Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Net Profit Margin since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Return on Invested Capital (ROIC)
Freeport-McMoRan Inc., ROIC calculation
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
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).
1 NOPAT. See details »
2 Invested capital. See details »
3 2025 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
The period under review demonstrates a generally declining trend in Return on Invested Capital (ROIC), despite some fluctuations. Net operating profit after taxes (NOPAT) initially decreased, stabilized, and then showed a modest increase, while invested capital exhibited a more variable pattern.
- ROIC Trend
- ROIC began at 17.66% in 2021, representing the highest value within the observed timeframe. A substantial decrease to 14.20% was recorded in 2022. This decline continued, albeit at a slower pace, to 13.19% in 2023. A slight recovery to 13.39% occurred in 2024, but this was followed by a further decrease to 11.69% in 2025. This overall trajectory indicates diminishing returns on capital employed.
- NOPAT Analysis
- NOPAT experienced a decrease from US$6,188 million in 2021 to US$5,116 million in 2022, representing a significant reduction in operating profitability. From 2022 to 2023, NOPAT continued to decline, reaching US$4,632 million. It remained relatively stable at US$4,538 million in 2024 before increasing to US$4,755 million in 2025. The 2025 value, while higher than the previous two years, remains below the 2021 level.
- Invested Capital Analysis
- Invested capital increased from US$35,043 million in 2021 to US$36,035 million in 2022. A slight decrease to US$35,126 million was observed in 2023. A more noticeable reduction occurred in 2024, with invested capital falling to US$33,889 million. However, 2025 saw a substantial increase to US$40,693 million, indicating significant capital deployment during that year. This increase in invested capital, coupled with a modest increase in NOPAT, contributed to the lower ROIC in 2025.
The interplay between NOPAT and invested capital suggests that while profitability experienced some recovery towards the end of the period, the increased capital employed did not yield a proportional increase in returns, resulting in the observed decline in ROIC. The significant increase in invested capital in 2025 warrants further investigation to determine the nature and expected returns of these investments.
Decomposition of ROIC
Freeport-McMoRan Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | = | × | × | ||||
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
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).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The period under review demonstrates a generally declining trend in Return on Invested Capital (ROIC), although with some fluctuations. This decline appears to be driven by offsetting movements in its component parts: operating profit margin, capital turnover, and the impact of taxes. A detailed examination of each component follows.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited a consistent decrease from 36.59% in 2021 to 26.27% in 2025. This represents a substantial reduction in profitability from operations over the five-year period. The most significant decline occurred between 2022 and 2023, followed by a more moderate decrease in subsequent years. This suggests increasing cost pressures or decreasing pricing power.
- Turnover of Capital (TO)
- The turnover of capital remained relatively stable between 2021 and 2023, fluctuating around 0.65. A notable increase to 0.75 was observed in 2024, indicating improved efficiency in utilizing capital to generate revenue. However, this improvement was not sustained, with the ratio decreasing to 0.64 in 2025. The 2024 increase partially offset the declining operating profit margin.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The adjustment for the effective cash tax rate generally decreased from 73.62% in 2021 to 62.94% in 2024, indicating a higher effective tax burden. This negatively impacted ROIC. A slight recovery to 69.80% was seen in 2025, lessening the negative impact from taxes, but not reversing the overall trend. The fluctuations in this metric contribute to the variability in ROIC.
- Return on Invested Capital (ROIC)
- As a result of the combined effects of the aforementioned factors, ROIC decreased from 17.66% in 2021 to 11.69% in 2025. While the increase in capital turnover in 2024 provided a temporary boost, the declining operating profit margin and, to a lesser extent, the changing tax rate adjustment, ultimately drove the overall downward trend in ROIC. The 2024 ROIC of 13.39% represents the only year-over-year increase in the period.
In summary, the observed decline in ROIC is primarily attributable to the erosion of operating profitability. While capital efficiency showed a temporary improvement, it was insufficient to counteract the negative influence of the decreasing operating profit margin and the fluctuating tax rate adjustment.
Operating Profit Margin (OPM)
Freeport-McMoRan Inc., OPM calculation
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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × ÷ =
The operating profit margin exhibited a declining trend over the five-year period. While net operating profit before taxes fluctuated, adjusted revenues generally increased, driving the observed changes in profitability.
- Operating Profit Margin (OPM)
- The operating profit margin decreased consistently from 36.59% in 2021 to 26.27% in 2025. This represents a cumulative decline of approximately 10.32 percentage points over the period. The most significant decrease occurred between 2021 and 2022, with a reduction of 4.8 percentage points. Subsequent declines were more moderate, though consistently negative.
Net operating profit before taxes experienced a decrease from US$8,405 million in 2021 to US$6,641 million in 2023, before partially recovering to US$7,210 million in 2024 and then decreasing again to US$6,813 million in 2025. This volatility in NOPBT contributed to the fluctuations observed in the OPM.
- Revenue and OPM Relationship
- Adjusted revenues demonstrated an overall upward trend, increasing from US$22,971 million in 2021 to US$25,930 million in 2025. Despite this revenue growth, the operating profit margin declined, indicating that revenue increases were not sufficient to offset pressures on profitability. The increasing revenue base, coupled with a decreasing OPM, suggests rising costs or pricing pressures.
The combination of fluctuating net operating profit and increasing revenues resulted in a consistent erosion of the operating profit margin. Further investigation into the underlying cost structure and pricing strategies would be necessary to fully understand the drivers of this trend.
Turnover of Capital (TO)
Freeport-McMoRan Inc., TO calculation
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).
1 Invested capital. See details »
2 2025 Calculation
TO = Adjusted revenues ÷ Invested capital
= ÷ =
The period under review demonstrates fluctuations in the turnover of capital. Adjusted revenues exhibited a relatively stable pattern, while invested capital showed more variability. The interplay between these two factors resulted in a dynamic turnover of capital ratio.
- Turnover of Capital (TO)
- The turnover of capital ratio decreased from 0.66 in 2021 to 0.63 in 2022, indicating a less efficient utilization of invested capital to generate revenue. A slight recovery was observed in 2023, with the ratio increasing to 0.65.
- A more substantial increase occurred in 2024, with the ratio reaching 0.75, suggesting improved capital utilization. However, this improvement was not sustained, as the ratio decreased to 0.64 in 2025. This final decrease suggests a potential weakening in the efficiency of revenue generation relative to the capital employed.
Adjusted revenues remained relatively consistent between 2021 and 2023, fluctuating around the US$22-23 billion mark. A noticeable increase in adjusted revenues was observed in 2024 and 2025, reaching US$25.385 billion and US$25.930 billion, respectively. This revenue growth did not consistently translate into a higher turnover of capital ratio.
- Invested Capital
- Invested capital increased from US$35.043 billion in 2021 to US$36.035 billion in 2022. A slight decrease was recorded in 2023, falling to US$35.126 billion. A more significant decrease occurred in 2024, with invested capital reaching US$33.889 billion.
- However, invested capital increased substantially in 2025, rising to US$40.693 billion. This increase in invested capital, coupled with a moderate increase in adjusted revenues, contributed to the decline in the turnover of capital ratio observed in that year.
The fluctuations in the turnover of capital ratio appear to be influenced by both changes in adjusted revenues and, more prominently, changes in invested capital. The increase in invested capital in 2025, without a proportionally larger increase in revenues, resulted in a lower ratio, indicating reduced efficiency in capital utilization during that period.
Effective Cash Tax Rate (CTR)
Freeport-McMoRan Inc., CTR calculation
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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
The effective cash tax rate exhibited fluctuations over the five-year period. Cash operating taxes remained relatively stable between 2021 and 2023, before increasing notably in 2024 and decreasing again in 2025. Net operating profit before taxes (NOPBT) generally decreased from 2021 to 2023, then increased in 2024, followed by a slight decrease in 2025.
- Effective Cash Tax Rate (CTR) - Trend Analysis
- The effective cash tax rate increased from 26.38% in 2021 to 28.99% in 2022, and further to 30.26% in 2023. A significant jump was observed in 2024, reaching 37.06%, before declining to 30.20% in 2025. This suggests increasing tax obligations relative to pre-tax profits during 2022 and 2023, a substantial increase in 2024, and a partial reversal of that increase in 2025.
- Relationship between NOPBT and Cash Taxes
- While NOPBT decreased from US$8,405 million in 2021 to US$6,641 million in 2023, the effective cash tax rate still increased. This indicates that the company continued to pay a larger percentage of its diminishing profits in taxes. The increase in NOPBT in 2024 to US$7,210 million coincided with the largest increase in the effective cash tax rate, suggesting a potentially significant change in taxable income composition or applicable tax regulations. The subsequent decrease in the CTR in 2025, despite a slight decrease in NOPBT, could be attributed to changes in tax credits or deductions.
The volatility in the effective cash tax rate warrants further investigation to understand the underlying drivers. Factors such as changes in tax laws, geographic mix of earnings, utilization of tax credits, and deferred tax asset adjustments could all contribute to these fluctuations.