Johnson & Johnson (NYSE:JNJ)

The data reflects the financial performance and asset utilization of the United States geographic area for Johnson & Johnson over a five-year period from 2020 to 2024. Several key trends can be identified in sales, asset base, and efficiency ratios.

Sales to Customers

Sales exhibited a generally positive trend, increasing from $43,133 million in 2020 to $50,302 million in 2024. There was consistent growth between 2020 and 2022, peaking at $48,580 million in 2022. However, 2023 saw a slight decline to $46,444 million before rebounding in 2024 to the highest level over the period. This suggests some market or operational challenges in 2023 that were overcome by the subsequent year.

Long-Lived Assets

The value of long-lived assets displayed significant fluctuations. Starting at $49,951 million in 2020, assets declined slightly by 2021 to $48,586 million, followed by a marked increase to $66,283 million in 2022. This was followed by a decrease in 2023 to $54,832 million and another substantial rise to $70,670 million in 2024. These variations may indicate periods of considerable capital investment or divestment, affecting the asset base significantly over these years.

Area Asset Turnover Ratio

The area asset turnover ratio, measuring sales efficiency relative to long-lived assets, exhibited notable volatility. It improved from 0.86 in 2020 to a peak of 0.97 in 2021, indicating better asset utilization. Nonetheless, there was a sharp drop to 0.73 in 2022, partially recovering to 0.85 in 2023, and declining again to 0.71 in 2024. This downward trend in the latter years reflects a decrease in sales generated per dollar of asset value, likely related to the increases in long-lived assets not immediately translating into proportional sales growth.

In summary, while sales have generally grown over the period, including a recovery after a dip in 2023, the asset base has experienced significant swings, suggesting active capital management. The declining asset turnover ratio toward the latter years underscores challenges in maintaining efficient use of assets amid these changes. This could signal the need for strategic evaluation of asset deployment to improve sales productivity in this geographic area.

Sales to customers

Sales to customers in Europe peaked in 2021 at 23,594 million US dollars, followed by a slight decline to 23,449 million in 2022. The sales figures then experienced a more pronounced decrease in 2023 and 2024, reaching 20,410 million and 20,212 million US dollars respectively. Overall, the sales trend shows an initial increase followed by a gradual decline over the most recent years.

Long-lived assets

The value of long-lived assets in the Europe region exhibits a consistent downward trend from 2020 to 2024. Starting at 49,363 million US dollars in 2020, the asset base reduced steadily each year, falling to 27,267 million US dollars by the end of 2024. This decline represents a significant reduction of approximately 45% over the five-year period, indicating possible asset disposals, impairments, or reduced capital expenditure.

Area asset turnover

The ratio of area asset turnover has shown continuous improvement over the years, rising from 0.38 in 2020 to 0.74 in 2024. This increase suggests enhanced efficiency in utilizing long-lived assets to generate sales in the Europe segment, nearly doubling the turnover ratio within five years. The improvement aligns inversely with the decrease in asset base, reflecting better asset utilization despite declining total sales in recent years.

Sales to customers

The sales to customers showed an increasing trend from 2020 to 2022, rising from 5335 million US dollars to 6125 million US dollars. However, there was a significant decline in 2023, dropping to 4549 million US dollars. A modest recovery occurred in 2024, with sales increasing slightly to 4714 million US dollars, yet remaining below the levels seen in 2020 to 2022.

Long-lived assets

Long-lived assets remained relatively stable between 2020 and 2022, fluctuating slightly around 2700 million US dollars. In 2023, there was a marked decrease to 1491 million US dollars, representing a significant reduction in asset base. In 2024, these assets showed some recovery, increasing to 1728 million US dollars, though still well below the early period levels.

Area asset turnover

Area asset turnover demonstrated a consistent upward trend from 1.95 in 2020 to 2.24 in 2022, indicating improved efficiency in using assets to generate sales. This ratio peaked sharply in 2023 at 3.05, reflecting a substantial increase in turnover despite the drop in sales and assets. In 2024, the ratio decreased somewhat to 2.73 but remained notably higher than the 2020-2022 period, suggesting sustained enhanced asset utilization efficiency.

Sales to customers

Sales figures in the Asia-Pacific and Africa region exhibited a fluctuating trend over the five-year period. Initially, there was an increase from 15,136 million US dollars in 2020 to a peak of 17,275 million in 2021. However, sales declined in the subsequent years, falling to 16,789 million in 2022 and further dropping to 13,756 million in 2023. The downward trend continued into 2024 with sales decreasing slightly to 13,593 million. This pattern indicates a reduction in market demand or competitive pressures in the last three years.

Long-lived assets

Long-lived assets have consistently decreased year-over-year. From 5,484 million US dollars in 2020, the value dropped steadily each year, reaching 5,035 million in 2021, then to 4,431 million in 2022. A more pronounced decline occurred in 2023, with assets falling sharply to 1,500 million and slightly further to 1,454 million in 2024. This significant reduction suggests divestment, asset write-downs, or strategic withdrawal from fixed asset investments in this geographic area.

Area asset turnover

The area asset turnover ratio showed a strong upward trend throughout the period. Starting at 2.76 in 2020, the ratio increased to 3.43 in 2021 and then to 3.79 in 2022, indicating improved efficiency in using long-lived assets to generate sales. A notable jump occurred in 2023, when the ratio rose sharply to 9.17, continuing to improve slightly to 9.35 in 2024. This dramatic increase corresponds with the sharp reduction in long-lived assets and suggests the company is generating nearly the same level of sales with far fewer assets, indicating enhanced operational efficiency or a shift towards a less asset-intensive business model in the region.

Overall insights

The combined trends reveal that despite declining sales, the company has substantially improved asset utilization in the Asia-Pacific and Africa region. The reduction in long-lived assets alongside a sharp increase in asset turnover indicates a strategic move towards greater efficiency, possibly involving asset divestiture or reshaping of asset structure. However, the decline in sales may warrant attention to underlying market or competitive conditions impacting revenue in this geographic area.