Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
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Return on Invested Capital (ROIC)
Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Net operating profit after taxes (NOPAT)1 | ||||||
Invested capital2 | ||||||
Performance Ratio | ||||||
ROIC3 | ||||||
Benchmarks | ||||||
ROIC, Competitors4 | ||||||
Freeport-McMoRan Inc. |
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 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows a clear declining trend over the period analyzed. It started at a high of 3,486 million USD in 2019, then fell sharply to 2,630 million USD in 2020. This decline continued more drastically in 2021 with a substantial decrease to 274 million USD. By 2022, the NOPAT turned negative, registering a loss of 555 million USD, which further worsened in 2023 to a loss of 2,520 million USD. This demonstrates a significant deterioration in profitability over the five-year span.
- Invested Capital
- Invested capital initially increased slightly from 28,943 million USD in 2019 to 29,461 million USD in 2020. However, it then decreased steadily to 27,566 million USD in 2021 and further down to 23,044 million USD in 2022. In 2023, there was a sharp rebound in invested capital, rising substantially to 36,379 million USD, the highest in the observed period. This indicates a renewed or increased investment after a period of reduction.
- Return on Invested Capital (ROIC)
- The ROIC follows a downward trend consistent with the changes in NOPAT. Starting at 12.04% in 2019, it decreased to 8.93% in 2020 and dropped significantly to 0.99% in 2021. In 2022, the ROIC was negative at -2.41%, and it declined even further to -6.93% in 2023. This pattern reflects a declining efficiency in generating returns from the invested capital, paralleling the drop in net operating profit and overall profitability.
- Overall Analysis
- The data exhibits a marked decline in profitability metrics from 2019 through 2023, with net operating profit after taxes turning negative in the last two years. Despite the fluctuating invested capital, particularly the sharp increase in 2023, returns on that capital have progressively worsened, indicating that the company has struggled to generate value from its investments during this period. The negative ROIC in the recent years highlights operational challenges and reduced capital efficiency.
Decomposition of ROIC
ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
---|---|---|---|---|---|---|---|
Dec 31, 2023 | = | × | × | ||||
Dec 31, 2022 | = | × | × | ||||
Dec 31, 2021 | = | × | × | ||||
Dec 31, 2020 | = | × | × | ||||
Dec 31, 2019 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin shows a clear declining trend over the observed period. Starting at a high of 41.44% in 2019, it dropped significantly to 31.44% in 2020, followed by a sharp decline to 12.57% in 2021. The margin further diminished to 1.76% in 2022 and turned negative to -15.82% in 2023, indicating increasing operational challenges and possibly rising costs or lower revenues impacting profitability.
- Turnover of Capital (TO)
- The turnover of capital improved steadily from 0.34 in 2019 to 0.52 in 2022, suggesting enhanced efficiency in using capital to generate revenues during this phase. However, in 2023, this ratio declined sharply to 0.32, indicating a reduction in capital utilization efficiency or potential asset underperformance in the most recent year.
- 1 – Effective Cash Tax Rate (CTR)
- The 1 minus effective cash tax rate metric exhibits high volatility. It decreased notably from 86.37% in 2019 to 72.74% in 2020 and further plummeted to 17.85% in 2021. In 2022, it showed an extreme negative value of -264.37%, which could reflect unusual tax credits, carrybacks, or other exceptional tax events during that year. It reverted sharply to 100% in 2023, indicating a normalization or an anomaly that requires further investigation.
- Return on Invested Capital (ROIC)
- Return on invested capital has seen a downward trajectory throughout the period. ROIC was positive at 12.04% in 2019, then declined to 8.93% in 2020, and dropped drastically to 0.99% in 2021. The measure turned negative in 2022 (-2.41%) and decreased further to -6.93% in 2023. This trend indicates worsening returns on the capital employed, possibly due to declining operational efficiency or adverse market conditions.
- Overall Observations
- The overall financial trends reveal declining profitability and returns, alongside a temporary increase and then a sharp fall in capital turnover. The operating margins and ROIC dropping into negative territory suggest significant operational and financial stress. The volatility seen in the effective cash tax rate signals irregular tax impacts, which could affect net profitability and cash flows. These patterns collectively point to challenges in sustaining profitability and efficient capital utilization over the recent years.
Operating Profit Margin (OPM)
Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Net operating profit after taxes (NOPAT)1 | ||||||
Add: Cash operating taxes2 | ||||||
Net operating profit before taxes (NOPBT) | ||||||
Sales | ||||||
Profitability Ratio | ||||||
OPM3 | ||||||
Benchmarks | ||||||
OPM, Competitors4 | ||||||
Freeport-McMoRan Inc. |
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 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT demonstrates a significant downward trend over the five-year period. It decreased from a high of 4036 million US dollars in 2019 to a negative value of -1869 million US dollars by the end of 2023. This represents a transition from strong profitability in 2019 and 2020, to a sharp decline in 2021 followed by persistent losses in 2022 and 2023.
- Sales
- Sales figures show an upward movement from 9740 million US dollars in 2019 to a peak of 12,222 million US dollars in 2021. However, in the subsequent years, sales slightly declined to 11,915 million US dollars in 2022 and further to 11,812 million US dollars in 2023. Despite the initial growth, sales stagnated and showed signs of plateauing during the latter years.
- Operating Profit Margin (OPM)
- The operating profit margin follows a downward trajectory consistent with the NOPBT trend. Starting at a strong 41.44% in 2019, it declined steadily to 31.44% in 2020 and further to 12.57% in 2021. The margin nearly evaporated in 2022, falling to 1.76%, and then turned negative, reaching -15.82% in 2023. This indicates worsening operational efficiency and profitability despite relatively stable sales levels towards the end of the period.
Turnover of Capital (TO)
Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Sales | ||||||
Invested capital1 | ||||||
Efficiency Ratio | ||||||
TO2 | ||||||
Benchmarks | ||||||
TO, Competitors3 | ||||||
Freeport-McMoRan Inc. |
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 Invested capital. See details »
2 2023 Calculation
TO = Sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Sales Trend
- Sales exhibited a growth trajectory from 2019 through 2021, increasing from $9,740 million to a peak of $12,222 million. However, following 2021, sales showed a slight decline, dropping to $11,915 million in 2022 and further to $11,812 million in 2023. Despite this recent downward movement, sales in 2023 remained above the 2019 level, indicating a moderate long-term growth over the five-year period.
- Invested Capital Trend
- Invested capital remained relatively stable around $28,943 million to $29,461 million in 2019 and 2020, followed by a decrease to $27,566 million in 2021 and a more pronounced reduction to $23,044 million in 2022. Subsequently, invested capital experienced a significant increase to $36,379 million in 2023, surpassing previous period levels substantially. This sharp rise in invested capital in 2023 is notable and suggests increased asset deployment or investment activity during that year.
- Turnover of Capital (TO) Ratio
- The turnover of capital ratio demonstrated a steady increase from 0.34 in 2019 to 0.52 in 2022, signaling improved efficiency in utilizing capital to generate sales. However, in 2023, this ratio dropped markedly to 0.32, the lowest observed during the period. This decline aligns with the large increase in invested capital coupled with a slight decrease in sales, indicating a reduction in capital use efficiency for that year.
- Overall Insights
- The data reveals a period of moderate sales growth accompanied by improvements in capital turnover efficiency until 2022. The significant increase in invested capital in 2023, without corresponding sales growth, resulted in a deterioration of capital turnover efficiency. This pattern suggests a potential strategic shift towards greater asset investment, which may require close monitoring to assess its impact on future sales performance and capital utilization efficiency.
Effective Cash Tax Rate (CTR)
Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Net operating profit after taxes (NOPAT)1 | ||||||
Add: Cash operating taxes2 | ||||||
Net operating profit before taxes (NOPBT) | ||||||
Tax Rate | ||||||
CTR3 | ||||||
Benchmarks | ||||||
CTR, Competitors4 | ||||||
Freeport-McMoRan Inc. |
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 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
Over the analyzed five-year period, the data reveals several notable trends and fluctuations in key financial metrics.
- Cash Operating Taxes
- The cash operating taxes demonstrate an initial upward trend from 550 million US dollars in 2019 to a peak of 1,262 million US dollars in 2021. However, a significant decline is observed in the subsequent years, dropping to 765 million US dollars in 2022 and further to 651 million US dollars in 2023. This pattern suggests a reduction in taxable income or changes in tax strategies or regulations during the last two years.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes exhibits a downward trajectory across the period. Starting at 4,036 million US dollars in 2019, it decreases gradually to 3,615 million in 2020, followed by a sharper decline to 1,536 million in 2021. In 2022, the metric falls dramatically to 210 million US dollars and turns negative in 2023, reaching a loss of 1,869 million US dollars. This indicates increasing operational challenges or adverse market conditions impacting profitability increasingly over time.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate rises markedly over the first four years, from 13.63% in 2019 to an exceptionally high 364.37% in 2022. This unusual spike likely reflects the steep decline in profitability and possibly the impact of non-deductible expenses or one-time tax adjustments. The rate for 2023 is not available, potentially due to the loss incurred, which typically results in undefined or zero tax expense.
In summary, the period is characterized by deteriorating operating profitability, as evidenced by the consistent decline and eventual negative NOPBT. Despite this, cash operating taxes initially increased before dropping modestly, and the effective cash tax rate surged to abnormal levels before data gaps appear. These indicators collectively suggest the company experienced significant financial stress and possibly tax-related complexities in the latter years.