Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Halliburton Co., profitability ratios
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
The financial performance indicators reveal significant volatility over the observed periods, with notable deteriorations followed by partial recoveries.
- Gross Profit Margin
- The gross profit margin exhibited a declining trend from 16.25% in 2014 to a low of 5.44% in 2016, indicating compression in the core profitability of sales. Subsequently, there was a recovery to 12.44% by the end of 2018, suggesting improvements in cost management or pricing power.
- Operating Profit Margin
- The operating profit margin experienced a substantial decline from a healthy 15.51% in 2014 to a negative -42.66% in 2016, reflecting severe operational challenges or increased operating expenses. A recovery trend is observed thereafter, with margins improving to 10.28% by the end of 2018, though not fully returning to initial 2014 levels.
- Net Profit Margin
- The net profit margin followed a pattern similar to the operating margin, moving from a positive 10.65% in 2014 to a negative -36.27% in 2016, signifying significant losses at the bottom line. Despite partial improvement to 6.9% in 2018, margins remained below the starting point, indicating ongoing profitability pressures.
- Return on Equity (ROE)
- ROE mirrored the net margin trends with a sharp fall from 21.52% in 2014 to a negative -61.25% in 2016, demonstrating a severe erosion of shareholder value during the downturn. A strong rebound to 17.39% in 2018 indicates that equity profitability was substantially restored, albeit not reaching the peak levels of 2014.
- Return on Assets (ROA)
- ROA showed considerable decline from 10.86% in 2014 to -21.34% in 2016, reflecting poor asset utilization or returns during that period. Improvement to 6.37% by 2018 suggests a recovery in asset efficiency but remains below initial levels.
Overall, the data depict a pronounced financial struggle around 2015 and 2016, with profitability and returns sharply impacted. The subsequent years demonstrate a notable recovery trajectory across gross margin, operating efficiency, profitability, and return measures, indicating management efforts towards stabilization and improvement have been partially successful by 2018.
Return on Sales
Return on Investment
Gross Profit Margin
Halliburton Co., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 2,986) | 2,265) | 864) | 2,520) | 5,340) | |
| Revenue | 23,995) | 20,620) | 15,887) | 23,633) | 32,870) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 12.44% | 10.98% | 5.44% | 10.66% | 16.25% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × 2,986 ÷ 23,995 = 12.44%
2 Click competitor name to see calculations.
- Revenue
- Revenue exhibited a significant decline from 32,870 million US dollars in 2014 to 15,887 million US dollars in 2016, representing a nearly 52% reduction over two years. Following this trough, a recovery trend is observable, with revenue rising to 20,620 million US dollars in 2017 and further to 23,995 million US dollars in 2018, although the level remained below that of 2014 and 2015.
- Gross Profit
- Gross profit followed a similar pattern to revenue, decreasing sharply from 5,340 million US dollars in 2014 to 864 million US dollars in 2016. This marked a substantial contraction in absolute gross profit. From 2016 onwards, gross profit improved substantially to 2,265 million US dollars in 2017 and further to 2,986 million US dollars in 2018, yet it remained significantly lower than the 2014 peak.
- Gross Profit Margin
- The gross profit margin shows a declining trend from 16.25% in 2014 to a low of 5.44% in 2016, reflecting a marked decrease in profitability relative to revenue. Subsequently, an improvement in margin is observed, increasing to 10.98% in 2017 and 12.44% in 2018, indicating a partial recovery in operating efficiency or pricing power, though margins were still below their 2014 level.
Operating Profit Margin
Halliburton Co., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) | 2,467) | 1,362) | (6,778) | (165) | 5,097) | |
| Revenue | 23,995) | 20,620) | 15,887) | 23,633) | 32,870) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 10.28% | 6.61% | -42.66% | -0.70% | 15.51% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Revenue
= 100 × 2,467 ÷ 23,995 = 10.28%
2 Click competitor name to see calculations.
- Revenue Trends
- Revenue experienced a significant decline from 2014 to 2016, dropping from 32,870 million USD to 15,887 million USD. This was followed by a recovery in 2017 and 2018, with revenues increasing to 20,620 million USD and 23,995 million USD respectively, yet remaining below the 2014 peak.
- Operating Income Pattern
- Operating income showed substantial volatility over the period. It started at 5,097 million USD in 2014, turned negative in 2015 with a loss of 165 million USD, and worsened sharply to a loss of 6,778 million USD in 2016. Subsequently, the operating income returned to positive territory in 2017 and improved further in 2018 to 2,467 million USD.
- Operating Profit Margin Analysis
- The operating profit margin reflected the trends observed in operating income, falling from a healthy 15.51% in 2014 to negative margins in 2015 (-0.7%) and 2016 (-42.66%). This indicates significant operating inefficiencies or cost pressures during those years. The margin improved to 6.61% in 2017 and further to 10.28% in 2018, signaling a recovery in profitability, though not yet reaching the earlier peak levels.
- Overall Insights
- The data indicate a period of financial distress and reduced profitability for the first half of the analyzed interval, particularly in 2015 and 2016, characterized by sharp declines in revenue and severe operating losses. The subsequent years exhibit a gradual turnaround with improving revenues, positive operating income, and increasingly higher operating margins, suggesting effective management responses to earlier challenges and a move toward stabilization and growth. However, performance in 2018, while improved from the trough, does not reach the levels observed in 2014, reflecting ongoing recovery efforts.
Net Profit Margin
Halliburton Co., net profit margin calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to company | 1,656) | (463) | (5,763) | (671) | 3,500) | |
| Revenue | 23,995) | 20,620) | 15,887) | 23,633) | 32,870) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 6.90% | -2.25% | -36.27% | -2.84% | 10.65% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Net profit margin = 100 × Net income (loss) attributable to company ÷ Revenue
= 100 × 1,656 ÷ 23,995 = 6.90%
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations in key performance indicators over the five-year period ending December 31, 2018.
- Net Income (Loss) Attributable to Company
- The net income experienced a pronounced decline from a positive $3,500 million in 2014 to substantial losses in 2015 and 2016, reaching negative figures of $671 million and $5,763 million respectively. A recovery trend began in 2017, with the loss narrowing to $463 million, followed by a return to profitability in 2018, registering a net income of $1,656 million.
- Revenue
- Revenue demonstrated a downward trend from $32,870 million in 2014 to a low of $15,887 million in 2016, representing a significant contraction. Subsequently, there was a gradual recovery observed in 2017 and 2018, with revenues increasing to $20,620 million and $23,995 million, respectively, though they did not return to the 2014 peak within the period.
- Net Profit Margin
- The net profit margin mirrored the net income trend, beginning at a healthy 10.65% in 2014, followed by a sharp decline to negative margins of -2.84% in 2015 and a steep drop to -36.27% in 2016. Margins improved slightly in 2017 to -2.25% and returned to positive territory at 6.9% in 2018, indicating a partial recovery in profitability relative to revenue.
Overall, the data indicates the company faced severe financial challenges, particularly marked by large losses and declining revenues in 2015 and 2016. Signs of stabilization and recovery became evident from 2017 onward, although the financial performance had not fully returned to the levels seen at the start of the period by 2018.
Return on Equity (ROE)
Halliburton Co., ROE calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to company | 1,656) | (463) | (5,763) | (671) | 3,500) | |
| Company shareholders’ equity | 9,522) | 8,322) | 9,409) | 15,462) | 16,267) | |
| Profitability Ratio | ||||||
| ROE1 | 17.39% | -5.56% | -61.25% | -4.34% | 21.52% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
ROE = 100 × Net income (loss) attributable to company ÷ Company shareholders’ equity
= 100 × 1,656 ÷ 9,522 = 17.39%
2 Click competitor name to see calculations.
- Net Income (Loss) Attributable to Company
- The net income exhibits significant volatility over the five-year period. Starting with a positive figure of $3,500 million in 2014, it sharply declined to a loss of $671 million in 2015. The losses deepened further in 2016 to $5,763 million, followed by a reduced loss of $463 million in 2017. In 2018, the company returned to profitability with a net income of $1,656 million, indicating a recovery from previous negative earnings.
- Company Shareholders’ Equity
- Shareholders’ equity shows a downward trend between 2014 and 2017, dropping from $16,267 million in 2014 to $8,322 million in 2017. In 2018, there is a modest increase to $9,522 million. This decline over the initial years aligns with the losses reported and indicates a reduction in the company's net assets, with some stabilization occurring in the final year reported.
- Return on Equity (ROE)
- The ROE demonstrates considerable fluctuations, reflecting changes in profitability relative to shareholder equity. It started at 21.52% in 2014, turned negative in 2015 at -4.34%, and experienced a sharp decrease to -61.25% in 2016. The negative trend continued in 2017 at -5.56%, before recovering to 17.39% in 2018. The substantial negative ROE in 2016 indicates an exceptional deterioration in profitability, while the rebound in 2018 suggests a significant improvement in generating returns on equity.
Return on Assets (ROA)
Halliburton Co., ROA calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to company | 1,656) | (463) | (5,763) | (671) | 3,500) | |
| Total assets | 25,982) | 25,085) | 27,000) | 36,942) | 32,240) | |
| Profitability Ratio | ||||||
| ROA1 | 6.37% | -1.85% | -21.34% | -1.82% | 10.86% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
ROA = 100 × Net income (loss) attributable to company ÷ Total assets
= 100 × 1,656 ÷ 25,982 = 6.37%
2 Click competitor name to see calculations.
- Net Income (Loss) Trends
- The net income attributable to the company exhibited significant volatility over the period analyzed. Beginning with a strong positive figure of 3500 million USD in 2014, the company experienced a sharp decline into negative territory in 2015 and 2016, with losses reaching a peak of -5763 million USD in 2016. Although the losses were reduced substantially in 2017 to -463 million USD, the company returned to profitability in 2018 with net income of 1656 million USD. This fluctuation suggests periods of operational and/or market challenges followed by recovery.
- Total Assets
- Total assets increased from 32240 million USD in 2014 to a peak of 36942 million USD in 2015. However, a notable contraction occurred in the following years, with assets declining to 27000 million USD in 2016 and further down to 25085 million USD in 2017. A slight rebound in asset base was observed in 2018, rising to 25982 million USD. The reduction in assets over the three years following 2015 may reflect asset disposals, impairments, or reduced capital expenditure during challenging periods.
- Return on Assets (ROA)
- Return on Assets (ROA) closely tracked the net income trends and exhibited considerable variation throughout the period. The ROA started robustly at 10.86% in 2014, then inverted to negative returns of -1.82% in 2015 and bottomed out at -21.34% in 2016, the lowest point within the timeframe. In 2017, the ROA slightly improved to -1.85%, indicating continued struggle but less severe than the prior year. By 2018, the ROA recovered to a positive 6.37%, reflecting the company's improved profitability and more efficient use of its asset base.
- Overall Insights
- The data indicates that the company underwent a challenging period particularly in 2015 and 2016, demonstrated by significant losses, asset base reductions, and negative returns on assets. The turnaround in 2018, evidenced by returning to profitability, stabilizing assets, and positive ROA, suggests successful efforts to restore operational efficiency and financial health. Monitoring future results will be necessary to assess the sustainability of this recovery.