Analysis of Property, Plant and Equipment
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Eaton Corp. plc pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Total Asset Turnover since 2005
- Aggregate Accruals
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Property, Plant and Equipment Disclosure
Eaton Corp. plc, balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Over the five-year period, a consistent increase in gross property, plant, and equipment is observed. This growth is primarily driven by additions to machinery and equipment, while land and buildings exhibit more moderate fluctuations. Accumulated depreciation has also increased steadily throughout the period, as expected with the passage of time and continued use of assets. Consequently, net property, plant, and equipment demonstrates a positive trend, indicating overall investment in and expansion of the company’s asset base.
- Land and Buildings
- The value of land and buildings decreased from US$2,227 million in 2021 to US$2,129 million in 2022. A subsequent recovery is noted, reaching US$2,241 million in 2023 and remaining relatively stable at US$2,239 million in 2024 before increasing to US$2,361 million in 2025. This suggests potential disposals in 2022 followed by reinvestment or revaluation in later years.
- Machinery and Equipment
- Machinery and equipment consistently increased from US$5,591 million in 2021 to US$7,667 million in 2025. The largest year-over-year increase occurred between 2023 and 2024, with an addition of US$326 million. This substantial growth indicates ongoing investment in operational capacity and technological upgrades.
- Gross Property, Plant, and Equipment
- Gross property, plant, and equipment increased steadily from US$7,818 million in 2021 to US$10,028 million in 2025. This represents a cumulative increase of approximately 28.2% over the five-year period, demonstrating a significant expansion of the company’s total fixed assets.
- Accumulated Depreciation
- Accumulated depreciation increased consistently from US$4,754 million in 2021 to US$5,712 million in 2025. The rate of increase appears relatively constant, aligning with the expected depreciation of the growing asset base. The increase from 2024 to 2025 was US$379 million, the largest single-year increase in the period.
- Net Property, Plant, and Equipment
- Net property, plant, and equipment increased from US$3,064 million in 2021 to US$4,316 million in 2025. This growth, while positive, is moderated by the increasing accumulated depreciation. The largest year-over-year increase in net property, plant, and equipment occurred between 2024 and 2025, with an increase of US$587 million, suggesting a period of strong asset growth outpacing depreciation.
The consistent growth in net property, plant, and equipment suggests a commitment to long-term investment and expansion. The increasing values of machinery and equipment, in particular, may indicate a focus on modernizing operations and enhancing production capabilities.
Asset Age Ratios (Summary)
Eaton Corp. plc, asset age ratios
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The analysis reveals a consistent pattern in the property, plant, and equipment characteristics over the five-year period. The average age ratio demonstrates a declining trend, while the estimated total useful life and elapsed time since purchase exhibit relative stability before a slight adjustment in the final year. These shifts suggest a potential change in asset management or accounting practices.
- Average Age Ratio
- The average age ratio decreased steadily from 60.81% in 2021 to 56.96% in 2025. This indicates that, relative to the estimated total useful life, the average age of the asset base is decreasing. This could be due to consistent asset replacement, revaluation, or a change in the composition of the asset base towards newer equipment.
- Estimated Total Useful Life
- The estimated total useful life remained constant at 20 years from 2022 through 2024. However, it increased to 21 years in 2025. This suggests a potential revision in the estimated longevity of the assets, possibly reflecting improvements in maintenance practices, technological advancements extending asset life, or a change in depreciation policies.
- Estimated Age & Remaining Life
- The estimated age, representing the time elapsed since purchase, remained stable at 12 years from 2022 to 2025. Consequently, the estimated remaining life was consistent at 8 years between 2022 and 2024, increasing to 9 years in 2025, aligning with the increase in estimated total useful life. This indicates that, for the majority of the asset base, the remaining useful life is a significant portion of the total estimated life.
The combined trends suggest a potential strategy of maintaining a relatively young asset base, coupled with a recent adjustment to extend the estimated useful lives of those assets. Further investigation into the specific asset acquisitions and depreciation methods would provide a more comprehensive understanding of these changes.
Average Age
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Accumulated depreciation | ||||||
| Gross property, plant and equipment | ||||||
| Asset Age Ratio | ||||||
| Average age1 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Average age = 100 × Accumulated depreciation ÷ Gross property, plant and equipment
= 100 × ÷ =
An examination of the financial information reveals trends in accumulated depreciation, gross property, plant, and equipment, and the resulting average age ratio over a five-year period. Both accumulated depreciation and gross property, plant, and equipment demonstrate consistent increases annually. However, the average age ratio exhibits a decreasing trend throughout the period.
- Accumulated Depreciation
- Accumulated depreciation increased from US$4,754 million in 2021 to US$5,712 million in 2025. The rate of increase appears relatively consistent year-over-year, with slightly larger increases observed between 2022 and 2023, and again between 2023 and 2024. This suggests a steady depreciation expense being recognized.
- Gross Property, Plant, and Equipment
- Gross property, plant, and equipment also increased steadily, moving from US$7,818 million in 2021 to US$10,028 million in 2025. The increases are generally proportional to the increases in accumulated depreciation, though the growth is more pronounced in the later years of the period, particularly between 2024 and 2025. This indicates continued investment in property, plant, and equipment.
- Average Age Ratio
- The average age ratio decreased from 60.81% in 2021 to 56.96% in 2025. This decline suggests that, despite increases in both gross property, plant, and equipment and accumulated depreciation, the company is effectively renewing or upgrading its asset base. The decreasing ratio implies that, on average, the property, plant, and equipment are becoming newer relative to their depreciable lives. The rate of decrease is most significant between 2021 and 2023, and then slows slightly in the subsequent years.
The combined trends suggest a pattern of ongoing investment in property, plant, and equipment, coupled with a consistent depreciation process. The decreasing average age ratio is a positive indicator, suggesting the asset base is being maintained and modernized.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Estimated total useful life = Gross property, plant and equipment ÷ Depreciation of property, plant and equipment
= ÷ =
Gross property, plant and equipment exhibited a consistent upward trend over the five-year period, increasing from US$7,818 million in 2021 to US$10,028 million in 2025. Depreciation expense fluctuated modestly, beginning at US$426 million in 2021, decreasing to US$408 million in 2022, and then generally increasing to US$477 million by 2025. The estimated total useful life of these assets demonstrated a slight increase over the period.
- Gross Property, Plant & Equipment Trend
- The value of gross property, plant and equipment increased each year. The largest year-over-year increase occurred between 2023 and 2025, with an addition of US$1,290 million. This suggests continued investment in fixed assets during this period.
- Depreciation Expense Trend
- Depreciation expense initially decreased in 2022, potentially due to assets reaching the end of their useful life and being disposed of, or a change in depreciation methods. However, it then increased steadily through 2025, aligning with the growth in gross property, plant and equipment. The increase in depreciation expense from 2024 to 2025 was the largest during the observed period.
- Estimated Useful Life Trend
- The estimated total useful life of the property, plant and equipment increased from 18 years in 2021 to 21 years in 2025. This increase could indicate a shift towards investing in asset types with longer lifespans, improvements in asset maintenance extending useful lives, or a revision of depreciation policies. The most significant change in estimated useful life occurred between 2024 and 2025.
The combination of increasing gross property, plant and equipment and a rising estimated useful life suggests a long-term investment strategy focused on assets expected to generate returns over an extended period. The increasing depreciation expense is a natural consequence of the growing asset base.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation of property, plant and equipment
= ÷ =
Analysis reveals a consistent increase in accumulated depreciation over the five-year period, alongside fluctuating, but generally increasing, annual depreciation expense. The reported time elapsed since purchase remains constant, suggesting a lack of significant new asset acquisitions relative to the existing asset base during this timeframe.
- Accumulated Depreciation
- Accumulated depreciation increased steadily from US$4,754 million in 2021 to US$5,712 million in 2025. This represents a total increase of approximately US$958 million, or 20.1%, over the period. The rate of increase appears to be accelerating, with larger year-over-year increases observed in 2023, 2024, and 2025.
- Depreciation Expense
- Depreciation expense exhibited some volatility. It decreased from US$426 million in 2021 to US$408 million in 2022, before increasing to US$429 million in 2023, US$446 million in 2024, and reaching US$477 million in 2025. The overall trend is upward, with a total increase of US$51 million, or 11.9%, from 2021 to 2025. The increases in depreciation expense in the later years align with the accelerating growth in accumulated depreciation.
- Time Elapsed Since Purchase
- The reported time elapsed since purchase remained constant at 12 years for the period 2022 through 2025, while it was 11 years in 2021. This suggests that the company has not been significantly updating its property, plant, and equipment base with substantial new purchases during this period. The consistent age indicates that the existing assets are continuing to be depreciated, contributing to the observed increases in accumulated depreciation and depreciation expense.
The combination of consistently increasing accumulated depreciation, rising depreciation expense, and a stable asset age suggests that the existing asset base is being utilized and depreciated over time without significant replacement. Further investigation into capital expenditure plans would be necessary to understand the company’s long-term strategy regarding property, plant, and equipment.
Estimated Remaining Life
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Estimated remaining life = Net property, plant and equipment ÷ Depreciation of property, plant and equipment
= ÷ =
Net property, plant and equipment exhibited a consistent upward trend over the five-year period, increasing from US$3,064 million in 2021 to US$4,316 million in 2025. Depreciation expense remained relatively stable between 2021 and 2025, fluctuating between US$408 million and US$477 million. A notable shift is observed in the estimated remaining life of the assets.
- Net PP&E Trend
- The growth in net property, plant and equipment suggests ongoing investment in fixed assets. The increase from 2021 to 2025 represents a cumulative growth of approximately 40.8%. This expansion could be due to capacity increases, modernization efforts, or acquisitions.
- Depreciation Expense Trend
- Depreciation expense remained within a narrow range throughout the period. The increase from US$426 million in 2021 to US$477 million in 2025 indicates a moderate rise in the depreciable base, but the percentage increase is relatively small, suggesting the impact of new asset additions is partially offset by fully depreciated assets or changes in depreciation methods.
- Estimated Remaining Life Trend
- The estimated remaining life initially increased from 7 years in 2021 to 8 years in 2022, and remained constant at 8 years through 2024. A further increase to 9 years is observed in 2025. This suggests a potential reassessment of asset useful lives, possibly due to improved maintenance practices, technological upgrades extending asset functionality, or a change in accounting estimates. The lengthening of the estimated remaining life will result in lower annual depreciation expense, all else being equal.
The combination of increasing net PP&E and a lengthening estimated remaining life suggests a strategy of continued investment in assets with an expectation of extended operational use. Further investigation into the specific nature of the asset additions and the rationale behind the changes in estimated useful lives would provide a more comprehensive understanding of the company’s capital expenditure and depreciation policies.