Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Newmont Corp., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -2,520 – 9.72% × 36,379 = -6,056
A significant deterioration in economic performance is evident over the five-year period ending December 31, 2023. The transition from positive economic profit to substantial value destruction indicates a systemic decline in the ability to generate returns exceeding the cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A severe downward trajectory is observed in operating profitability. NOPAT decreased from 3,486 million US$ in 2019 to 2,630 million US$ in 2020, followed by a sharp contraction to 274 million US$ in 2021. This decline accelerated into negative territory, reaching -555 million US$ in 2022 and culminating in a loss of -2,520 million US$ in 2023.
- Cost of Capital and Invested Capital
- The cost of capital remained relatively stable, fluctuating within a narrow range between 9.72% and 10.41%. Invested capital showed volatility, decreasing from a peak of 29,461 million US$ in 2020 to a low of 23,044 million US$ in 2022, before increasing sharply to 36,379 million US$ in 2023. This increase in the capital base occurred simultaneously with the deepest decline in operating profit.
- Economic Profit
- Economic profit shifted from a value-creative state of 564 million US$ in 2019 to an increasingly value-destructive state. The deficit widened progressively, moving to -370 million US$ in 2020, -2,594 million US$ in 2021, and -2,920 million US$ in 2022. By December 31, 2023, the economic profit reached its lowest point at -6,056 million US$.
The correlation between the collapsing NOPAT and the expansion of invested capital in 2023 magnified the losses in economic profit. The inability to maintain positive operating returns while managing a growing capital base has resulted in a substantial erosion of economic value.
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Net Operating Profit after Taxes (NOPAT)
Newmont Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Newmont stockholders.
3 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 105 × 3.78% = 4
4 2023 Calculation
Tax benefit of interest expense, net of capitalized interest = Adjusted interest expense, net of capitalized interest × Statutory income tax rate
= 247 × 21.00% = 52
5 Addition of after taxes interest expense to net income (loss) attributable to Newmont stockholders.
6 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 148 × 21.00% = 31
7 Elimination of after taxes investment income.
8 Elimination of discontinued operations.
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 $2.5 billion in 2023.
- Profitability Trends
- The company experienced robust profitability in 2019 and 2020, but profitability sharply declined starting in 2021, transitioning into losses by 2022 and 2023.
- Net Income Analysis
- Net income sustained positive values for the first three years analyzed, but the significant drop in 2021 indicates operational or market challenges. The losses in the last two years suggest ongoing issues impacting the bottom line.
- NOPAT Analysis
- NOPAT mirrored net income movements but showed an earlier and steeper decline, reflecting diminishing operational efficiency or increased expenses relative to operating profit.
- Overall
- The data suggests increasing financial strain from 2021 onward, with deteriorating profitability and operational performance. The downward trend in both net income and NOPAT highlights potential risks or negative developments affecting financial health.
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Cash Operating Taxes
Newmont Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- 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.
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Invested Capital
Newmont Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of equity equivalents to total Newmont stockholders’ equity.
4 Removal of accumulated other comprehensive income.
5 Subtraction of construction-in-progress.
6 Subtraction of marketable securities and restricted marketable securities.
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 $36,379 million, marking a significant expansion of the capital base, likely linked to the increased debt and equity levels recorded the same year.
Overall, the data indicates a phase of consolidation or capital reduction from 2020 to 2022, characterized by declines in debt, equity, and invested capital. This was followed by a strong growth phase in 2023, with marked increases across all major capital metrics. The simultaneous rise in debt and equity suggests an aggressive capital expansion, possibly to fund new investments or strategic initiatives. This shift in 2023 represents a significant change in the company's financial strategy compared to the prior years.
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Cost of Capital
Newmont Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 36,017) | 36,017) | ÷ | 45,659) | = | 0.79 | 0.79 | × | 11.38% | = | 8.98% | ||
| Debt, finance lease and other financing obligations3 | 9,537) | 9,537) | ÷ | 45,659) | = | 0.21 | 0.21 | × | 4.44% × (1 – 21.00%) | = | 0.73% | ||
| Operating lease liability4 | 105) | 105) | ÷ | 45,659) | = | 0.00 | 0.00 | × | 3.78% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 45,659) | 1.00 | 9.72% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, finance lease and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 35,133) | 35,133) | ÷ | 40,946) | = | 0.86 | 0.86 | × | 11.38% | = | 9.77% | ||
| Debt, finance lease and other financing obligations3 | 5,697) | 5,697) | ÷ | 40,946) | = | 0.14 | 0.14 | × | 4.42% × (1 – 21.00%) | = | 0.49% | ||
| Operating lease liability4 | 116) | 116) | ÷ | 40,946) | = | 0.00 | 0.00 | × | 4.35% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 40,946) | 1.00 | 10.26% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, finance lease and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 52,876) | 52,876) | ÷ | 60,366) | = | 0.88 | 0.88 | × | 11.38% | = | 9.97% | ||
| Debt, finance lease and other financing obligations3 | 7,362) | 7,362) | ÷ | 60,366) | = | 0.12 | 0.12 | × | 4.42% × (1 – 21.00%) | = | 0.43% | ||
| Operating lease liability4 | 128) | 128) | ÷ | 60,366) | = | 0.00 | 0.00 | × | 4.90% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 60,366) | 1.00 | 10.41% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, finance lease and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 45,906) | 45,906) | ÷ | 54,271) | = | 0.85 | 0.85 | × | 11.38% | = | 9.63% | ||
| Debt, finance lease and other financing obligations3 | 8,257) | 8,257) | ÷ | 54,271) | = | 0.15 | 0.15 | × | 4.55% × (1 – 21.00%) | = | 0.55% | ||
| Operating lease liability4 | 108) | 108) | ÷ | 54,271) | = | 0.00 | 0.00 | × | 3.87% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 54,271) | 1.00 | 10.18% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, finance lease and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 38,845) | 38,845) | ÷ | 46,684) | = | 0.83 | 0.83 | × | 11.38% | = | 9.47% | ||
| Debt, finance lease and other financing obligations3 | 7,764) | 7,764) | ÷ | 46,684) | = | 0.17 | 0.17 | × | 4.68% × (1 – 21.00%) | = | 0.61% | ||
| Operating lease liability4 | 75) | 75) | ÷ | 46,684) | = | 0.00 | 0.00 | × | 5.31% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 46,684) | 1.00 | 10.09% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, finance lease and other financing obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Newmont Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (6,056) | (2,920) | (2,594) | (370) | 564) | |
| Invested capital2 | 36,379) | 23,044) | 27,566) | 29,461) | 28,943) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -16.65% | -12.67% | -9.41% | -1.26% | 1.95% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Freeport-McMoRan Inc. | -7.11% | -6.13% | -2.65% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -6,056 ÷ 36,379 = -16.65%
4 Click competitor name to see calculations.
The financial trajectory from 2019 to 2023 indicates a systemic decline in the ability to generate economic value. While the period began with positive economic profit, a consistent downward trend emerged, culminating in significant value destruction by the end of 2023.
- Economic Profit Trend
- A sharp reversal in economic profit is observed, transitioning from a surplus of 564 million US dollars in 2019 to a deficit of 6,056 million US dollars in 2023. The losses accelerated markedly after 2020, with the most substantial drop occurring between 2022 and 2023, where the deficit more than doubled.
- Invested Capital Dynamics
- Invested capital remained relatively stable between 2019 and 2021, followed by a contraction to 23,044 million US dollars in 2022. However, a significant increase occurred in 2023, with invested capital rising to 36,379 million US dollars. This spike in capital deployment coincided with the largest annual decline in economic profit, suggesting that the additional capital has not yet yielded a return exceeding the cost of capital.
- Economic Spread Ratio Analysis
- The economic spread ratio exhibits a continuous and accelerating negative trend. Starting at a positive 1.95% in 2019, the ratio turned negative in 2020 (-1.26%) and deteriorated rapidly to -16.65% by 2023. This progression confirms a widening gap between the return on invested capital and the weighted average cost of capital, indicating that the company is increasingly failing to cover its cost of funding through its operational returns.
The correlation between the rising invested capital in 2023 and the deepening negative economic spread suggests a period of aggressive capital expenditure or acquisition that has significantly increased the cost burden without a corresponding increase in economic gains.
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Economic Profit Margin
Newmont Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (6,056) | (2,920) | (2,594) | (370) | 564) | |
| Sales | 11,812) | 11,915) | 12,222) | 11,497) | 9,740) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -51.27% | -24.51% | -21.23% | -3.22% | 5.79% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Freeport-McMoRan Inc. | -10.88% | -9.74% | -4.04% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales
= 100 × -6,056 ÷ 11,812 = -51.27%
3 Click competitor name to see calculations.
A significant deterioration in economic performance is evident over the five-year period ending December 31, 2023. While revenue showed initial growth, the company experienced a severe and accelerating decline in economic profit, indicating that the returns generated were insufficient to cover the cost of capital employed.
- Economic Profit Trajectory
- Economic profit shifted from a positive value of 564 million USD in 2019 to a substantial deficit of 6,056 million USD by 2023. The transition to negative economic profit occurred in 2020 and intensified annually, with the loss expanding most aggressively between 2022 and 2023, where it more than doubled from 2,920 million USD to 6,056 million USD.
- Sales Revenue Analysis
- Sales experienced an upward trend in the early part of the period, rising from 9,740 million USD in 2019 to a peak of 12,222 million USD in 2021. However, this growth plateaued and slightly declined over the following two years, ending at 11,812 million USD in 2023. The divergence between rising sales and plummeting economic profit suggests that revenue growth was not accompanied by proportional gains in operational efficiency or cost management.
- Economic Profit Margin Erosion
- The economic profit margin reflects a critical downward trend, collapsing from a positive 5.79% in 2019 to -51.27% in 2023. The most precipitous drop occurred between 2020 and 2021, where the margin fell from -3.22% to -21.23%. By the end of the observed period, the margin indicated that the economic loss was equivalent to more than half of the total sales revenue, highlighting a systemic failure to create economic value.
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