Newmont Corp. (NYSE:NEM)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibits a clear and concerning downward trend over the analyzed period. Starting from a high of 3,486 million USD in 2019, there is a significant decrease to 2,630 million USD in 2020. The decline becomes more pronounced in subsequent years, reaching 274 million USD in 2021, then turning negative to -555 million USD in 2022, and further deteriorating to -2,520 million USD by the end of 2023. This indicates increasing operational challenges or cost pressures resulting in deteriorating profitability.

Cost of Capital

The cost of capital shows a relatively stable pattern over the five years, fluctuating slightly between 8.56% and 9.12%. It peaks in 2021 at 9.12%, decreases marginally to 9.00% in 2022, and then decreases further to 8.56% in 2023. The stability suggests that the company's financing costs or risk profile did not change dramatically despite operational difficulties.

Invested Capital

Invested capital exhibits variability, starting at 28,943 million USD in 2019, with a slight increase to 29,461 million USD in 2020, followed by a decline to 27,566 million USD in 2021 and a more marked drop to 23,044 million USD in 2022. Interestingly, there is a substantial increase to 36,379 million USD in 2023, which might suggest significant new investments or acquisitions despite the ongoing profitability issues.

Economic Profit

Economic profit demonstrates a sharp negative shift throughout the period. From a positive 919 million USD in 2019, it plummets to nearly neutral (-3 million USD) in 2020, then drops significantly to -2,239 million USD in 2021, and further worsens to -2,629 million USD in 2022. The most severe deficit occurs in 2023, with economic profit declining to -5,633 million USD. This substantial erosion implies that the returns generated are insufficient to cover the cost of capital, highlighting a significant destruction of shareholder value over time.

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 reveals significant trends and variations across the observed periods. There is a consistent decline in economic profit from 2019 to 2023, transitioning from a positive figure to increasingly negative values each year.

Economic Profit

Economic profit starts at a positive value in 2019, then sharply decreases to nearly zero in 2020, followed by increasingly larger negative values through 2023. This trend indicates a deteriorating profitability situation over the period, with losses expanding substantially by the final year.

Invested Capital

The invested capital figures initially remain relatively stable between 2019 and 2021, showing a slight decline in 2021 and a more notable decrease in 2022. However, a pronounced increase occurs in 2023, bringing the invested capital to a level significantly higher than in prior years. This suggests increasing resource allocation or asset acquisition in the most recent year, possibly aimed at reversing the negative profitability trend.

Economic Spread Ratio

The economic spread ratio mirrors the pattern of economic profit, starting positively in 2019, becoming negative in 2020, and continuing to decline in each subsequent year. The spread ratio reaches its lowest point in 2023, reflecting worsening efficiency in generating returns above the cost of capital.

Overall, the data indicates increasing challenges in generating economic value, with declining profitability and efficiency despite fluctuating levels of invested capital. The substantial rise in invested capital in 2023 contrasts with continued deterioration in economic profit and spread ratio, suggesting potential risks associated with recent capital deployment or a lag in return realization.

The financial data reveals notable trends impacting the economic profit and overall sales performance over the five-year period analyzed.

Sales

Sales increased steadily from US$9,740 million in 2019 to a peak of US$12,222 million in 2021, reflecting a positive growth trajectory. However, from 2021 onwards, sales experienced a slight decline, falling to US$11,915 million in 2022 and further slightly decreasing to US$11,812 million in 2023. Despite this modest downturn in recent years, overall sales remained significantly higher in 2023 compared to 2019.

Economic Profit

The economic profit shows a sharply deteriorating pattern throughout the period. In 2019, economic profit was substantially positive at US$919 million; however, it turned negative in 2020 with a slight loss of US$3 million. The decline intensified over the next three years, with economic profit decreasing to negative US$2,239 million in 2021, US$2,629 million in 2022, and reaching a much larger deficit of US$5,633 million by 2023. This trend indicates a significant decline in value creation despite previously strong sales figures.

Economic Profit Margin

The economic profit margin mirrors the trajectory of economic profit, moving from a positive margin of 9.44% in 2019 to negative margins starting from 2020 onwards. The margin deteriorated sharply to -0.03% in 2020 and worsened significantly to -18.32% in 2021 and -22.07% in 2022. By 2023, the margin had declined drastically to -47.69%, illustrating an increasing inefficiency or rising costs relative to sales revenue over time.

In summary, while sales grew initially and remained relatively robust, the company experienced a continual and substantial decline in economic profit and profit margins starting in 2020. This divergence between sales performance and economic profitability suggests rising operational costs, capital inefficiencies, or other financial pressures that increasingly impaired the company's ability to generate economic value during the later years.