Monsanto Co. (NYSE:MON)

Net Operating Profit After Taxes (NOPAT)

The NOPAT values demonstrate variability across the observed period. Starting at 2247 million US dollars in 2012, it increased to a peak of 2743 million in 2013. Thereafter, a downward trend is observed until 2016, reaching a low of 1816 million, before recovering to 2582 million in 2017. This pattern indicates fluctuations in operating profitability with a notable dip in the middle years and partial recovery towards the end.

Cost of Capital

The cost of capital shows a slight decline from 15.71% in 2012 to a minimum of 13.89% in 2015, reflecting potentially lower capital costs or shifts in market conditions during that period. However, from 2015 onwards, it slightly increased again, reaching 14.46% in 2017, suggesting some upward pressure on the cost of financing.

Invested Capital

The invested capital generally increased from 14553 million in 2012 to a peak of 18327 million in 2015. Following this peak, there was a contraction to 15963 million in 2016, and a slight increase to 16366 million in 2017. This trend points to expansion efforts up to 2015, followed by a period of reduced capital deployment or divestment, then stabilizing towards the end of the timeline.

Economic Profit

The economic profit, which reflects the value created above the cost of capital, fluctuated notably over the years. It started with a slight negative in 2012 (-39 million), improved strongly in 2013 and 2014 to 246 million and 270 million respectively, indicating value creation during these years. However, the performance declined sharply in 2015 and 2016, resulting in negative economic profits of -185 million and -407 million, signaling significant value destruction. A recovery is evident in 2017 with a positive economic profit of 216 million.

Overall Analysis

The data reveal a cycle of growth followed by contraction and subsequent recovery within the six-year period. Operating profitability and invested capital expansion appear to peak around 2013-2015, followed by a decline and reduced investment levels. The fluctuations in economic profit suggest challenges in maintaining value creation in some years, linked with changes in operating profit and invested capital. The cost of capital decreased mid-period, potentially aiding profitability, but its increase in later years may have contributed to economic profit volatility. The partial rebound in 2017 indicates some restoration of operational efficiency and value creation.

The financial data reveals certain trends in profitability for the analyzed company over a six-year period ending August 31, 2017.

Net Income Attributable to the Company

Net income shows an overall fluctuating pattern across the years. It increased steadily from 2045 million US dollars in 2012 to a peak of 2740 million in 2014. Subsequently, it experienced a decline to 2314 million in 2015 and a more pronounced decrease to 1336 million in 2016, indicating a significant setback in profitability during that year. However, the net income rebounded sharply to 2260 million in 2017, signaling recovery but not reaching the earlier peak levels.

Net Operating Profit After Taxes (NOPAT)

NOPAT similarly experienced variations over the examined period. It rose from 2247 million USD in 2012 to 2743 million in 2013, before slightly declining to 2633 million in 2014. The value then decreased further to 2361 million in 2015 and took a more substantial fall to 1816 million in 2016. In 2017, NOPAT saw a notable recovery to 2582 million. This suggests operational efficiency or profitability challenges during 2015 and 2016 with improvement thereafter.

Overall, both net income and NOPAT indicate a peak generally around 2013-2014, followed by declines in 2015 and notably in 2016. The recovery in 2017 reflects a positive turnaround. The inconsistency observed in both metrics suggests volatility in profitability and operational performance during these years, highlighting a period of financial challenges mid-cycle with subsequent recovery efforts yielding results by the final year reported.

Income Tax Provision from Continuing Operations

The income tax provision from continuing operations exhibited a fluctuating trend over the six-year period. Starting at 901 million USD in 2012, a slight increase to 915 million USD was observed in 2013. This upward movement continued more notably in 2014, reaching a peak of 1,078 million USD. However, the subsequent years showed a declining pattern: it decreased to 864 million USD in 2015, further dropped to 695 million USD in 2016, and reached its lowest point at 626 million USD in 2017. Overall, despite an initial rise until 2014, the income tax provision has generally declined in the latter part of the timeframe.

Cash Operating Taxes

Cash operating taxes demonstrated more volatility relative to the income tax provision. Beginning at 708 million USD in 2012, there was a steady increase to 821 million USD in 2013, followed by a substantial spike to 1,179 million USD in 2014. The upward trend continued into 2015, peaking at 1,272 million USD. However, unlike income tax provision, cash operating taxes experienced a sharp decrease in 2016, falling to 801 million USD, and then a further decline to 719 million USD by 2017. Despite the fluctuations, the values at the end of the period remained higher than the initial 2012 figures.

Comparative Observations

Both income tax provision and cash operating taxes display a pattern of increasing values through the early years, reaching peaks around 2014 or 2015, followed by a notable decline in the last two years. The cash operating taxes showed more pronounced increases and decreases compared to the income tax provision, suggesting greater variability in actual tax cash outflows relative to the accounting provisions. The consistent decline in both items after 2015 might indicate changes in tax strategy, operational performance, or tax regulations affecting the company's tax liabilities.

The financial data reveals several important trends and shifts over the six-year period ending August 31, 2017.

Total reported debt & leases

This metric shows a notable increase from 2012 through 2015, rising sharply from approximately $2.4 billion to $9.5 billion. The peak occurs in 2015 with a slight decline thereafter, dropping to $8.6 billion by 2017. This suggests a significant increase in leverage or borrowing activities during the mid-period, followed by some reduction in debt levels.

Total Monsanto Company shareowners’ equity

Shareowners’ equity exhibits a declining trend over the years. Starting at about $11.8 billion in 2012, equity increases slightly in 2013 but then declines steadily to a low of $4.5 billion in 2016. A partial recovery to $6.4 billion in 2017 is observed. This decreasing equity position alongside rising debt levels in the earlier years indicates possible financial restructuring or share buybacks impacting the equity base.

Invested capital

Invested capital shows a general upward trend from 2012 through 2015, rising from approximately $14.6 billion to $18.3 billion before declining to around $16.0 billion in 2016. A slight increase to $16.4 billion in 2017 occurs. The growth in invested capital up to 2015 parallels the increases in both debt and equity during that period, suggesting expansion or acquisition initiatives. The subsequent decrease and stabilization may reflect a period of consolidation or reevaluation of capital investment.

Overall, the data suggest that the company experienced increased leverage with a peak in debt around 2015, accompanied by declining shareholders’ equity after 2013. Despite fluctuations, invested capital remained relatively high, implying continued commitment to the company's operational base or growth efforts. The partial recovery in equity and reduction in debt post-2015 could indicate a strategic shift towards strengthening the balance sheet and deleveraging.

The financial data over the six-year period reveals fluctuations in key performance metrics related to economic profit, invested capital, and economic spread ratio.

Economic Profit

The economic profit exhibits considerable volatility throughout the observed period. It begins with a negative value of -39 million US dollars in 2012, then sharply increases to positive values in 2013 and 2014, reaching peaks of 246 and 270 million US dollars respectively. However, this positive trend reverses in 2015 and 2016, with economic profit declining substantially into negative territory at -185 million and -407 million US dollars. By 2017, the measure recovers again strongly to 216 million US dollars. This pattern indicates alternating periods of profitability and losses, suggesting fluctuations in operational efficiency or market conditions.

Invested Capital

The invested capital shows a general upward trend with some variability. Starting at 14,553 million US dollars in 2012, it increases steadily until 2015 when it peaks at 18,327 million US dollars. After this peak, there is a decrease to 15,963 million US dollars in 2016, followed by a slight recovery to 16,366 million US dollars in 2017. This trend suggests phases of investment growth and partial divestment or asset reallocation.

Economic Spread Ratio

The economic spread ratio fluctuates significantly across the years. Initially negative at -0.27% in 2012, it turns positive in 2013 and 2014 with increases to 1.56% and 1.66%, then falls to negative values in 2015 and 2016 at -1.01% and -2.55%. By 2017, the ratio rebounds to a positive 1.32%. The spread ratio closely mirrors the trend in economic profit, reflecting periods where returns on invested capital either exceed or fall below the cost of capital.

Overall, the company's financial performance demonstrates cyclical patterns with alternating phases of growth and contraction in economic profit and returns, coupled with a largely increasing but somewhat fluctuating base of invested capital. These dynamics suggest sensitivity to external economic factors or internal operational adjustments impacting profitability.

Adjusted Net Sales

The adjusted net sales demonstrated fluctuations over the examined six-year period. The sales increased from $13,435 million in 2012 to a peak of $15,685 million in 2014. Subsequently, sales declined to $13,688 million in 2016 before rising again to $14,878 million in 2017. This pattern indicates some variability in revenue generation, with no consistent upward or downward trend across the full period.

Economic Profit

Economic profit showed considerable volatility throughout the years. Starting with a negative figure of -$39 million in 2012, economic profit improved markedly in 2013 and 2014, reaching positive values of $246 million and $270 million, respectively. However, the profit turned sharply negative in 2015 and 2016, dropping to -$185 million and -$407 million. In 2017, the company returned to a positive economic profit of $216 million, indicating a recovery after two challenging years.

Economic Profit Margin

The economic profit margin mirrored the trend observed in the absolute economic profit values. The margin shifted from a negative -0.29% in 2012 to positive margins of 1.65% and 1.72% in 2013 and 2014, respectively. This was followed by a reversal to -1.24% in 2015 and a further decline to -2.98% in 2016. By 2017, the margin had rebounded to 1.45%. This suggests that profitability relative to sales improved in the early part of the period, deteriorated significantly in the middle years, and improved again by 2017.

Overall Trends and Insights

The company experienced a cycle of growth and contraction in both sales and profitability measures. The initial positive momentum in sales and economic profit during 2013 and 2014 was not sustained, as both metrics declined significantly in 2015 and 2016. The recovery observed in 2017 signals a potential turnaround. The volatility in economic profit and its margin suggest sensitivity to cost structures, market conditions, or operational efficiency during the period. Stakeholders should consider investigating the drivers behind the mid-period declines and the factors contributing to the recovery to inform future strategic decisions.