Newmont Corp. (NYSE:NEM)

The financial data reveals significant fluctuations and trends across the reported years. Key metrics such as net operating profit after taxes (NOPAT), economic profit, invested capital, and cost of capital provide insights into the operational performance and capital efficiency over the period.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited a strong value of 3,486 million USD in 2019, followed by a decrease to 2,630 million USD in 2020. The figure then sharply declined to 274 million USD in 2021, turning negative in the subsequent years with -555 million USD in 2022 and further dropping to -2,520 million USD in 2023. This indicates a deteriorating profitability trend, with the company moving from positive to substantial losses.

Cost of Capital

The cost of capital remained relatively stable, fluctuating slightly between 8.66% and 9.23% over the five-year period. Notably, it peaked at 9.23% in 2021 before gradually decreasing to 8.66% by 2023. The relatively narrow range suggests no major shifts in the company's capital structure or market risk perception during this timeframe.

Invested Capital

Invested capital showed a slight increase from 28,943 million USD in 2019 to 29,461 million USD in 2020, followed by a decline to 27,566 million USD in 2021 and a more pronounced drop to 23,044 million USD in 2022. However, in 2023, invested capital surged to 36,379 million USD, representing a significant reinvestment or asset acquisition despite the concurrent operational losses.

Economic Profit

Economic profit, which factors in the cost of capital, transitioned from a positive 889 million USD in 2019 to negative values in every following year. The transition was abrupt, moving to -34 million USD in 2020, then sharply down to -2,269 million USD in 2021, further declining to -2,654 million USD in 2022, and plunging to a significant negative 5,669 million USD in 2023. This downward trend reflects increasing inefficiency in generating returns above the cost of capital and points to substantial value destruction in the most recent periods.

Overall, the data indicates a challenging financial performance marked by declining profitability and worsening value creation metrics from 2019 through 2023. Despite a relatively stable cost of capital, the company’s invested capital dramatically increased in the latest year, which, combined with steep operating losses, led to an exacerbated negative economic profit. This suggests that recent investments have not yet translated into positive returns and that the company faces considerable financial hurdles.

The financial data reveals significant fluctuations in profitability over the five-year period ending in 2023. Net income attributable to stockholders showed a positive trend through 2019 and 2020, peaking at approximately $2.8 billion in those years. However, a sharp decline is evident starting in 2021, where net income drops to around $1.2 billion, followed by a transition to negative territory in 2022 and 2023, with losses reaching nearly $0.4 billion and $2.5 billion respectively.

Similarly, the net operating profit after taxes (NOPAT) follows a comparable trajectory. It decreased from $3.5 billion in 2019 to $2.6 billion in 2020, then plummeted to just $274 million in 2021. The subsequent years show further deterioration into negative values, with losses of about $555 million in 2022 and $2.5 billion in 2023.

Profitability Trends

The company experienced robust profitability in 2019 and 2020, but profitability sharply declined starting in 2021, transitioning into losses by 2022 and 2023.

Net Income Analysis

Net income sustained positive values for the first three years analyzed, but the significant drop in 2021 indicates operational or market challenges. The losses in the last two years suggest ongoing issues impacting the bottom line.

NOPAT Analysis

NOPAT mirrored net income movements but showed an earlier and steeper decline, reflecting diminishing operational efficiency or increased expenses relative to operating profit.

Overall

The data suggests increasing financial strain from 2021 onward, with deteriorating profitability and operational performance. The downward trend in both net income and NOPAT highlights potential risks or negative developments affecting financial health.

Income and Mining Tax Expense

The income and mining tax expense exhibited notable fluctuations over the five-year period. Initially, it decreased from 832 million US dollars in 2019 to 704 million in 2020. This decline was followed by a significant increase to 1,098 million in 2021, representing the highest value in the period under review. Subsequently, the expense dropped sharply to 455 million in 2022 before experiencing a moderate rise to 526 million in 2023. Overall, the tax expense shows a volatile pattern with a peak occurring in 2021 and lower values in the later years.

Cash Operating Taxes

Cash operating taxes demonstrated an overall upward trend from 2019 through 2021, increasing from 550 million to 1,262 million US dollars. The growth in this category was consistent and pronounced during these years. However, in 2022, there was a significant decline to 765 million, and this downward trend continued into 2023, with the amount further decreasing to 651 million. This pattern indicates strong growth in cash operating taxes during the initial years, followed by a substantial reduction in the final two years.

Comparative Analysis

Both income and mining tax expense and cash operating taxes peaked in 2021 before declining in the subsequent years. The variations in income and mining tax expense were more pronounced, exhibiting greater volatility, whereas cash operating taxes had a steadier increase prior to the decline. The decline in both categories after 2021 may suggest changes in operational efficiencies, tax policies, or variations in taxable income. The divergence in magnitude of fluctuations between the two items could imply differences in their calculation bases or timing recognition.

The financial data reveals several notable trends in the company's capital structure and financing activities over the five-year period ending December 31, 2023.

Total Reported Debt & Leases

The total reported debt and leases showed a generally declining trend from 2019 through 2022, dropping from $6,909 million in 2019 to $6,248 million in 2022. This reduction suggests the company was actively managing and reducing its debt obligations during this period. However, in 2023, there was a significant increase to $9,541 million, reversing the downward trend and indicating a substantial rise in leverage or new financing activities undertaken in that year.

Total Newmont Stockholders’ Equity

Stockholders’ equity increased from $21,420 million in 2019 to a peak of $23,008 million in 2020, reflecting growth in the equity base. The level then moderately declined in the following two years, reaching $19,354 million in 2022. In 2023, equity rebounded sharply to $29,027 million, exceeding all previous years in the data set. This sharp rise might indicate retained earnings accumulation, equity infusions, or favorable changes in asset valuations leading to an expanded equity base.

Invested Capital

Invested capital initially increased slightly from $28,943 million in 2019 to $29,461 million in 2020, then declined steadily to $23,044 million by the end of 2022. This decreasing trend corresponds with the reductions in both equity and debt earlier noted, possibly reflecting asset sales, depreciation, or less capital deployment during this period. In 2023, invested capital surged to $36,379 million, marking a significant expansion of the capital base, likely linked to the increased debt and equity levels recorded the same year.

Overall, the data indicates a phase of consolidation or capital reduction from 2020 to 2022, characterized by declines in debt, equity, and invested capital. This was followed by a strong growth phase in 2023, with marked increases across all major capital metrics. The simultaneous rise in debt and equity suggests an aggressive capital expansion, possibly to fund new investments or strategic initiatives. This shift in 2023 represents a significant change in the company's financial strategy compared to the prior years.

The financial data over the period from December 31, 2019, to December 31, 2023, reveals significant fluctuations and notable trends across key metrics.

Economic Profit

There is a marked decline in economic profit over the observed years. Starting from a positive 889 million US dollars in 2019, economic profit turned negative in 2020, registering -34 million US dollars. The downward trajectory deepened substantially in subsequent years, reaching -2,269 million in 2021, -2,654 million in 2022, and further intensifying to -5,669 million in 2023. This persistent decrease indicates growing challenges in generating profit above the cost of capital.

Invested Capital

Invested capital shows a more varied pattern. An initial slight increase occurred from 28,943 million US dollars in 2019 to 29,461 million in 2020, followed by a reduction to 27,566 million in 2021 and a further decrease to 23,044 million in 2022. However, in 2023, there was a notable increase to 36,379 million US dollars, surpassing earlier years significantly. This sharp rise after two years of decline suggests substantial new investments or asset revaluation starting in the latest period.

Economic Spread Ratio

The economic spread ratio exhibits a downward trend consistent with the economic profit results. From a positive 3.07% in 2019, it dropped to slightly negative -0.12% in 2020, and deteriorated further into negative territory with -8.23% in 2021, -11.52% in 2022, and reaching -15.58% in 2023. This decline reflects increasing inefficiency or lower returns relative to the invested capital's cost, indicating worsening value creation over the years.

Overall, the data indicate a deterioration in economic performance characterized by sustained negative economic profits and economic spreads after 2019, despite a significant increase in invested capital in 2023. The contrasting trend between rising invested capital and worsening profitability measures suggests challenges in achieving adequate returns on the newly invested resources, raising concerns about the effectiveness of recent investments and capital allocation strategies.

Sales

Sales increased steadily from 2019 through 2021, rising from 9,740 million USD to 12,222 million USD. However, there was a slight decline in sales in the subsequent periods, with sales decreasing to 11,915 million USD in 2022 and further to 11,812 million USD in 2023. Overall, the sales figures peaked in 2021 and then showed a modest downward trend.

Economic Profit

The economic profit experienced a significant negative shift over the period. In 2019, economic profit was positive at 889 million USD but turned negative in 2020 with a loss of 34 million USD. This downward trend worsened sharply in the following years, with losses escalating to 2,269 million USD in 2021, 2,654 million USD in 2022, and reaching a substantial negative value of 5,669 million USD in 2023. This indicates a worsening economic profitability despite sales remaining relatively high.

Economic Profit Margin

The economic profit margin follows the same negative trend as the economic profit. Starting at a positive margin of 9.13% in 2019, it dropped to slightly negative at -0.3% in 2020. Subsequently, the margin deteriorated significantly, reaching -18.56% in 2021, -22.27% in 2022, and further declining to -47.99% in 2023. This reflects increasing inefficiency or rising costs relative to sales, causing profitability on an economic profit basis to erode substantially.

Overall Analysis

While sales exhibited growth until 2021 followed by a slight decline, the economic profit and economic profit margin both demonstrate a severe and accelerating decline from 2019 onwards. The transition from positive to large negative values in economic profit and margin indicates challenges in cost management, capital efficiency, or other factors impacting profitability. The gap between stable sales figures and declining economic profitability suggests that increasing revenue has not translated into economic value creation over the analyzed period.