DuPont de Nemours Inc. (NYSE:DD)

Return on Assets (ROA)

The Return on Assets shows an initial peak of 11.3% in the quarter ending March 31, 2016, followed by a gradual decline through 2017, reaching as low as 0.76% by March 31, 2018. Subsequently, a modest recovery occurs in 2018, with ROA increasing slightly to around 1.14% by December 31, 2018. However, from 2019 onwards, the ROA generally trends downward again, ending at 0.72% in the last quarter of 2019. This pattern indicates a significant decrease in asset profitability from 2016 to 2019, with no sustained recovery during the period analyzed.

Financial Leverage

Financial leverage exhibited a clear declining trend from March 31, 2015, at 3.05, through to December 31, 2017, when it approached approximately 1.92. After this period, leverage levels fluctuated slightly but remained relatively stable between 1.69 and 2.05 from 2018 through the end of 2019. This decreasing trend in financial leverage suggests a reduction in the reliance on debt financing over the years, with a stabilization at a lower leverage ratio in the later periods.

Return on Equity (ROE)

The Return on Equity was highest in early 2016, peaking at over 30% in March 2016. Subsequently, ROE declined significantly through 2017, reaching a low point of approximately 1.46% in March 2018. Some recovery occurred in 2018, with ROE increasing slightly to above 4% in early 2019. However, the overall trend across the years is downward, with ROE falling to about 1.22% by December 31, 2019. The sharp declines in ROE correspond with the declines observed in ROA and are likely influenced by the reduction in financial leverage.

The analyzed financial metrics exhibit varying trends over the reported quarters. The absence of data prior to March 31, 2016, limits the ability to assess some early patterns, but clear movements are discernible from that point onward.

Net Profit Margin (%)

The net profit margin displayed a general decline from a peak of 18.31% in September 2016 to a notably lower range around 2-4% by the end of 2018 and through 2019. This indicates a reduction in profitability relative to revenue over the period. After the initial strong margins, the figures declined sharply in 2017, followed by a relatively subdued and somewhat stable performance at low margins in subsequent quarters.

Asset Turnover (ratio)

Asset turnover ratios fluctuated significantly with an initial decrease from 0.72 in March 2016 to lows near 0.28 in December 2017. Thereafter, ratios increased gradually, peaking at 0.92 in September 2019, before dropping again to 0.31 by December 2019. This variability suggests changes in the efficiency with which the company utilized its assets to generate sales, with some improvement in 2018 and 2019, yet concluding the period with diminished turnover.

Financial Leverage (ratio)

Financial leverage consistently declined from 3.05 in March 2015 to approximately 1.7 by the end of 2019. This steady reduction indicates a gradual de-leveraging strategy, with the company lowering its reliance on debt relative to equity. The most notable decreases occurred between late 2016 and late 2017, with relative stability around a leverage ratio near 1.7 thereafter.

Return on Equity (ROE) (%)

Return on equity showed a marked downward trend from a high of 30.29% in March 2016 to single-digit and low single-digit values by late 2017 and onwards. The ROE declined sharply during 2017, reaching a low of 1.22% by December 2019. This trend suggests a significant reduction in the company’s capability to generate earnings from shareholders’ equity, aligning with the decreases observed in net profit margin and partially reflecting the reduced financial leverage.

In summary, the company experienced declining profitability and returns on equity from 2016 through 2019, despite some periods of improved asset turnover efficiency during 2018 and 2019. The strategic reduction in financial leverage implies a focus on risk mitigation and stronger capital structure, although the simultaneous decrease in ROE indicates that these efforts were associated with lower overall profitability and less effective equity utilization over the analyzed period.

The analysis of the quarterly financial data reveals several notable trends and fluctuations across the key performance ratios for the period under review.

Tax Burden

The tax burden ratio shows variability over the quarters, beginning at 0.78 in the first observed quarter of 2016 and rising to a peak of 1.48 by the end of 2017. Subsequently, it declines sharply to a low of 0.51 by third-quarter 2019 before increasing again to 0.78 in the final quarter. This fluctuation indicates periods of changing tax liabilities or effective tax rates impacting net profitability.

Interest Burden

The interest burden ratio demonstrates a general declining trend, starting at 0.91 in early 2016 and gradually decreasing to 0.49 by the final quarter of 2019. This steady reduction suggests either lower interest expenses relative to earnings before interest and taxes or improved debt management over time.

EBIT Margin

The EBIT margin experiences significant decline from around 22.1% in early 2016 to a low near 3.31%-4.04% throughout 2017 and 2018. A slight recovery is observable in 2019, with the margin rising modestly to approximately 6.07% by year-end. These changes may reflect shifts in operational efficiency, pricing strategy, or cost structure.

Asset Turnover

Asset turnover ratios are relatively unstable. Beginning at roughly 0.72 in early 2016, the ratio dips sharply to as low as 0.28 by late 2017, followed by a gradual rebound to 0.92 mid-2019 and falling again thereafter. This variability implies fluctuations in the company’s efficiency in utilizing its assets to generate revenue.

Financial Leverage

Financial leverage remains generally in the range between about 1.69 and 3.06. It declines from above 3.0 in early 2015 to just below 2.0 through 2017 and 2018, and further stabilizes around 1.7 towards the end of the period. This trend indicates a reduction in reliance on debt financing over time, enhancing the equity base relative to assets.

Return on Equity (ROE)

ROE shows a marked downward trajectory from a high of over 30% in early 2016 to a low near 1.22% by the final quarter of 2019. There are occasional minor upticks, but the overall trend suggests diminishing profitability in relation to shareholders' equity. Factors contributing to this could include reduced EBIT margins and changing financial leverage.

The financial data reveals notable fluctuations in key performance indicators over the analyzed quarterly periods. The following summary encapsulates the observable trends in net profit margin, asset turnover, and return on assets (ROA).

Net Profit Margin (%)

Starting from the first available data in March 2016, the net profit margin demonstrated variability with an initial high of 15.76%, followed by a gradual decline and some intermittent recovery phases. The margin decreased to a low of approximately 2.34% in March 2018 before exhibiting minor increases and decreases in subsequent periods. While modest improvements were observed in early 2019, reaching around 4.47% in March 2019, margins generally remained subdued compared to the earlier peak, indicating fluctuating profitability levels.

Asset Turnover (ratio)

Asset turnover showed a declining trend in the early part of the dataset, starting from 0.72 in March 2016 and falling to a low point of 0.28 in December 2017. Following this decline, the ratio climbed steadily through 2018, peaking at around 0.92 in September 2019, signaling improved efficiency in asset utilization during that period. However, the ratio dropped again to 0.31 by the end of 2019, reflecting a reduction in how effectively assets were generating sales.

Return on Assets (ROA) (%)

ROA trends mirrored aspects of both net profit margin and asset turnover. The ROA declined from 11.3% in March 2016 to a low of 0.76% in March 2018, illustrating a significant decrease in the company’s ability to generate profits from its assets. A slight recovery was observed thereafter, peaking at 2.04% in March 2019, followed by a gradual decrease towards the end of 2019, indicating ongoing challenges in earning returns on assets.

Overall, the data suggests a period of declining profitability and asset efficiency from 2016 through early 2018, with intermittent recoveries that were not sustained into late 2019. The fluctuations in net profit margin and ROA are aligned with changes in asset turnover, underscoring interdependencies among profitability and operational efficiency metrics.

Tax Burden

The tax burden ratio shows a generally fluctuating trend with values initially increasing from 0.78 in March 2016 to a peak of 1.48 in March 2018, indicating higher effective tax rates at that time. After this peak, the ratio declines steadily and reaches 0.55 by December 2019. This suggests a reduction in tax expense relative to earnings toward the end of the period.

Interest Burden

The interest burden ratio remains relatively stable during early periods, hovering around 0.9 through 2016. From 2017 onward, a declining trend is noticeable, with the ratio dropping to 0.49 by December 2019. This decrease indicates increasing interest expense impact on earnings before taxes over time.

EBIT Margin

EBIT margin exhibits considerable volatility throughout the analyzed periods. Initial margins around 22% in early 2016 decrease sharply to lows near 3-4% during 2017 and 2018, with a modest recovery in 2019 to approximately 6%. This pattern reflects fluctuating operational profitability, with a significant contraction post-2016 followed by partial improvement in 2019.

Asset Turnover

Asset turnover ratios reveal a general decline from about 0.72 in early 2016 to a low near 0.28 in late 2017. Subsequently, the ratio trends upward again, reaching a peak of 0.92 in March 2019 before falling back to 0.31 by the end of 2019. This indicates variable efficiency in asset utilization to generate sales, with periods of both decreased and heightened turnover within the timeframe.

Return on Assets (ROA)

The ROA percentage follows a declining pattern after March 2016, moving from around 11.3% to under 1% through most of 2017 and 2018, indicating diminished profitability related to asset base. In 2019, slight improvements are observed, with ROA rising to about 2% mid-year, yet ending at a low of 0.72% by December 2019. This signals continued challenges in converting assets into net income effectively.

Tax Burden Trend

The tax burden ratio shows considerable fluctuations over the observed periods. Beginning at 0.78 in the first available quarter of March 31, 2016, the ratio increases steadily, peaking at 1.48 by the end of December 31, 2017, indicating a period of elevated tax load relative to pre-tax income. After this peak, there is a notable decline, falling below 0.6 in several quarters of 2019, with some recovery towards the end of the year, reaching 0.78 by December 31, 2019.

Interest Burden Trend

The interest burden ratio follows a generally declining trend from March 2016 onwards. Starting near 0.91, it decreases gradually to 0.8 by the end of 2017. Subsequently, there is a significant drop to as low as 0.48 in early 2018. In 2019, the ratio remains below 0.8, showing a consistent decline in the portion of earnings retained after interest expense over the years, reaching 0.49 by December 31, 2019.

EBIT Margin Trend

The EBIT margin (%) demonstrates a downward trajectory from early 2016, starting at 22.1% and falling sharply to single-digit percentages by the end of 2017, with the lowest points around 3.3% to 4%. Although there is a modest rebound in 2019, with margins reaching up to 7.95% in the first quarter, the figures remain substantially below earlier levels, indicating compressed operating profitability over the period.

Net Profit Margin Trend

Net profit margin (%) correlates closely with the EBIT margin trend, showing a significant decline from a high of 18.31% in September 2016 to as low as approximately 2.34%-2.62% throughout 2017 and 2018. The margin slightly improves in 2019, although it remains modest, under 5%, reaching 4.47% at the beginning of the year before dipping again. This pattern highlights reduced net profitability consistent with observed EBIT margin and burden ratios.

Overall Insights

The financial ratios indicate an overall trend of decreasing profitability and increased burdens related to tax and interest payments from 2016 through 2019. The initial period up to 2017 shows the highest margins, which then sharply decline, suggesting challenges in operational efficiency or increased costs. The tax burden's volatility and elevated levels during certain periods may have contributed to margin compression. The sustained low interest burden in later years might reflect changes in financing costs or debt levels. The net profit margin closely follows EBIT margin dynamics, reflecting the compounded effect of taxation and interest expenses on bottom-line profitability.