Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
United States Steel Corp., profitability ratios
Based on: 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), 10-K (reporting date: 2018-12-31).
The profitability metrics demonstrate a cyclical and highly volatile trend between 2018 and 2022. A significant contraction in margins and returns is observed during the 2019-2020 period, followed by a sharp recovery in 2021 and a subsequent moderate correction in 2022.
- Profit Margins
- Gross profit margin experienced a steep decline from 13.21% in 2018 to a low of 1.88% in 2020. This was followed by a substantial increase to 28.32% in 2021, before settling at 20.36% in 2022. Operating and net profit margins followed a similar trajectory, both turning negative in 2019 and reaching their lowest points in 2020 at -11.04% and -11.96%, respectively. A rapid reversal occurred in 2021, with the net profit margin peaking at 20.59%.
- Returns on Investment
- Return on equity (ROE) and return on assets (ROA) reflect the volatility seen in the margin data. ROE fell from 26.53% in 2018 to -30.77% in 2020, marking a period of significant equity erosion. A sharp recovery is noted in 2021, where ROE reached a peak of 46.33% before declining to 24.70% in 2022. Similarly, ROA moved from 10.15% in 2018 to a trough of -9.66% in 2020, before peaking at 23.43% in 2021 and normalizing to 12.97% in 2022.
- Overall Performance Pattern
- The data indicates a V-shaped recovery across all profitability indicators. The severe downturn in 2020 across all ratios suggests significant operational challenges or market headwinds, while the 2021 results represent an exceptional peak in efficiency and profitability. The 2022 figures suggest a stabilization period where profitability remained stronger than pre-crisis levels but below the 2021 anomalies.
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Gross Profit Margin
United States Steel Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 4,288) | 5,742) | 183) | 855) | 1,873) | |
| Net sales | 21,065) | 20,275) | 9,741) | 12,937) | 14,178) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 20.36% | 28.32% | 1.88% | 6.61% | 13.21% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 33.76% | 38.59% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 4,288 ÷ 21,065 = 20.36%
2 Click competitor name to see calculations.
The financial trajectory from 2018 through 2022 is characterized by extreme volatility in gross profitability, featuring a severe contraction period followed by a rapid expansion and a subsequent moderate correction.
- Profitability Contraction (2018–2020)
- A consistent downward trend in margins is observed during the first three years of the period. The gross profit margin declined from 13.21% in 2018 to 6.61% in 2019, reaching a nadir of 1.88% in 2020. This collapse in profitability coincided with a significant reduction in net sales, which fell from $14,178 million to $9,741 million, while gross profit plummeted from $1,873 million to just $183 million.
- Rapid Recovery and Peak (2021)
- The 2021 fiscal year marked a dramatic reversal in performance. Net sales more than doubled from the previous year to $20,275 million, while gross profit surged to $5,742 million. This resulted in a peak gross profit margin of 28.32%, representing the highest level of operational efficiency in the analyzed timeframe.
- Revenue Growth and Margin Compression (2022)
- In 2022, net sales continued to climb to a five-year high of $21,065 million. However, this increase in top-line revenue did not translate to higher gross profits, which decreased to $4,288 million. Consequently, the gross profit margin compressed to 20.36%, suggesting an increase in the cost of goods sold relative to sales growth.
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Operating Profit Margin
United States Steel Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Earnings (loss) before interest and income taxes | 3,160) | 4,946) | (1,075) | (230) | 1,124) | |
| Net sales | 21,065) | 20,275) | 9,741) | 12,937) | 14,178) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 15.00% | 24.39% | -11.04% | -1.78% | 7.93% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 30.89% | 36.62% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Materials | 19.68% | 21.62% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Operating profit margin = 100 × Earnings (loss) before interest and income taxes ÷ Net sales
= 100 × 3,160 ÷ 21,065 = 15.00%
2 Click competitor name to see calculations.
A period of significant volatility in operational performance is evident between 2018 and 2022, characterized by a severe contraction followed by a robust recovery. The financial trajectory reflects a sharp decline in profitability through 2020, succeeded by a substantial expansion in both top-line revenue and operating margins in the subsequent two years.
- Revenue Dynamics
- Net sales experienced a downward trend in the first three years of the period, falling from 14,178 million US dollars in 2018 to a low of 9,741 million US dollars in 2020. A rapid acceleration followed, with sales more than doubling between 2020 and 2021 to reach 20,275 million US dollars, and further increasing to 21,065 million US dollars by the end of 2022.
- Operating Income Performance
- Earnings before interest and income taxes shifted from a positive 1,124 million US dollars in 2018 to operating losses of 230 million US dollars in 2019 and 1,075 million US dollars in 2020. A significant reversal occurred in 2021, where earnings spiked to 4,946 million US dollars, before moderating to 3,160 million US dollars in 2022.
- Operating Profit Margin Trends
- The operating profit margin mirrored the volatility of earnings, declining from 7.93% in 2018 to a trough of -11.04% in 2020. A sharp recovery led to a peak margin of 24.39% in 2021, the highest recorded in the five-year period. While the margin compressed to 15.00% in 2022, it maintained a level substantially higher than the margins observed between 2018 and 2020.
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Net Profit Margin
United States Steel Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings (loss) attributable to United States Steel Corporation | 2,524) | 4,174) | (1,165) | (630) | 1,115) | |
| Net sales | 21,065) | 20,275) | 9,741) | 12,937) | 14,178) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 11.98% | 20.59% | -11.96% | -4.87% | 7.86% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 15.22% | 18.85% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Materials | 12.31% | 13.59% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net profit margin = 100 × Net earnings (loss) attributable to United States Steel Corporation ÷ Net sales
= 100 × 2,524 ÷ 21,065 = 11.98%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by extreme volatility in both top-line revenue and bottom-line profitability. An initial period of contraction transitioned into a sharp recovery, followed by a partial correction in the final year of the period.
- Net Profit Margin Trend
- A significant downward trajectory is observed between 2018 and 2020, with the net profit margin falling from 7.86% to a low of -11.96%. This decline coincides with a substantial decrease in net sales, which reached a period low of 9,741 million US dollars in 2020. A rapid reversal occurred in 2021, where the margin surged to a peak of 20.59%, indicating a strong recovery in operational efficiency or favorable market pricing. By 2022, the margin moderated to 11.98%, despite continued growth in net sales.
- Net Earnings Dynamics
- Net earnings shifted from a positive 1,115 million US dollars in 2018 to significant losses of 630 million and 1,165 million US dollars in 2019 and 2020, respectively. The 2021 fiscal year represents a critical inflection point, with net earnings increasing to 4,174 million US dollars. Although earnings decreased to 2,524 million US dollars in 2022, the figure remains substantially higher than pre-2021 levels.
- Revenue Correlation with Profitability
- A strong correlation is observed between net sales volume and profit margins. The contraction in sales from 2018 to 2020 mirrored the decline in margins. Conversely, the expansion of net sales to over 20 billion US dollars in 2021 and 2022 supported the return to profitability. However, the divergence between the record sales of 2022 and the lower profit margin relative to 2021 suggests an increase in operating costs or a compression in pricing power during the final year analyzed.
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Return on Equity (ROE)
United States Steel Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings (loss) attributable to United States Steel Corporation | 2,524) | 4,174) | (1,165) | (630) | 1,115) | |
| Total United States Steel Corporation stockholders’ equity | 10,218) | 9,010) | 3,786) | 4,092) | 4,202) | |
| Profitability Ratio | ||||||
| ROE1 | 24.70% | 46.33% | -30.77% | -15.40% | 26.53% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 22.30% | 30.80% | — | — | — | |
| ROE, Industry | ||||||
| Materials | 16.42% | 16.54% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROE = 100 × Net earnings (loss) attributable to United States Steel Corporation ÷ Total United States Steel Corporation stockholders’ equity
= 100 × 2,524 ÷ 10,218 = 24.70%
2 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by extreme volatility in net earnings and a significant expansion of the equity base. A period of substantial losses occurring between 2019 and 2020 was followed by a rapid recovery in 2021, resulting in a strengthened capital position by the end of 2022.
- Return on Equity (ROE) Trend
- A sharp decline in ROE is observed from 2018 to 2020, moving from 26.53% to a low of -30.77%. This deterioration correlates directly with the transition from positive net earnings in 2018 to increasing losses through 2020, during which stockholders' equity experienced a gradual reduction.
- Profitability Recovery and Peak
- The year 2021 represents a significant pivot, with ROE peaking at 46.33%. This surge was driven by a substantial increase in net earnings to US$ 4,174 million and a simultaneous expansion of stockholders' equity, which rose to US$ 9,010 million.
- Equity Growth and ROE Normalization
- In 2022, ROE decreased to 24.70% despite the company maintaining profitability with net earnings of US$ 2,524 million. This moderation in the ratio is attributed to the continued growth of stockholders' equity to US$ 10,218 million, which increased the denominator of the calculation and lowered the resulting percentage return relative to the 2021 peak.
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Return on Assets (ROA)
United States Steel Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings (loss) attributable to United States Steel Corporation | 2,524) | 4,174) | (1,165) | (630) | 1,115) | |
| Total assets | 19,458) | 17,816) | 12,059) | 11,608) | 10,982) | |
| Profitability Ratio | ||||||
| ROA1 | 12.97% | 23.43% | -9.66% | -5.43% | 10.15% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 6.79% | 8.97% | — | — | — | |
| ROA, Industry | ||||||
| Materials | 6.28% | 6.65% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROA = 100 × Net earnings (loss) attributable to United States Steel Corporation ÷ Total assets
= 100 × 2,524 ÷ 19,458 = 12.97%
2 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by significant volatility in earnings and a steady expansion of the total asset base. The Return on Assets (ROA) reflects these fluctuations, shifting from positive returns to significant losses before experiencing a sharp recovery and subsequent normalization.
- Net Earnings Volatility
- Net earnings exhibited a sharp downward trajectory starting in 2019, with losses widening from negative 630 million US dollars to negative 1.165 billion US dollars by 2020. A substantial reversal occurred in 2021, as earnings spiked to 4.174 billion US dollars, followed by a moderation to 2.524 billion US dollars in 2022.
- Asset Base Expansion
- Total assets grew consistently throughout the analyzed period. An accelerated increase is observed between 2020 and 2021, where assets rose from 12.059 billion US dollars to 17.816 billion US dollars. By December 31, 2022, the asset base reached 19.458 billion US dollars, representing a significant increase compared to the 10.982 billion US dollars reported in 2018.
- Return on Assets (ROA) Trend
- The ROA followed a cyclical pattern, dropping from 10.15% in 2018 to a minimum of -9.66% in 2020. The ratio reached a peak of 23.43% in 2021, driven by the surge in net earnings despite the growing asset base. In 2022, the ROA declined to 12.97%, indicating that while the company remains profitable, the efficiency of asset utilization relative to earnings has decreased from its 2021 high.
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