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 – 9.85% × 36,379 = -6,104
A significant decline in economic value creation is evident from 2019 to 2023. The transition from positive economic profit to substantial losses indicates a failure to generate returns above the cost of capital during the majority of the analyzed period.
- Net Operating Profit After Taxes (NOPAT)
- A severe downward trajectory is observed in NOPAT, which fell from US$ 3,486 million in 2019 to US$ 274 million in 2021. The decline persisted into negative territory starting in 2022, culminating in a loss of US$ 2,520 million by December 31, 2023.
- Invested Capital
- Invested capital experienced fluctuations, decreasing from US$ 28,943 million in 2019 to a low of US$ 23,044 million in 2022. However, 2023 saw a substantial increase in the capital base, which rose sharply to US$ 36,379 million.
- Cost of Capital
- The cost of capital remained relatively stable over the five-year horizon, fluctuating within a narrow range between 9.85% and 10.55%. This consistency suggests that the volatility in economic profit was not driven by changes in the required rate of return, but rather by operational performance and capital expansion.
- Economic Profit
- Economic profit transitioned from a positive US$ 524 million in 2019 to a significant deficit of US$ 6,104 million in 2023. The acceleration of value destruction is particularly pronounced in the final year, where the combination of deeply negative NOPAT and a significantly expanded capital base intensified the economic loss.
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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 $36,379 million, marking a significant expansion of the capital base, likely linked to the increased debt and equity levels recorded the same year.
Overall, the data indicates a phase of consolidation or capital reduction from 2020 to 2022, characterized by declines in debt, equity, and invested capital. This was followed by a strong growth phase in 2023, with marked increases across all major capital metrics. The simultaneous rise in debt and equity suggests an aggressive capital expansion, possibly to fund new investments or strategic initiatives. This shift in 2023 represents a significant change in the company's financial strategy compared to the prior years.
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Cost of Capital
Newmont Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 36,017) | 36,017) | ÷ | 45,659) | = | 0.79 | 0.79 | × | 11.55% | = | 9.11% | ||
| Debt, finance lease and other financing obligations3 | 9,537) | 9,537) | ÷ | 45,659) | = | 0.21 | 0.21 | × | 4.44% × (1 – 21.00%) | = | 0.73% | ||
| Operating lease liability4 | 105) | 105) | ÷ | 45,659) | = | 0.00 | 0.00 | × | 3.78% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 45,659) | 1.00 | 9.85% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ 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 | × | 11.55% | = | 9.91% | ||
| 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 | 10.41% | ||||||||||
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 | × | 11.55% | = | 10.12% | ||
| 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 | 10.55% | ||||||||||
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 | × | 11.55% | = | 9.77% | ||
| 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 | 10.32% | ||||||||||
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 | × | 11.55% | = | 9.61% | ||
| 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 | 10.23% | ||||||||||
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 | (6,104) | (2,954) | (2,635) | (412) | 524) | |
| Invested capital2 | 36,379) | 23,044) | 27,566) | 29,461) | 28,943) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -16.78% | -12.82% | -9.56% | -1.40% | 1.81% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Freeport-McMoRan Inc. | -7.12% | -6.14% | -2.67% | — | — | |
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 × -6,104 ÷ 36,379 = -16.78%
4 Click competitor name to see calculations.
A significant deterioration in value creation is evident over the five-year period ending December 31, 2023. The transition from positive economic value added to substantial economic losses indicates that the return on invested capital has fallen progressively below the company's cost of capital.
- Economic Profit Trends
- Economic profit shifted from a positive position of 524 million USD in 2019 to increasingly negative values, reaching a deficit of 6,104 million USD by 2023. The acceleration of these losses is particularly pronounced between 2022 and 2023, where the economic loss more than doubled, suggesting a sharp decline in the ability to generate surplus value.
- Economic Spread Ratio Analysis
- The economic spread ratio reflects a consistent downward trajectory, falling from 1.81% in 2019 to -16.78% in 2023. This negative spread confirms that the business is destroying shareholder value, as the gap between the internal rate of return and the cost of capital has widened every year since 2019.
- Invested Capital Dynamics
- Invested capital remained relatively stable between 2019 and 2021 before declining to 23,044 million USD in 2022. However, a substantial increase to 36,379 million USD occurred in 2023. The fact that this increase in invested capital coincided with the largest annual drop in economic profit suggests that the additional capital deployed has not yet yielded a return sufficient to cover its cost.
The convergence of rising invested capital and a plummeting economic spread ratio indicates a systemic failure to achieve economic profitability during the analyzed period. The widening negative spread suggests that the operational returns are not keeping pace with the rising costs of financing the company's asset base.
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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 | (6,104) | (2,954) | (2,635) | (412) | 524) | |
| Sales | 11,812) | 11,915) | 12,222) | 11,497) | 9,740) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -51.68% | -24.79% | -21.56% | -3.58% | 5.38% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Freeport-McMoRan Inc. | -10.91% | -9.77% | -4.07% | — | — | |
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 × -6,104 ÷ 11,812 = -51.68%
3 Click competitor name to see calculations.
A significant and accelerating deterioration in value creation is evident over the five-year period ending December 31, 2023. While the organization began the period generating positive economic value, it transitioned into a state of substantial economic loss, with the magnitude of these losses increasing exponentially despite relatively stable revenue streams.
- Economic Profit Trajectory
- Economic profit shifted from a positive US$ 524 million in 2019 to a deep deficit of US$ 6,104 million by 2023. The most pronounced decline occurred between 2022 and 2023, where the economic loss more than doubled, indicating that the returns on capital are failing to cover the cost of capital at an increasing rate.
- Sales Performance and Divergence
- Sales exhibited an initial growth trend, rising from US$ 9,740 million in 2019 to a peak of US$ 12,222 million in 2021, before experiencing a marginal decline to US$ 11,812 million in 2023. The divergence between increasing or stable sales and plummeting economic profit suggests that top-line growth has not translated into economic value and that capital inefficiency or rising costs of capital are the primary drivers of the decline.
- Economic Profit Margin Erosion
- The economic profit margin reflects a severe downward trend, moving from a positive 5.38% in 2019 to -51.68% in 2023. This collapse in the margin indicates that for every dollar of sales generated in 2023, the company lost approximately 52 cents in economic value, representing a critical failure to generate returns above the required cost of capital.
The overall financial pattern reveals a systemic decline in capital efficiency. The transition from a positive economic profit margin to a deeply negative one, occurring while sales remained higher than 2019 levels, highlights that the current operational scale is significantly underperforming relative to the capital invested.
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