Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Balance Sheet: Assets
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
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Profitability Ratios (Summary)
Freeport-McMoRan Inc., profitability ratios
Based on: 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), 10-K (reporting date: 2020-12-31).
- Gross profit margin
- The gross profit margin demonstrates a significant increase from 17.91% in 2020 to a peak of 38.59% in 2021, followed by a gradual decline over the subsequent years. By 2024, the margin decreases to 30.09%, indicating that while profitability at the gross level remains strong compared to 2020, there is a diminishing trend after 2021.
- Operating profit margin
- The operating profit margin shows a similar pattern to the gross margin, rising sharply from 17.16% in 2020 to 36.62% in 2021. Subsequently, it trends downward to 26.97% in 2024. Despite the decline, the margin maintains a higher profitability level than in 2020, suggesting sustained but weakening operating efficiency.
- Net profit margin
- The net profit margin increases markedly from 4.22% in 2020 to 18.85% in 2021, indicating improved bottom-line profitability. However, this margin experiences a persistent decrease afterward, dropping to 7.42% by 2024. This trend suggests that expenses, taxes, or other non-operating factors may have increased, impacting the net profitability despite solid gross and operating margins.
- Return on equity (ROE)
- ROE follows a sharp positive trajectory from 5.89% in 2020 to a high of 30.8% in 2021, reflecting significant improvement in generating shareholder value. Thereafter, ROE declines steadily, reaching 10.74% in 2024. Although lower than the peak, this remains higher than the 2020 base, indicating better capital utilization overall but weakened returns in the later years.
- Return on assets (ROA)
- ROA increases strongly from 1.42% in 2020 to 8.97% in 2021, showing enhanced efficiency in asset use to generate profits. This metric subsequently decreases to 3.44% by 2024, converging toward pre-2021 levels but still exceeding the initial figure. The decline signals a reduction in asset profitability, possibly due to changes in operating conditions or increased asset base without commensurate profit growth.
Return on Sales
Return on Investment
Gross Profit Margin
Freeport-McMoRan Inc., gross profit margin calculation
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × ÷ =
- Revenue Trends
- Revenues show a significant increase from 14,198 million US dollars in 2020 to 22,855 million US dollars in 2023, followed by a further rise to 25,455 million US dollars in 2024. This reflects strong top-line growth over the five-year period.
- Gross Profit Trends
- Gross profit rose sharply from 2,543 million US dollars in 2020 to a peak of 8,815 million US dollars in 2021, then declined to 7,160 million US dollars in 2023 before slightly recovering to 7,660 million US dollars in 2024. Despite the initial surge, gross profit has trended downward after 2021 but remains well above 2020 levels.
- Gross Profit Margin Trends
- The gross profit margin increased substantially from 17.91% in 2020 to 38.59% in 2021, indicating improved profitability or cost efficiency. However, from 2021 onwards, the margin decreased consistently, falling to 30.09% by 2024. This decline suggests either rising costs or pricing pressures affecting profit retention on revenues.
- Overall Insights
- The data indicates that the company achieved strong growth in revenues and gross profit early in the period, peaking in 2021. Since then, while revenues have modestly increased, gross profit and profit margins have declined, highlighting potential challenges in sustaining high profitability. The erosion of margins suggests an area that may require management attention to improve cost controls or pricing strategies going forward.
Operating Profit Margin
Freeport-McMoRan Inc., operating profit margin calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × ÷ =
The financial data displays notable changes in the operating income, revenues, and operating profit margin over the five-year period analyzed.
- Operating Income
- The operating income showed significant growth from 2020 to 2021, increasing sharply from 2,437 million USD to 8,366 million USD. However, this was followed by declines in the next two years, decreasing to 7,037 million USD in 2022 and further to 6,225 million USD in 2023. A slight recovery is observed in 2024 with operating income rising to 6,864 million USD, though it remains below the peak of 2021.
- Revenues
- Revenues experienced a continuous upward trend throughout the period. Starting at 14,198 million USD in 2020, they increased sharply to 22,845 million USD in 2021. The revenue then stabilized around the 22,780 to 22,855 million USD range in 2022 and 2023, before ascending again to 25,455 million USD in 2024. This growth pattern indicates robust sales performance with a minor plateau during the middle years.
- Operating Profit Margin
- The operating profit margin followed an upward trajectory initially, rising from 17.16% in 2020 to a high of 36.62% in 2021. This was followed by a gradual decline over the subsequent years to 30.89% in 2022, 27.24% in 2023, and slightly lower to 26.97% in 2024. Despite the decrease, the margin remains substantially higher compared to the 2020 level.
In summary, the operating income and profit margin peaked in 2021, corresponding with a significant increase in revenues. Following this peak, operating income and margin have trended downward, indicating increasing costs or other pressures impacting profitability, despite overall revenue growth continuing. The revenue growth by 2024 suggests solid market demand, while the decreasing profit margin may warrant closer examination of operational efficiency or cost management going forward.
Net Profit Margin
Freeport-McMoRan Inc., net profit margin calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net profit margin = 100 × Net income attributable to common stockholders ÷ Revenues
= 100 × ÷ =
- Revenue Trends
- The revenues exhibited a substantial increase from 14,198 million US dollars in 2020 to 25,455 million US dollars in 2024. The most significant growth occurred between 2020 and 2021, with revenues rising sharply from 14,198 to 22,845 million US dollars. Subsequently, revenues remained relatively stable around 22,780 to 22,855 million US dollars during 2022 and 2023, before increasing again in 2024.
- Net Income Analysis
- Net income attributable to common stockholders showed considerable volatility. It surged in 2021 to 4,306 million US dollars from 599 million in 2020, indicating a strong performance year. However, net income declined in the following years, down to 3,468 million in 2022 and further to 1,848 million in 2023. A marginal recovery is observed in 2024 with net income reaching 1,889 million US dollars.
- Net Profit Margin Evaluation
- The net profit margin percentage followed a pattern consistent with net income fluctuations. The margin peaked at 18.85% in 2021, up from 4.22% in 2020, reflecting the improved profitability in that year. Afterwards, the margin declined progressively to 15.22% in 2022, then sharply to 8.09% in 2023 and 7.42% in 2024. This decline indicates decreasing profitability relative to revenues despite revenue growth.
- Insight Summary
- The company experienced significant growth in revenues and net income in 2021, marking it as an exceptional year. However, profitability metrics have declined since then, indicating pressures on net income despite generally stable or growing revenues. This suggests that cost increases or other factors may be impacting profit margins. The modest improvement in net income in 2024 does not correspond to a similar improvement in profit margin, which continues to trend downward.
Return on Equity (ROE)
Freeport-McMoRan Inc., ROE calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROE = 100 × Net income attributable to common stockholders ÷ Stockholders’ equity
= 100 × ÷ =
- Net Income Attributable to Common Stockholders
- The net income shows a significant increase from 599 million US dollars in 2020 to a peak of 4,306 million US dollars in 2021. Following this peak, there is a decline over the next two years to 3,468 million US dollars in 2022 and further down to 1,848 million US dollars in 2023. The figure stabilizes somewhat in 2024, with a slight increase to 1,889 million US dollars.
- Stockholders’ Equity
- Stockholders’ equity exhibits consistent growth throughout the period under review. Starting at 10,174 million US dollars in 2020, it rises steadily each year, reaching 17,581 million US dollars by 2024. This reflects a sustained increase of approximately 73% over the five-year span.
- Return on Equity (ROE)
- ROE experiences considerable volatility. Beginning at 5.89% in 2020, it surges to a high of 30.8% in 2021. Subsequently, ROE declines substantially to 22.3% in 2022 and continues its downward trend to 11.07% in 2023, before slightly decreasing again to 10.74% in 2024. This pattern indicates diminishing profitability relative to equity despite the growth in stockholders’ equity.
- Overall Trends and Insights
- The data demonstrate a peak in profitability in 2021, with both net income and ROE reaching their highest points. Despite ongoing growth in stockholders’ equity, profitability metrics have declined since 2021 and have not returned to their previous highs by 2024. This suggests that growth in equity is not being matched by proportionate increases in net income, leading to reduced efficiency in generating returns for shareholders over the most recent years.
Return on Assets (ROA)
Freeport-McMoRan Inc., ROA calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROA = 100 × Net income attributable to common stockholders ÷ Total assets
= 100 × ÷ =
- Net Income Attributable to Common Stockholders
- The net income demonstrates significant volatility over the observed period. It increased sharply from 599 million USD in 2020 to a peak of 4306 million USD in 2021, followed by a decline to 3468 million USD in 2022. The downward trend continued, with net income dropping to 1848 million USD in 2023 and slightly rising to 1889 million USD in 2024. This pattern reflects a substantial gain in 2021, succeeded by a steady reduction in profitability over the subsequent years.
- Total Assets
- Total assets show a consistent upward trend throughout the five-year span. Assets grew from 42,144 million USD at the end of 2020 to 54,848 million USD by the end of 2024. This steady increase suggests ongoing investment, expansion, or asset acquisition over time, reflecting growth in the company's asset base.
- Return on Assets (ROA)
- Return on assets exhibits notable fluctuation aligning with net income changes. ROA rose sharply from 1.42% in 2020 to 8.97% in 2021, indicating improved efficiency or profitability during that year. However, there is a declining trend afterward, with ROA decreasing to 6.79% in 2022, then falling more steeply to 3.52% in 2023, and remaining nearly stable at 3.44% in 2024. This decline in ROA corresponds with the reduction in net income despite the increase in total assets, suggesting diminishing effectiveness in utilizing assets to generate profit in recent years.