Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
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 analysis of the financial ratios over the six-year period reveals several notable trends and fluctuations in the company's profitability and efficiency metrics.
- Gross Profit Margin
- The gross profit margin exhibits a generally positive trend, increasing from 29.87% in 2018 to a peak of 34.05% in 2021. There is a slight decline in 2022 to 32.98%, followed by a modest recovery to 33.48% in 2023. This indicates an overall improvement in the company's ability to manage production costs relative to sales revenue, with some minor variability in recent years.
- Operating Profit Margin
- This metric shows significant volatility. After dropping sharply from 9.89% in 2018 to 5.07% in 2019 and continuing lower to 4.32% in 2020, the operating profit margin then recovers strongly to 10.81% in 2021. However, it declines again in the subsequent years to 6.63% in 2022 and 6.44% in 2023. The oscillating pattern suggests sensitivity to operating expenses and possibly changes in operational efficiency or cost structure during these years.
- Net Profit Margin
- The net profit margin shows marked fluctuation. It peaked unusually high at 23.67% in 2019, which is an outlier compared to other years, where margins hover between approximately 2.83% and 6.92%. The margin reached its lowest point in 2020 at 2.83%, then modestly improved thereafter, indicating variability in net income relative to sales that might reflect one-time events, tax effects, or financial expenses impacting net earnings.
- Return on Equity (ROE)
- ROE follows a pattern similar to net profit margin, with a peak at 28.71% in 2019, followed by a sharp decline to 3.62% in 2020. Subsequent years show a gradual recovery upward to 11.18% in 2023. This suggests volatility in the company's ability to generate profit from shareholders' equity, reflecting the impact of fluctuating profitability on returns to investors.
- Return on Assets (ROA)
- ROA mirrors the patterns observed in ROE and net profit margin, with a high of 13.42% in 2019, a significant drop to 1.55% in 2020, then a steady recovery reaching 4.38% in 2023. This indicates changes in the efficiency with which the company utilizes its assets to generate earnings, with considerable variation over the reviewed period.
Overall, the data indicate that the company experienced considerable instability in profitability and returns, particularly around 2019 and 2020, possibly due to external or internal factors affecting operations and earnings. Gross profit margins were relatively more stable and showed a general upward trend, suggesting consistent control over production costs. However, the volatile operating and net profit margins, along with fluctuating ROE and ROA, point toward challenges in cost management, operational efficiency, or external economic conditions influencing financial performance during these years.
Return on Sales
Return on Investment
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% | -9.78% | — | — | |
| Caterpillar Inc. | 33.04% | 26.91% | 26.30% | 25.47% | — | — | |
| Eaton Corp. plc | 36.36% | 33.19% | 32.28% | 30.52% | — | — | |
| GE Aerospace | 21.95% | 24.55% | 24.19% | 17.26% | — | — | |
| Honeywell International Inc. | 37.28% | 36.99% | 35.85% | 32.07% | — | — | |
| Lockheed Martin Corp. | 12.55% | 12.56% | 13.52% | 13.23% | — | — | |
| RTX Corp. | 17.54% | 20.38% | 19.40% | 15.08% | — | — | |
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 data reveals several noteworthy trends over the six-year period. Net sales experienced a significant decline from 31,400 million US dollars in 2018 to a low of 22,317 million in 2020, representing a substantial reduction. Following this trough, net sales showed a steady recovery, reaching 26,793 million by 2023, although they have not returned to the 2018 level.
Gross profit also followed a somewhat similar trajectory. Initially, it decreased from 9,380 million in 2018 to 7,411 million in 2020, coinciding with the dip in net sales. Subsequently, gross profit improved year over year, climbing to 8,971 million by 2023. This indicates effective cost management or improved pricing strategies, as gross profit recovered alongside sales.
- Gross Profit Margin
- The gross profit margin displayed an increasing trend, rising from 29.87% in 2018 to a peak of 34.05% in 2021. Although slightly dipping to 32.98% in 2022, it rebounded to 33.48% in 2023. This upward trend in margin percentages suggests enhanced operational efficiency or a favorable shift in the product mix, enabling the company to retain more profit per dollar of sales despite fluctuations in revenue.
Overall, the pattern indicates an initial period of contraction in both sales and gross profit, likely due to external pressures or market conditions, followed by a recovery phase supported by improved profitability at the gross margin level. This trend highlights resilience in the core business operations and an ability to improve cost efficiency over time.
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% | -21.95% | — | — | |
| Caterpillar Inc. | 20.30% | 13.97% | 14.27% | 11.67% | — | — | |
| Eaton Corp. plc | 16.75% | 14.55% | 15.69% | 11.45% | — | — | |
| GE Aerospace | 8.49% | 6.05% | 8.58% | 5.49% | — | — | |
| Honeywell International Inc. | 19.32% | 18.12% | 18.03% | 17.45% | — | — | |
| Lockheed Martin Corp. | 12.59% | 12.65% | 13.61% | 13.22% | — | — | |
| RTX Corp. | 5.17% | 8.07% | 7.70% | -3.34% | — | — | |
| Operating Profit Margin, Sector | |||||||
| Capital Goods | 10.11% | 8.29% | 9.11% | 3.00% | — | — | |
| Operating Profit Margin, Industry | |||||||
| Industrials | 9.90% | 9.06% | 9.24% | 3.13% | — | — | |
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 financial data reveals significant fluctuations in operating income over the analyzed six-year period. Operating income experienced a substantial decline from US$3,107 million in 2018 to US$1,214 million in 2019, followed by a further decrease to US$963 million in 2020. Subsequently, there was a notable recovery in 2021 with operating income rising sharply to US$2,559 million, before decreasing again in 2022 and 2023 to approximately US$1,677 million and US$1,726 million respectively.
Net sales demonstrated a downward trend initially, decreasing from US$31,400 million in 2018 to US$22,317 million in 2020. From 2021 onwards, net sales showed a consistent upward trajectory, increasing to US$23,668 million in 2021, US$25,299 million in 2022, and reaching US$26,793 million in 2023. This indicates an overall recovery in sales after the dip observed in the earlier years.
The operating profit margin mirrored the trends seen in operating income, with margins declining sharply from 9.89% in 2018 to 5.07% in 2019, and further down to 4.32% in 2020. A recovery occurred in 2021, with the margin improving to 10.81%, the highest in the period. However, the margin decreased again in 2022 and remained relatively stable in 2023 at 6.63% and 6.44% respectively.
- Operating income
- Declined sharply over 2018-2020, rebounded significantly in 2021, then moderately decreased and stabilized during 2022-2023.
- Net sales
- Witnessed a downward trend from 2018 to 2020, followed by steady growth from 2021 through 2023, indicating a recovery in revenue generation.
- Operating profit margin
- Followed the pattern of operating income with a decline until 2020, a strong rebound in 2021, and a subsequent reduction but stabilization in the last two years analyzed.
Overall, the data suggest a period of operational and financial challenges culminating around 2019-2020, with signs of recovery and improvement starting in 2021. Despite the recovery in both net sales and operating income, the profit margin did not regain its earlier peak and remains at a more moderate level during the latest years. This pattern may reflect external market conditions, operational efficiency changes, or other factors impacting profitability after the recovery phase.
Net Profit Margin
Johnson Controls International plc, net profit margin calculation, comparison to benchmarks
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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% | -20.42% | — | — | |
| Caterpillar Inc. | 16.18% | 11.85% | 13.47% | 7.68% | — | — | |
| Eaton Corp. plc | 13.87% | 11.86% | 10.92% | 7.90% | — | — | |
| GE Aerospace | 14.68% | 0.31% | -9.17% | 7.81% | — | — | |
| Honeywell International Inc. | 15.43% | 14.00% | 16.11% | 14.64% | — | — | |
| Lockheed Martin Corp. | 10.24% | 8.69% | 9.42% | 10.45% | — | — | |
| RTX Corp. | 4.64% | 7.75% | 6.00% | -6.22% | — | — | |
| Net Profit Margin, Sector | |||||||
| Capital Goods | 9.09% | 5.27% | 3.71% | 1.85% | — | — | |
| Net Profit Margin, Industry | |||||||
| Industrials | 8.32% | 5.04% | 5.85% | 0.09% | — | — | |
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.
- Net Income Attributable to Johnson Controls
- The net income demonstrated significant volatility over the observed period. Beginning at $2,162 million in September 2018, it peaked sharply at $5,674 million in 2019, followed by a drastic decline to $631 million in 2020. Subsequently, it recovered to $1,637 million in 2021 but experienced a slight drop to $1,532 million in 2022 before increasing again to $1,849 million in 2023. This pattern suggests fluctuations possibly influenced by external economic factors or company-specific events impacting profitability.
- Net Sales
- Net sales showed a declining trend from $31,400 million in 2018 to $22,317 million in 2020, indicating a contraction in revenue. However, from 2020 onwards, there was a steady recovery, with net sales rising to $23,668 million in 2021, then further to $25,299 million in 2022 and reaching $26,793 million in 2023. This gradual improvement suggests successful efforts to restore revenue growth after a downturn.
- Net Profit Margin
- Net profit margin followed a fluctuating trajectory aligned with net income trends. It began at 6.89% in 2018, surged substantially to 23.67% in 2019, and then plummeted to 2.83% in 2020. Thereafter, it improved to 6.92% in 2021, dipped slightly to 6.06% in 2022, and modestly increased again to 6.9% in 2023. These variations imply changes in operational efficiency or cost management impacting profitability relative to sales.
Return on Equity (ROE)
Johnson Controls International plc, ROE calculation, comparison to benchmarks
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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% | 19.56% | — | — | |
| Eaton Corp. plc | 16.90% | 14.45% | 13.06% | 9.44% | — | — | |
| GE Aerospace | 34.63% | 0.62% | -16.17% | 16.04% | — | — | |
| Honeywell International Inc. | 35.68% | 29.74% | 29.85% | 27.23% | — | — | |
| Lockheed Martin Corp. | 101.24% | 61.86% | 57.62% | 113.60% | — | — | |
| RTX Corp. | 5.34% | 7.16% | 5.29% | -4.88% | — | — | |
| ROE, Sector | |||||||
| Capital Goods | 27.89% | 13.39% | 8.48% | 4.42% | — | — | |
| ROE, Industry | |||||||
| Industrials | 27.70% | 15.38% | 15.38% | 0.24% | — | — | |
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
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.
- Net Income Trends
- The net income attributable to the company exhibited considerable volatility over the analyzed period. It peaked significantly in the year ending September 30, 2019, reaching 5,674 million US dollars. However, this was followed by a sharp decline in 2020, dropping to 631 million US dollars. A partial recovery occurred in the subsequent years, with net income rising to 1,637 million in 2021, slightly decreasing to 1,532 million in 2022, and increasing again to 1,849 million as of September 30, 2023. This pattern suggests a period of financial instability or unusual events impacting profitability around 2019-2020, followed by a gradual recovery.
- Shareholders' Equity Analysis
- Shareholders’ equity attributable to the company experienced a downward trend throughout the period. Starting at 21,164 million US dollars in 2018, it declined steadily to 16,545 million by 2023. This represents a reduction of approximately 22% over six years. The consistent decrease in equity may indicate dividend payouts exceeding net income, share repurchases, restructuring costs, or other factors reducing retained earnings or capital base.
- Return on Equity (ROE) Analysis
- The return on equity followed a fluctuating pattern over the years. After a strong performance in 2019 with an ROE of 28.71%, it dropped to a low of 3.62% in 2020, reflecting the dramatic decline in net income during that year. In the following years, ROE modestly recovered to levels around 9-11%, aligning more closely with the net income recovery trend. The ROE figures indicate that profitability relative to shareholders' equity remains below the peak observed in 2019 but has improved since the 2020 low.
- Overall Insights
- The company experienced significant earnings volatility during the period, with an exceptional peak in 2019 followed by a substantial decline in 2020 and partial recovery thereafter. The persistent decline in shareholders’ equity suggests ongoing capital depletion despite net income gains. ROE patterns mirror net income shifts, underscoring the impact of profitability fluctuations on shareholder returns. The data indicate that the company may have faced operational or market challenges around 2019-2020, stabilizing in subsequent years but not fully returning to peak financial performance observed prior to 2020.
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% | -7.80% | — | — | |
| Caterpillar Inc. | 11.81% | 8.18% | 7.84% | 3.83% | — | — | |
| Eaton Corp. plc | 8.37% | 7.03% | 6.30% | 4.43% | — | — | |
| GE Aerospace | 5.81% | 0.12% | -3.28% | 2.25% | — | — | |
| Honeywell International Inc. | 9.20% | 7.97% | 8.60% | 7.40% | — | — | |
| Lockheed Martin Corp. | 13.19% | 10.84% | 12.41% | 13.47% | — | — | |
| RTX Corp. | 1.97% | 3.27% | 2.39% | -2.17% | — | — | |
| ROA, Sector | |||||||
| Capital Goods | 5.21% | 2.84% | 1.86% | 0.80% | — | — | |
| ROA, Industry | |||||||
| Industrials | 5.61% | 3.31% | 3.40% | 0.04% | — | — | |
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 data reveals fluctuating performance metrics over the examined periods. Net income attributable to the company showed considerable variability. Starting at $2,162 million in 2018, it surged significantly to $5,674 million in 2019. However, this was followed by a sharp decline to $631 million in 2020. Subsequent years demonstrated some recovery with net income rising to $1,637 million in 2021 and then experiencing a slight decrease to $1,532 million in 2022, before increasing again to $1,849 million in 2023.
Total assets demonstrated a general downward trend from 2018 through 2020, dropping from $48,797 million to $40,815 million. From 2021 onwards, total assets stabilized, showing minor fluctuations and hovering around the $42,000 million mark.
The return on assets (ROA) percentage mirrored the variability seen in net income. It started at 4.43% in 2018, peaked at 13.42% in 2019, then severely declined to 1.55% in 2020. Following that low point, ROA gradually improved, reaching 3.91% in 2021, slightly declining to 3.63% in 2022, and then increasing to 4.38% in 2023.
- Net Income Trends
- Highly volatile with a peak in 2019, significant dip in 2020, and partial recovery through 2023.
- Total Assets Trends
- Decreasing trend until 2020, then stabilization around $42 billion from 2021 onward.
- ROA Trends
- Correlated fluctuations with net income, reaching a high in 2019 and trough in 2020, followed by gradual recovery.
Overall, the data shows the company experienced a strong earnings peak in 2019 before facing significant challenges in 2020, reflected both in net income and ROA. Despite stabilization in asset levels, profitability measures indicate a recovery phase but have not returned to the 2019 peak levels. The analysis suggests a period of operational stress around 2020 with subsequent efforts toward stabilization and improved profitability in later years.