Pfizer Inc. (NYSE:PFE)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited significant fluctuations over the observed period. It started at 6,095 million US dollars in 2020 and increased sharply to 18,394 million in 2021, followed by a further rise to 31,018 million in 2022. However, a notable decline occurred in 2023, with NOPAT turning negative at -1,277 million, before recovering to 7,374 million in 2024. This pattern indicates a period of strong profit growth preceding a steep drop and partial recovery.

Invested Capital

Invested capital saw a decrease from 103,898 million US dollars in 2020 to 87,670 million in 2021. This was followed by a marked increase to 110,746 million in 2022 and a more pronounced rise to 154,882 million in 2023. In 2024, invested capital declined to 135,777 million. Overall, the invested capital trend is characterized by an initial reduction, substantial growth until 2023, and a subsequent reduction in the final year.

Return on Invested Capital (ROIC)

ROIC followed a volatile trajectory. Starting at a modest 5.87% in 2020, it jumped significantly to 20.98% in 2021 and further increased to 28.01% in 2022, indicating improved efficiency and profitability relative to capital invested. However, in 2023, ROIC declined drastically to -0.82%, corresponding with the negative NOPAT, and partially rebounded to 5.43% in 2024. This suggests a period of strong operational performance followed by a temporary downturn and subsequent stabilization.

The analysis of the financial performance over the five-year period reveals several notable trends and fluctuations in key profitability and efficiency metrics.

Operating Profit Margin (OPM)

The operating profit margin demonstrated an increasing trend from 19.18% in 2020 to a peak of 38.53% in 2022, indicating significant improvement in operational efficiency and profitability. However, this was followed by a sharp decline to 1.4% in 2023, before a partial recovery to 15.4% in 2024. This volatility suggests transient factors impacting profitability during the latter years, possibly related to cost structure changes or market conditions.

Turnover of Capital (TO)

The turnover of capital showed an initial strong increase from 0.41 in 2020 to 0.94 in 2021, illustrating enhanced asset utilization. It then slightly decreased to 0.91 in 2022, but experienced a significant reduction to 0.38 in 2023. A mild recovery to 0.47 in 2024 was observed. Overall, this metric reflects a decreasing trend in capital efficiency after 2021, which may have affected overall performance.

1 – Effective Cash Tax Rate (CTR)

This measure remained relatively stable around 74-79% from 2020 through 2022, indicating consistent tax expense relative to earnings. In 2023, there was an extreme anomaly with a negative value of -152.75%, suggesting unusual tax benefits or adjustments that year. The figure then normalized to 75.24% in 2024. This aberration points to significant one-time tax effects in 2023.

Return on Invested Capital (ROIC)

The return on invested capital increased substantially from 5.87% in 2020 to 28.01% in 2022, signaling improved profitability relative to the capital invested. Nonetheless, it dropped sharply to -0.82% in 2023, indicating a negative return, before recovering to 5.43% in 2024. This pattern aligns with the trends seen in operating profit margin and turnover of capital, suggesting a challenging year in 2023 disrupting overall performance.

In summary, the period exhibits a strong positive trajectory in profitability and capital efficiency up to 2022, followed by a pronounced downturn across several metrics in 2023, and a partial recovery in 2024. The data indicates that the year 2023 was marked by significant operational and tax-related challenges, which impacted the financial effectiveness as reflected in all key indicators analyzed.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes exhibited significant fluctuations over the five-year period. Starting at 8,185 million US dollars in 2020, it more than tripled by 2021 to 24,532 million, and continued to surge in 2022, reaching a peak of 38,985 million. However, a drastic decline occurred in 2023, with NOPBT dropping to 836 million, followed by a partial recovery in 2024 to 9,801 million. The trend suggests exceptional profitability growth through 2022, interrupted by a sharp contraction in 2023, and a moderate rebound thereafter.

Revenues

Revenues showed a strong increasing trend from 2020 through 2022, beginning at 42,678 million US dollars and ascending to 101,175 million in 2022. This was followed by a notable decline in 2023 to 59,553 million, and a slight increase in 2024 to 63,627 million. The revenue pattern mirrors the trend observed in net operating profit, signaling a peak in 2022 before a significant decrease and a subsequent marginal recovery.

Operating Profit Margin (OPM)

The operating profit margin as a percentage indicates efficiency and profitability relative to revenues. It increased substantially from 19.18% in 2020 to 29.86% in 2021, reaching the highest point of 38.53% in 2022. This surge in margin corresponds with the growth in net operating profit and revenues during the same period. However, in 2023, the margin collapsed dramatically to just 1.4%, evidencing a severe deterioration in operating profitability. In 2024, there was some improvement to 15.4%, but it remained considerably below earlier peak levels.

Overall Insights

The data reveals a pronounced growth phase from 2020 to 2022, characterized by increasing revenues, higher operating profits, and expanding profit margins. This robust performance peaked in 2022 across all metrics. The sharp decline in 2023 across net operating profit, revenues, and operating margin suggests a significant adverse event or operational challenge that severely impacted financial results. Although there was some recovery in 2024, the financial performance did not return to the previously recorded highs, indicating possible ongoing challenges or market conditions limiting full rebound.

Revenues

The revenues show significant fluctuation over the five-year period. Starting at 42,678 million USD in 2020, there is a sharp increase to 82,145 million USD in 2021, followed by a further rise to 101,175 million USD in 2022. However, revenues decline notably to 59,553 million USD in 2023 before experiencing a moderate recovery to 63,627 million USD in 2024. This pattern indicates volatility with a peak in 2022 and a subsequent decrease in the following years.

Invested Capital

Invested capital follows a variable trend without a consistent direction. It starts at 103,898 million USD in 2020, decreases to 87,670 million USD in 2021, then increases to 110,746 million USD in 2022. A significant jump occurs in 2023 to 154,882 million USD, followed by a reduction to 135,777 million USD in 2024. This suggests substantial capital investment activity particularly around 2023, potentially indicating strategic shifts or asset acquisitions.

Turnover of Capital (TO)

The turnover ratio exhibits a pattern closely linked to the fluctuations in revenues and invested capital. It starts relatively low at 0.41 in 2020, rises sharply to 0.94 in 2021, and slightly decreases to 0.91 in 2022, corresponding to high revenue levels relative to invested capital. In 2023, there is a marked decline to 0.38, reflecting the combination of increased capital and decreased revenues. A modest improvement to 0.47 in 2024 occurs as revenues recover somewhat and capital decreases.

Overall Insights

The data reveal a period marked by dynamic changes in both revenues and invested capital, affecting capital efficiency as seen through the turnover ratio. The peak in revenue in 2022 is followed by a sharp decline, despite significant increases in invested capital in 2023. The corresponding fall in turnover ratio suggests reduced efficiency in utilizing capital assets during this period. Some recovery in 2024 hints at stabilization, but turnover remains below earlier peak levels, indicating potential ongoing challenges in capital deployment or market conditions.

Cash Operating Taxes

The cash operating taxes exhibited a notable increase from 2020 to 2022, rising from approximately $2.1 billion to nearly $8 billion. However, this trend reversed sharply in 2023 where the taxes dropped to around $2.1 billion before slightly increasing again in 2024 to approximately $2.4 billion. This fluctuation indicates a significant variation in taxable income or tax management strategies during these years.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes displayed a strong upward trend from 2020 through 2022, growing from about $8.2 billion to nearly $39 billion, demonstrating robust profitability during this period. However, there was a dramatic decline in 2023, where NOPBT fell sharply to $836 million, followed by a partial recovery in 2024 to approximately $9.8 billion. This suggests a period of considerable operational or market challenges in 2023, with signs of improvement in the subsequent year.

Effective Cash Tax Rate (CTR)

The effective cash tax rate remained relatively stable between 2020 and 2022, averaging in the low to mid-20% range (around 25.53% in 2020 down to 20.44% in 2022). In 2023, there was a significant spike to 252.75%, which is an unusually high and potentially anomalous figure indicating either extraordinary tax events, adjustments, or accounting irregularities. This rate normalized again in 2024 to 24.76%, more aligned with the earlier period's rates. This variability in 2023 warrants closer examination for potential one-time items or accounting treatments impacting the tax expense.