Newmont Corp. (NYSE:NEM)

The period between 2019 and 2023 is characterized by a severe decline in capital efficiency and operational profitability. A consistent downward trajectory in returns is evident, moving from a position of healthy capital generation to significant value destruction.

Net Operating Profit After Taxes (NOPAT)

A precipitous decline in NOPAT is observed over the five-year period. From a peak of US$ 3,486 million in 2019, profitability eroded steadily until it became negative in 2022. This trend accelerated sharply in 2023, with NOPAT falling to negative US$ 2,520 million, indicating a substantial collapse in the company's ability to generate operating earnings.

Invested Capital

The capital base remained relatively stable between 2019 and 2022, fluctuating within a range of approximately US$ 23 billion to US$ 29 billion. However, 2023 marked a significant divergence, with invested capital increasing sharply to US$ 36,379 million. This expansion of the asset base occurred simultaneously with a decline in operating profits, further compounding the negative impact on returns.

Return on Invested Capital (ROIC)

ROIC exhibits a continuous and accelerating contraction. Starting at 12.04% in 2019, the ratio declined to 0.99% by 2021, effectively signaling a break-even point in capital productivity. The transition into negative territory occurred in 2022 (-2.41%) and deepened significantly in 2023 to -6.93%. The divergence between the rising invested capital in 2023 and the falling NOPAT resulted in the lowest ROIC of the analyzed period.

A consistent and severe deterioration in the Return on Invested Capital (ROIC) is observed over the five-year period ending December 31, 2023. The ROIC transitioned from a positive 12.04% in 2019 to a negative 6.93% by 2023, indicating a significant decline in the company's ability to generate returns from its invested capital base.

Operating Profit Margin (OPM)

The primary driver of the ROIC decline is the collapse of the operating profit margin. A sharp downward trend is evident, moving from 41.44% in 2019 to -15.82% in 2023. This continuous erosion of profitability indicates that operating costs have scaled disproportionately relative to revenue, ultimately resulting in operating losses by the final year of the period.

Turnover of Capital (TO)

Capital efficiency showed an initial upward trend, increasing steadily from 0.34 in 2019 to a peak of 0.52 in 2022. This suggests that the company was successfully increasing the revenue generated per unit of invested capital for several years. However, this trend reversed sharply in 2023, with the ratio falling to 0.32, the lowest level in the analyzed period.

Effective Cash Tax Rate (CTR) Impacts

The component representing the tax effect (1 – Effective Cash Tax Rate) exhibits extreme volatility. After a decline from 86.37% in 2019 to 17.85% in 2021, a significant anomaly occurred in 2022 with a value of -264.37%, suggesting a substantial tax benefit or accounting adjustment. The value returned to 100.00% in 2023, indicating a negligible cash tax impact for that year.

ROIC Decomposition Analysis

The decomposition reveals that the improvements in capital turnover between 2019 and 2022 were insufficient to offset the aggressive decline in operating profit margins. The transition to a negative ROIC was cemented in 2022 and accelerated in 2023, driven by the simultaneous occurrence of negative operating margins and a collapse in capital turnover.

A significant deterioration in operational profitability is evident between 2019 and 2023. While revenue levels remained relatively stable or grew during the initial years of the period, there was a consistent and severe decline in the ability to convert sales into operating profit, eventually resulting in a negative operating margin.

Sales Performance

Revenue exhibited an initial upward trend, increasing from 9,740 million USD in 2019 to a peak of 12,222 million USD in 2021. Following this peak, sales remained relatively stagnant, ending the period at 11,812 million USD in 2023. This suggests that the overall decline in profitability was not driven by a failure to generate revenue.

Net Operating Profit Before Taxes (NOPBT)

A precipitous decline in NOPBT is observed throughout the five-year window. The figure dropped from 4,036 million USD in 2019 to 210 million USD by 2022, before collapsing into a deficit of 1,869 million USD in 2023. This trajectory indicates a substantial increase in operating expenses or a decrease in operational efficiency that far outpaced revenue growth.

Operating Profit Margin (OPM)

The operating profit margin reflects a severe contraction, moving from a robust 41.44% in 2019 to -15.82% in 2023. The most acute erosion occurred between 2021 and 2023, where the margin fell from 12.57% to negative territory. This consistent downward trend highlights a critical loss of operational leverage and a failure to contain costs relative to sales volume.

The analysis of capital efficiency from 2019 to 2023 reveals a period of steady improvement in asset utilization followed by a sharp decline in the final year. The turnover of capital ratio experienced a consistent upward trend for four consecutive years, peaking in 2022, before dropping to its lowest level in the five-year period during 2023.

Sales Trends

Revenue exhibited growth in the early part of the period, rising from US$ 9,740 million in 2019 to a peak of US$ 12,222 million in 2021. Subsequently, sales entered a phase of relative stability with slight contractions, ending at US$ 11,812 million in 2023. This indicates that while the top line expanded initially, growth plateaued after 2021.

Invested Capital Dynamics

Invested capital remained relatively stable between 2019 and 2020, followed by a period of contraction that reached a low of US$ 23,044 million in 2022. However, 2023 saw a substantial increase in invested capital to US$ 36,379 million, representing a significant expansion of the capital base compared to the previous year.

Turnover of Capital (TO) Analysis

The turnover of capital ratio improved from 0.34 in 2019 to 0.52 in 2022. This improvement was driven by a combination of increasing sales and a reduction in invested capital, suggesting enhanced operational efficiency and better utilization of resources. The subsequent decline to 0.32 in 2023 is directly attributable to the surge in invested capital, which outpaced sales performance, thereby diluting the capital turnover ratio.

An analysis of the financial data reveals a significant divergence between operating profitability and cash tax obligations over the five-year period ending December 31, 2023. While net operating profit before taxes experienced a severe and consistent decline, cash tax payments remained substantial, leading to an unsustainable escalation in the effective cash tax rate.

Net Operating Profit Before Taxes (NOPBT)

A sharp downward trajectory is observed in NOPBT, which fell from US$ 4,036 million in 2019 to a negative US$ 1,869 million by 2023. The most acute deterioration occurred between 2021 and 2023, where profitability collapsed from US$ 1,536 million to a significant operating loss.

Cash Operating Taxes

Cash tax expenditures exhibited a non-linear trend, peaking in 2021 at US$ 1,262 million. Despite the collapse in NOPBT, cash taxes did not decrease proportionally. Although payments declined to US$ 651 million by 2023, the level of cash outflow for taxes remained high relative to the diminishing operating profit.

Effective Cash Tax Rate (CTR)

The CTR demonstrated an exponential increase, rising from 13.63% in 2019 to 364.37% in 2022. This anomalous surge is a direct result of the narrowing gap between cash tax payments and a rapidly declining NOPBT. By 2022, cash taxes paid exceeded the reported operating profit by more than three times. In 2023, a CTR could not be meaningfully calculated as NOPBT entered negative territory.

The overall data indicates a period of severe financial pressure where cash tax burdens became decoupled from current operating performance. The transition from a modest tax rate in 2019 to an extreme rate in 2022 highlights a critical misalignment between accounting profitability and cash outflows for taxation.