Johnson Controls International plc (NYSE:JCI)

The financial performance exhibits distinct fluctuations over the analyzed periods, with notable variations in returns and leverage metrics.

Return on Assets (ROA)

The ROA shows a marked improvement from approximately 4.76% at the end of 2018 to a peak exceeding 13% during mid-2019, indicating heightened asset efficiency in that timeframe. However, a sharp decline follows in early and mid-2020, dropping to near 1.5-2%, suggestive of reduced asset productivity possibly linked to external disruptions. Post-2020, the ROA gradually recovers, demonstrating moderate oscillations but generally stabilizing around the 3.5% to 4.8% range by the start of 2024.

Financial Leverage

The financial leverage ratio remains relatively stable with a gentle upward trend across the periods. Starting at about 2.39 in late 2018, it held steady in the low 2.3 range until 2019, then incrementally increased, reaching approximately 2.78 by Q1 2024. This gradual increase indicates a modest rise in debt usage relative to equity, implying a cautious but steady reliance on leveraged financing.

Return on Equity (ROE)

The ROE mirrors the ROA's pattern but with higher magnitude, rising from around 11.38% at the end of 2018 to nearly 29% in mid to late 2019. This sharp increase reflects strong profitability and possibly effective use of financial leverage during that period. A significant drop occurs in 2020, with ROE falling below 5%, signaling reduced shareholder returns amid economic challenges. Since mid-2020, there is a positive recovery trend, with ROE values fluctuating but improving to a range between 10.8% and 12.6% by early 2024, indicative of restoring profitability and efficiency.

Overall, the data reveals a period of robust profitability in 2019, followed by a significant downturn in 2020, likely influenced by adverse market conditions. Recovery trends in ROA and ROE post-2020, accompanied by a slight increase in financial leverage, suggest strategic adjustments in capital structure and operational effectiveness aimed at regaining financial performance.

Net Profit Margin

The net profit margin displays considerable volatility across the analyzed periods. It peaked notably in mid to late 2019, reaching values above 22%, followed by a sharp decline in the early quarters of 2020 to below 4%. Subsequently, it experienced a moderate recovery, fluctuating between approximately 4% and 8% from late 2020 through early 2024. This pattern suggests that profitability was significantly impacted around 2020, with a gradual but uneven improvement thereafter.

Asset Turnover

Asset turnover ratios remained relatively stable throughout the observed periods, with minor fluctuations ranging between 0.53 and 0.63. There is a subtle upward trend evident from the second half of 2021 onwards, moving from the mid-0.5 range closer to 0.62 by early 2024. This indicates a steady improvement in the efficiency with which assets are used to generate sales.

Financial Leverage

Financial leverage exhibited a gradual increasing trend over time. Starting from approximately 2.39 in late 2018, the ratio experienced some fluctuations but generally rose to around 2.78 by the first quarter of 2024. This suggests an increasing use of debt or financial obligations relative to equity, which may impact the company’s risk profile and cost of capital.

Return on Equity (ROE)

Return on equity showed significant variation, closely mirroring the trend in net profit margin. It peaked sharply in mid to late 2019 at around 28%, then dropped drastically to a low of about 3.6% in the early part of 2020. Thereafter, a recovery phase took place, with ROE climbing back to a range between approximately 7.5% and 12.6% in the subsequent years up to early 2024. This fluctuation indicates a strong responsiveness of shareholder returns to underlying profitability and leverage changes during the period.

Net Profit Margin

The net profit margin displays considerable volatility across the periods under review. Starting from 7.77% at the end of 2018, it increased significantly to peak values above 20% during mid-2019. However, a sharp decline occurred in early 2020, reaching as low as 2.83% in the third quarter of 2020. Following this trough, the margin showed a moderate recovery, stabilizing between 4% and 8% from 2021 onward. Nevertheless, fluctuations persisted, with the margin peaking at 7.85% in late 2023 but declining again to 6.32% by the first quarter of 2024.

Asset Turnover

The asset turnover ratio has remained relatively stable throughout the periods, exhibiting minor fluctuations within a narrow range. Starting at 0.61 at the end of 2018, it declined slightly to 0.55 by mid-2020 and hovered around 0.53 to 0.57 through 2021 and early 2022. From mid-2022 onwards, a gradual upward trend is evident, reaching a high of 0.63 in late 2023 before a slight dip to 0.62 in early 2024. Overall, the ratio reflects a consistent level of efficiency in generating sales from assets.

Return on Assets (ROA)

Return on Assets experienced marked variation over the periods. Initially near 4.76% at the end of 2018, ROA surged dramatically to peaks above 13% in mid-2019. A steep decline followed in 2020, dropping to just 1.55% in the third quarter. From 2021 forward, ROA gradually recovered, fluctuating between approximately 2% to just under 5%. The highest point in this later period was 4.82% in mid-2023, followed by a small decline to 3.9% in the first quarter of 2024. This pattern reflects an initial period of strong profitability contribution from assets, interrupted by a pronounced dip likely linked to external challenges, with a moderate recovery thereafter.

Summary

Across the observed periods, profitability measures show significant volatility, with strong performances in 2019 followed by pronounced declines in 2020, likely indicative of challenging economic conditions impacting margins and returns. Asset turnover remains steady, indicating consistent asset utilization despite these fluctuations. The recovery in profitability metrics during 2021 through early 2024 suggests gradual improvement, though some variability remains. This mixed pattern highlights the company's resilience but also its exposure to external influences affecting profitability.