 20,421 = 17.31%
2 Click competitor name to see calculations.
The financial data reveals notable trends in profitability and sales performance over the three-year period ending December 31, 2022.
- Net Income Attributable to Common Shareowners
- This metric experienced a decline from 1982 million US dollars in 2020 to 1664 million US dollars in 2021. However, it then demonstrated a substantial recovery and growth in 2022, reaching 3534 million US dollars, which is the highest value in the observed period.
- Net Sales
- Net sales showed an upward trend from 17456 million US dollars in 2020 to a peak of 20613 million US dollars in 2021, followed by a slight decrease to 20421 million US dollars in 2022. Despite this marginal decline in the final year, overall sales remained significantly higher than in 2020.
- Net Profit Margin
- The net profit margin declined notably from 11.35% in 2020 to 8.07% in 2021, aligning with the reduction in net income despite sales growth. Subsequently, a sharp increase occurred in 2022, with the margin rising to 17.31%, more than double the margin recorded in 2021 and substantially higher than in 2020.
In summary, the company experienced a dip in profitability during 2021 despite rising sales, indicating possible cost or expense pressures during that year. The robust rebound in net income and profit margin in 2022, alongside relatively stable sales, suggests a significant improvement in operational efficiency or reductions in costs. The marked increase in profitability in 2022 points to a stronger capacity to convert sales into net earnings compared to the previous two years.
Return on Equity (ROE)
Carrier Global Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Net income attributable to common shareowners | 3,534) | 1,664) | 1,982) | |
| Equity attributable to common shareowners | 7,758) | 6,767) | 6,252) | |
| Profitability Ratio | ||||
| ROE1 | 45.55% | 24.59% | 31.70% | |
| Benchmarks | ||||
| ROE, Competitors2 | ||||
| Boeing Co. | — | — | — | |
| Caterpillar Inc. | 42.25% | 39.37% | 19.56% | |
| Eaton Corp. plc | 14.45% | 13.06% | 9.44% | |
| GE Aerospace | 0.62% | -16.17% | 16.04% | |
| Honeywell International Inc. | 29.74% | 29.85% | 27.23% | |
| Lockheed Martin Corp. | 61.86% | 57.62% | 113.60% | |
| RTX Corp. | 7.16% | 5.29% | -4.88% | |
| ROE, Sector | ||||
| Capital Goods | 13.39% | 8.48% | 4.42% | |
| ROE, Industry | ||||
| Industrials | 15.38% | 15.38% | 0.24% | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2022 Calculation
ROE = 100 × Net income attributable to common shareowners ÷ Equity attributable to common shareowners
= 100 × 3,534 ÷ 7,758 = 45.55%
2 Click competitor name to see calculations.
- Net Income Attributable to Common Shareowners
- The net income attributable to common shareowners experienced a decline from 1982 million US dollars in 2020 to 1664 million US dollars in 2021. However, there was a strong recovery and substantial growth in 2022, where net income more than doubled to 3534 million US dollars. This indicates a significant increase in profitability in the latest year.
- Equity Attributable to Common Shareowners
- Equity attributable to common shareowners showed a consistent upward trend throughout the period. It increased from 6252 million US dollars in 2020 to 6767 million US dollars in 2021, and further to 7758 million US dollars in 2022. This steady growth suggests strengthening financial stability and retained earnings accumulation over the three years.
- Return on Equity (ROE)
- The return on equity declined from 31.7% in 2020 to 24.59% in 2021, mirroring the drop in net income during the same period. Subsequently, ROE increased significantly to 45.55% in 2022, exceeding the initial 2020 level. This sharp rise reflects improved efficiency in generating profits from the equity base in the most recent year.
Return on Assets (ROA)
Carrier Global Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Net income attributable to common shareowners | 3,534) | 1,664) | 1,982) | |
| Total assets | 26,086) | 26,172) | 25,093) | |
| Profitability Ratio | ||||
| ROA1 | 13.55% | 6.36% | 7.90% | |
| Benchmarks | ||||
| ROA, Competitors2 | ||||
| Boeing Co. | -3.60% | -3.03% | -7.80% | |
| Caterpillar Inc. | 8.18% | 7.84% | 3.83% | |
| Eaton Corp. plc | 7.03% | 6.30% | 4.43% | |
| GE Aerospace | 0.12% | -3.28% | 2.25% | |
| Honeywell International Inc. | 7.97% | 8.60% | 7.40% | |
| Lockheed Martin Corp. | 10.84% | 12.41% | 13.47% | |
| RTX Corp. | 3.27% | 2.39% | -2.17% | |
| ROA, Sector | ||||
| Capital Goods | 2.84% | 1.86% | 0.80% | |
| ROA, Industry | ||||
| Industrials | 3.31% | 3.40% | 0.04% | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2022 Calculation
ROA = 100 × Net income attributable to common shareowners ÷ Total assets
= 100 × 3,534 ÷ 26,086 = 13.55%
2 Click competitor name to see calculations.
- Net Income Attributable to Common Shareowners
- The net income shows a declining trend from 2020 to 2021, decreasing from 1982 million US dollars to 1664 million US dollars. However, a significant increase occurred in 2022, reaching 3534 million US dollars, more than doubling the previous year's profit. This indicates a strong recovery and improved profitability in 2022.
- Total Assets
- Total assets increased slightly from 25093 million US dollars in 2020 to 26172 million US dollars in 2021. In 2022, total assets remained relatively stable with a marginal decrease to 26086 million US dollars. This stability suggests consistent asset management without major expansions or contractions during this period.
- Return on Assets (ROA)
- The ROA showed a decreasing trend from 7.9% in 2020 to 6.36% in 2021, reflecting a reduction in asset efficiency and profitability of the asset base during that year. In 2022, ROA increased substantially to 13.55%, indicating a significant improvement in generating earnings from the existing asset base. This improvement aligns with the surge in net income and signifies better utilization of assets.