Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Johnson Controls International plc, profitability ratios
Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).
The profitability profile of the organization is characterized by a divergence between steady gross margin expansion and significant volatility in operational and net profitability metrics between 2018 and 2023.
- Gross Profitability
- A positive and sustained trend is evident in the gross profit margin, which rose from 29.87% in 2018 to a peak of 34.05% in 2021. Despite a slight dip in 2022, the margin remained resilient, closing at 33.48% in 2023, indicating an overall improvement in the management of direct costs of goods sold.
- Operational Efficiency
- The operating profit margin exhibited substantial instability. After a decline from 9.89% in 2018 to a low of 4.32% in 2020, a sharp recovery occurred in 2021, reaching 10.81%. However, this gain was not sustained, with the margin retreating to 6.44% by 2023, suggesting inconsistent control over operating expenses relative to revenue growth.
- Net Profitability and Returns
- Net profit margin, Return on Equity (ROE), and Return on Assets (ROA) all demonstrate a mirrored pattern of extreme fluctuation. An anomalous peak occurred in 2019, where net profit margin reached 23.67%, ROE climbed to 28.71%, and ROA rose to 13.42%. This was followed by a severe contraction in 2020, with net profit margin dropping to 2.83% and ROA falling to 1.55%.
- Recovery and Stabilization
- Following the 2020 trough, a gradual recovery phase is observable. By September 30, 2023, the net profit margin returned to 6.90%, nearly matching 2018 levels. Similarly, ROE improved to 11.18% and ROA recovered to 4.38%, indicating a return to baseline profitability levels after a period of high variance.
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Gross Profit Margin
Johnson Controls International plc, gross profit margin calculation, comparison to benchmarks
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Gross profit | 8,971) | 8,343) | 8,059) | 7,411) | 7,693) | 9,380) | |
| Net sales | 26,793) | 25,299) | 23,668) | 22,317) | 23,968) | 31,400) | |
| Profitability Ratio | |||||||
| Gross profit margin1 | 33.48% | 32.98% | 34.05% | 33.21% | 32.10% | 29.87% | |
| Benchmarks | |||||||
| Gross Profit Margin, Competitors2 | |||||||
| Boeing Co. | 9.93% | 5.26% | 4.84% | — | — | — | |
| Caterpillar Inc. | 33.04% | 26.91% | 26.30% | — | — | — | |
| Eaton Corp. plc | 36.36% | 33.19% | 32.28% | — | — | — | |
| GE Aerospace | 21.95% | 24.55% | 24.19% | — | — | — | |
| Honeywell International Inc. | 37.28% | 36.99% | 35.85% | — | — | — | |
| Lockheed Martin Corp. | 12.55% | 12.56% | 13.52% | — | — | — | |
| RTX Corp. | 17.54% | 20.38% | 19.40% | — | — | — | |
Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).
1 2023 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 8,971 ÷ 26,793 = 33.48%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2023 exhibits a notable divergence between revenue volume and profitability efficiency. While net sales experienced a significant contraction in the early part of the period, the gross profit margin demonstrated a consistent upward trajectory, indicating a shift toward a more profitable revenue mix or enhanced cost management strategies.
- Net Sales Trend
- A substantial decline in net sales is observed between September 30, 2018, and September 30, 2020, with revenue falling from US$ 31,400 million to US$ 22,317 million. Following this trough, a steady recovery phase occurred from 2021 through 2023, with sales reaching US$ 26,793 million by the end of the period. Despite this recovery, total sales remained approximately 14.7% below the 2018 peak.
- Gross Profit Margin Evolution
- The gross profit margin increased steadily from 29.87% in 2018 to a peak of 34.05% in 2021. This expansion occurred simultaneously with the decline in net sales, suggesting that the company successfully reduced its cost of goods sold relative to revenue or transitioned toward higher-margin offerings. Following the 2021 peak, the margin experienced a slight contraction to 32.98% in 2022 before recovering to 33.48% in 2023.
- Gross Profit Analysis
- Gross profit followed a trajectory similar to net sales, decreasing from US$ 9,380 million in 2018 to US$ 7,411 million in 2020. However, the subsequent growth in gross profit from 2021 to 2023 (ending at US$ 8,971 million) was supported by both the recovery in sales volume and the maintenance of a higher margin floor compared to the 2018 baseline.
In summary, the data indicates a strategic transformation during this six-year period. The company transitioned from a high-volume, lower-margin operation in 2018 to a more streamlined operation with significantly improved profitability per dollar of sales by 2023.
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Operating Profit Margin
Johnson Controls International plc, operating profit margin calculation, comparison to benchmarks
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Operating income | 1,726) | 1,677) | 2,559) | 963) | 1,214) | 3,107) | |
| Net sales | 26,793) | 25,299) | 23,668) | 22,317) | 23,968) | 31,400) | |
| Profitability Ratio | |||||||
| Operating profit margin1 | 6.44% | 6.63% | 10.81% | 4.32% | 5.07% | 9.89% | |
| Benchmarks | |||||||
| Operating Profit Margin, Competitors2 | |||||||
| Boeing Co. | -0.99% | -5.33% | -4.66% | — | — | — | |
| Caterpillar Inc. | 20.30% | 13.97% | 14.27% | — | — | — | |
| Eaton Corp. plc | 16.75% | 14.55% | 15.69% | — | — | — | |
| GE Aerospace | 8.49% | 6.05% | 8.58% | — | — | — | |
| Honeywell International Inc. | 19.32% | 18.12% | 18.03% | — | — | — | |
| Lockheed Martin Corp. | 12.59% | 12.65% | 13.61% | — | — | — | |
| RTX Corp. | 5.17% | 8.07% | 7.70% | — | — | — | |
| Operating Profit Margin, Sector | |||||||
| Capital Goods | 10.11% | 8.29% | 9.11% | — | — | — | |
| Operating Profit Margin, Industry | |||||||
| Industrials | 9.90% | 9.06% | 9.24% | — | — | — | |
Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).
1 2023 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 1,726 ÷ 26,793 = 6.44%
2 Click competitor name to see calculations.
The operational performance of the entity between 2018 and 2023 is characterized by significant volatility in both top-line revenue and bottom-line operating profitability. A sharp contraction occurred in the early part of the period, followed by a recovery in sales that has not been mirrored by a proportional recovery in operating margins.
- Net Sales Trends
- A substantial decline in net sales was observed between 2018 and 2020, with figures dropping from 31,400 million US$ to 22,317 million US$. Following this trough, a consistent growth trend emerged, with sales increasing annually to reach 26,793 million US$ by September 30, 2023. Despite this recovery, revenue levels remain approximately 14.7% below the 2018 peak.
- Operating Income Fluctuations
- Operating income exhibited extreme variance, falling from 3,107 million US$ in 2018 to a minimum of 963 million US$ in 2020. A sharp rebound occurred in 2021, where income rose to 2,559 million US$. However, this gain was not sustained, as income retreated to 1,677 million US$ in 2022 and remained relatively flat at 1,726 million US$ in 2023.
- Operating Profit Margin Analysis
- The operating profit margin followed a volatile trajectory, contracting from 9.89% in 2018 to 4.32% in 2020. A significant peak was reached in 2021, with the margin expanding to 10.81%, the highest point in the analyzed period. Subsequently, the margin experienced a correction, settling at 6.63% in 2022 and 6.44% in 2023.
The analysis indicates that while the company has successfully regained sales momentum since 2020, the inability to maintain the 2021 margin peak suggests increased operating costs or a shift in product mix. The stabilization of the operating profit margin around 6.4% to 6.6% in the final two years suggests a new operational baseline that is significantly lower than the efficiency levels observed in 2018 and 2021.
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Net Profit Margin
Johnson Controls International plc, net profit margin calculation, comparison to benchmarks
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income attributable to Johnson Controls | 1,849) | 1,532) | 1,637) | 631) | 5,674) | 2,162) | |
| Net sales | 26,793) | 25,299) | 23,668) | 22,317) | 23,968) | 31,400) | |
| Profitability Ratio | |||||||
| Net profit margin1 | 6.90% | 6.06% | 6.92% | 2.83% | 23.67% | 6.89% | |
| Benchmarks | |||||||
| Net Profit Margin, Competitors2 | |||||||
| Boeing Co. | -2.86% | -7.41% | -6.75% | — | — | — | |
| Caterpillar Inc. | 16.18% | 11.85% | 13.47% | — | — | — | |
| Eaton Corp. plc | 13.87% | 11.86% | 10.92% | — | — | — | |
| GE Aerospace | 14.68% | 0.31% | -9.17% | — | — | — | |
| Honeywell International Inc. | 15.43% | 14.00% | 16.11% | — | — | — | |
| Lockheed Martin Corp. | 10.24% | 8.69% | 9.42% | — | — | — | |
| RTX Corp. | 4.64% | 7.75% | 6.00% | — | — | — | |
| Net Profit Margin, Sector | |||||||
| Capital Goods | 9.09% | 5.27% | 3.71% | — | — | — | |
| Net Profit Margin, Industry | |||||||
| Industrials | 8.32% | 5.04% | 5.85% | — | — | — | |
Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).
1 2023 Calculation
Net profit margin = 100 × Net income attributable to Johnson Controls ÷ Net sales
= 100 × 1,849 ÷ 26,793 = 6.90%
2 Click competitor name to see calculations.
The analysis of net profit margins over the six-year period reveals a profile characterized by extreme volatility in the early years followed by a trend of normalization and stability.
- Profitability Volatility (2018-2020)
- A significant anomaly is observed in 2019, where the net profit margin spiked to 23.67%. This peak occurred despite a reduction in net sales from US$ 31.4 billion in 2018 to US$ 23.9 billion in 2019, indicating that the surge in net income attributable to the company was likely driven by non-recurring items rather than operational efficiency. This was followed by a sharp correction in 2020, where the margin fell to its lowest point of 2.83%, coinciding with a trough in net sales of US$ 22.3 billion.
- Stabilization and Recovery (2021-2023)
- Beginning in 2021, a recovery phase is evident. Net sales exhibited consistent year-over-year growth, rising from US$ 23.6 billion in 2021 to US$ 26.7 billion by 2023. During this period, the net profit margin stabilized, fluctuating minimally between 6.06% and 6.92%. This trend suggests a return to sustainable operational performance and a steadying of the cost-to-revenue relationship.
- Long-term Margin Comparison
- The net profit margin as of September 30, 2023, stands at 6.90%, which is nearly identical to the 6.89% reported on September 30, 2018. This indicates that after a period of extreme fluctuation, the company's bottom-line efficiency has returned to its 2018 levels, despite the overall decrease in net sales volume compared to the start of the period.
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Return on Equity (ROE)
Johnson Controls International plc, ROE calculation, comparison to benchmarks
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income attributable to Johnson Controls | 1,849) | 1,532) | 1,637) | 631) | 5,674) | 2,162) | |
| Shareholders’ equity attributable to Johnson Controls | 16,545) | 16,268) | 17,562) | 17,447) | 19,766) | 21,164) | |
| Profitability Ratio | |||||||
| ROE1 | 11.18% | 9.42% | 9.32% | 3.62% | 28.71% | 10.22% | |
| Benchmarks | |||||||
| ROE, Competitors2 | |||||||
| Boeing Co. | — | — | — | — | — | — | |
| Caterpillar Inc. | 53.02% | 42.25% | 39.37% | — | — | — | |
| Eaton Corp. plc | 16.90% | 14.45% | 13.06% | — | — | — | |
| GE Aerospace | 34.63% | 0.62% | -16.17% | — | — | — | |
| Honeywell International Inc. | 35.68% | 29.74% | 29.85% | — | — | — | |
| Lockheed Martin Corp. | 101.24% | 61.86% | 57.62% | — | — | — | |
| RTX Corp. | 5.34% | 7.16% | 5.29% | — | — | — | |
| ROE, Sector | |||||||
| Capital Goods | 27.89% | 13.39% | 8.48% | — | — | — | |
| ROE, Industry | |||||||
| Industrials | 27.70% | 15.38% | 15.38% | — | — | — | |
Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).
1 2023 Calculation
ROE = 100 × Net income attributable to Johnson Controls ÷ Shareholders’ equity attributable to Johnson Controls
= 100 × 1,849 ÷ 16,545 = 11.18%
2 Click competitor name to see calculations.
The Return on Equity (ROE) for the period between 2018 and 2023 is characterized by significant volatility, followed by a period of stabilization and moderate growth. The metric experienced an extreme peak in 2019 before dropping to a multi-year low in 2020, eventually recovering to 11.18% by September 30, 2023.
- Net Income Dynamics
- Earnings attributable to shareholders exhibited substantial fluctuations. A sharp increase in net income occurred in 2019, reaching 5,674 million USD, which drove the ROE to its highest point of 28.71%. This was followed by a precipitous decline in 2020 to 631 million USD, contributing to a sharp contraction in the ROE to 3.62%. Since 2021, net income has shown a trajectory of gradual recovery, rising from 1,637 million USD in 2021 to 1,849 million USD in 2023.
- Shareholders' Equity Trends
- A general downward trend in shareholders' equity is observed over the six-year period. Total equity decreased from 21,164 million USD in 2018 to 16,545 million USD in 2023. This reduction in the equity base serves to amplify the impact of net income changes on the ROE percentage, as the denominator of the ratio contracted by approximately 21.8% over the analyzed timeframe.
- ROE Recovery and Stabilization
- Following the instability observed between 2019 and 2020, the ROE has entered a phase of consistent improvement. From the 3.62% trough in 2020, the ratio climbed to 9.32% in 2021 and 9.42% in 2022, ultimately exceeding 2018 levels to reach 11.18% in 2023. This indicates a restoration of profitability efficiency relative to the invested capital.
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Return on Assets (ROA)
Johnson Controls International plc, ROA calculation, comparison to benchmarks
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income attributable to Johnson Controls | 1,849) | 1,532) | 1,637) | 631) | 5,674) | 2,162) | |
| Total assets | 42,242) | 42,158) | 41,890) | 40,815) | 42,287) | 48,797) | |
| Profitability Ratio | |||||||
| ROA1 | 4.38% | 3.63% | 3.91% | 1.55% | 13.42% | 4.43% | |
| Benchmarks | |||||||
| ROA, Competitors2 | |||||||
| Boeing Co. | -1.62% | -3.60% | -3.03% | — | — | — | |
| Caterpillar Inc. | 11.81% | 8.18% | 7.84% | — | — | — | |
| Eaton Corp. plc | 8.37% | 7.03% | 6.30% | — | — | — | |
| GE Aerospace | 5.81% | 0.12% | -3.28% | — | — | — | |
| Honeywell International Inc. | 9.20% | 7.97% | 8.60% | — | — | — | |
| Lockheed Martin Corp. | 13.19% | 10.84% | 12.41% | — | — | — | |
| RTX Corp. | 1.97% | 3.27% | 2.39% | — | — | — | |
| ROA, Sector | |||||||
| Capital Goods | 5.21% | 2.84% | 1.86% | — | — | — | |
| ROA, Industry | |||||||
| Industrials | 5.61% | 3.31% | 3.40% | — | — | — | |
Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).
1 2023 Calculation
ROA = 100 × Net income attributable to Johnson Controls ÷ Total assets
= 100 × 1,849 ÷ 42,242 = 4.38%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2023 is characterized by significant volatility in profitability and a stabilization of the total asset base. After a peak in 2019, the return on assets experienced a sharp decline followed by a multi-year period of gradual recovery.
- Net Income Fluctuations
- Net income attributable to the company exhibited substantial variance, peaking at 5,674 million US dollars in 2019 before falling to a period low of 631 million US dollars in 2020. A consistent recovery trend was observed between 2021 and 2023, with net income rising to 1,849 million US dollars by the end of the analyzed period.
- Asset Base Stability
- A contraction in total assets occurred between 2018 and 2020, decreasing from 48,797 million US dollars to 40,815 million US dollars. Following this decline, the asset base remained relatively constant, maintaining a narrow range between 41,890 million and 42,242 million US dollars from 2021 through 2023.
- Return on Assets (ROA) Trends
- The ROA mirrored the volatility of net income, reaching a high of 13.42% in 2019 and a trough of 1.55% in 2020. Subsequent years indicate a stabilization phase; the ratio climbed to 3.91% in 2021, dipped slightly to 3.63% in 2022, and reached 4.38% in 2023, effectively returning to levels seen in 2018.
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