Monsanto Co. (NYSE:MON)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited fluctuations over the analyzed period. Starting at 2247 million USD in 2012, it increased to a peak of 2743 million USD in 2013. Following this peak, a decline was observed, reaching a low of 1816 million USD in 2016. However, in 2017, there was a notable recovery to 2582 million USD. Overall, the trend indicates volatility with a notable rebound towards the end of the period.

Invested Capital

Invested capital demonstrated a general upward trend from 14553 million USD in 2012 to a high of 18327 million USD in 2015. After 2015, a decline occurred in 2016 to 15963 million USD, followed by a mild increase in 2017 to 16366 million USD. This suggests periods of significant capital deployment followed by capital reduction and partial recovery.

Return on Invested Capital (ROIC)

The ROIC rate started at 15.44% in 2012, rising to its highest point of 17.39% in 2013. Subsequently, it declined steadily, reaching a trough of 11.38% in 2016. In 2017, ROIC improved to 15.78%, indicating a recovery in profitability relative to capital invested. The trend in ROIC closely mirrors the fluctuations in NOPAT and invested capital, highlighting shifts in operational efficiency and capital utilization over time.

The analysis of the financial ratios over the six-year period reveals several noteworthy trends in profitability, asset utilization, tax efficiency, and overall return performance.

Operating Profit Margin (OPM)

The operating profit margin demonstrates a general upward trend from 21.99% in 2012 to a peak of 24.33% in 2015. However, this is followed by a decline to 19.12% in 2016 before improving again to 22.19% in 2017. This pattern indicates fluctuations in core profitability, with a peak mid-period and some volatility thereafter.

Turnover of Capital (TO)

The turnover of capital ratio shows relative stability, with values ranging between 0.81 and 0.96. A slight increase occurs from 0.92 in 2012 to 0.96 in 2014, followed by a decrease to 0.81 in 2015. The ratio then recovers somewhat, reaching 0.91 in 2017. The mid-period dip suggests a temporary reduction in the efficiency with which capital is deployed to generate sales.

Effective Cash Tax Rate (1 – CTR)

The inverse effective cash tax rate exhibits variability across the years. Starting at 76.05% in 2012, it peaks at 78.22% in 2017 with a notable trough at 65% in 2015. This indicates changes in the company’s tax management or tax burden over time, with the lowest tax efficiency occurring around 2015.

Return on Invested Capital (ROIC)

ROIC reaches its highest level of 17.39% in 2013 and declines to its lowest point of 11.38% in 2016, before rebounding to 15.78% in 2017. This downward trend through the middle years followed by recovery suggests fluctuations in the effectiveness of invested capital in generating returns, paralleling the patterns observed in profitability and capital turnover.

Overall, the financial ratios indicate a period of relative strength up to around 2014-2015, after which multiple indicators deteriorate, notably operating margins, capital turnover, and ROIC. The later years show a recovery phase, suggesting efforts to enhance operational efficiency, asset utilization, and profitability. The fluctuating effective cash tax rate implies external or internal influences impacting tax-related expenses over the evaluation period.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes demonstrated an overall upward trend from 2012 to 2014, increasing from 2,954 million US dollars in 2012 to a peak of 3,812 million US dollars in 2014. Following this peak, there was a noticeable decline in 2015 and 2016, with NOPBT dropping to 3,632 million and then a more substantial decrease to 2,617 million US dollars in 2016. In 2017, the NOPBT rebounded to 3,301 million US dollars, indicating a recovery but not reaching the previous high levels observed in 2014.

Adjusted Net Sales

Adjusted net sales exhibited growth from 2012 through 2014, rising from 13,435 million US dollars to 15,685 million US dollars. After peaking in 2014, net sales declined to 14,933 million in 2015 and further decreased to 13,688 million in 2016. In 2017, net sales recovered to 14,878 million US dollars. The pattern shares similarities with the NOPBT trend, reflecting growth followed by a dip and a partial recovery within the examined period.

Operating Profit Margin (OPM)

The operating profit margin increased steadily from 21.99% in 2012 to a high of 24.33% in 2015, reflecting improving operational efficiency or pricing power during this period. However, the margin contracted significantly in 2016 to 19.12%, suggesting increased costs or lower profitability relative to sales. In 2017, the margin improved again to 22.19%, indicating a partial restoration of operational profitability but still below the peak margins achieved in 2014 and 2015.

Overall Insights

The financial data reveals a cycle of growth followed by a decline and then partial recovery across key performance indicators between 2012 and 2017. Both net sales and net operating profit peaked around 2014, declined for two consecutive years, and then began to recover in 2017. Operating profit margins followed a similar pattern, suggesting external or internal factors impacted profitability and sales concurrently during the mid-period. The partial recovery in 2017 across all metrics may indicate effective strategic adjustments or market conditions improving after the downturn. Close monitoring of trends beyond 2017 would be necessary to confirm the sustainability of this recovery.

The adjusted net sales experienced fluctuations over the observed periods. Starting at 13,435 million US dollars in 2012, sales saw an increase, peaking at 15,685 million in 2014. However, the following years indicated a decline, with sales dropping to 13,688 million by 2016 before partially recovering to 14,878 million in 2017. This pattern suggests some volatility in revenue generation across the years.

Invested capital exhibited an upward trend initially, moving from 14,553 million US dollars in 2012 to a high of 18,327 million in 2015. After this peak, there was a noticeable reduction in 2016 to 15,963 million, followed by a modest increase to 16,366 million in 2017. The data implies investment activity that intensified until 2015, followed by a period of retraction and stabilization.

The turnover of capital ratio, which measures the efficiency of capital utilization, remained fairly consistent but with some variability. Beginning at 0.92 in 2012, it showed a slight upward movement peaking at 0.96 in 2014. A significant decline occurred in 2015, dropping to 0.81, reflecting reduced efficiency in capital use during that year. The ratio rebounded somewhat to 0.91 by 2017, suggesting gradual recovery in operational efficiency.

Summary of observations:

- Adjusted net sales showed growth until 2014, followed by decline and partial recovery by 2017.

- Invested capital increased until 2015, then decreased and stabilized thereafter.

- Turnover of capital ratio peaked in 2014, declined sharply in 2015, then recovered by 2017.

- The overall trends indicate periods of growth and contraction in both sales and capital investment, with corresponding impacts on efficiency.

Cash Operating Taxes

The cash operating taxes initially increased from 708 million US dollars in 2012 to a peak of 1,272 million US dollars in 2015. Following this peak, there was a substantial decline over the next two years, resulting in a value of 719 million US dollars by 2017, almost returning to the 2012 level.

Net Operating Profit Before Taxes (NOPBT)

NOPBT showed an overall increase from 2,954 million US dollars in 2012 to a high of 3,812 million US dollars in 2014. However, this was followed by a decline to 2,617 million US dollars in 2016 before recovering somewhat to 3,301 million US dollars in 2017. The pattern indicates some volatility with a notable dip occurring between 2014 and 2016.

Effective Cash Tax Rate (CTR)

The effective cash tax rate exhibited variability over the years. Starting at 23.95% in 2012, it decreased slightly in 2013 but increased noticeably to reach a peak of 35% in 2015. Subsequently, the rate decreased considerably to 21.78% in 2017, indicating a more favorable tax environment or tax strategy in the later years.

Overall Analysis

The period under review reflects fluctuations in both profitability and tax expenses. Despite some gains in operating profit up to 2014, the subsequent decline and recovery suggest sensitivity to external or internal factors affecting earnings. Tax-related figures show a similar trend of increase followed by reduction, which could be influenced by changing tax rates or tax planning efficacy. The decline in the effective cash tax rate by 2017, coupled with a recovery in profitability, may be indicative of improved after-tax profitability towards the end of the period.