Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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LyondellBasell Industries N.V. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Liquidity Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Return on Equity (ROE) since 2011
- Return on Assets (ROA) since 2011
- Price to Book Value (P/BV) since 2011
- Analysis of Revenues
- Aggregate Accruals
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Profitability Ratios (Summary)
LyondellBasell Industries N.V., 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).
- Gross Profit Margin
- The gross profit margin shows an overall decreasing trend over the five-year period. It peaked at 21.54% in 2015 before gradually declining to 16.6% by the end of 2018. This indicates a reduction in the proportion of revenue retained as gross profit after accounting for cost of goods sold.
- Operating Profit Margin
- Similarly, the operating profit margin experienced a rise early on, reaching 18.7% in 2015, then steadily declined to 13.41% by 2018. This suggests that operating efficiency or control over operating expenses diminished somewhat after 2015.
- Net Profit Margin
- The net profit margin fluctuated with a general downward tendency after 2017. It rose from 9.15% in 2014 to 14.15% in 2017, representing an improvement in bottom-line profitability, but then decreased to 12.02% in 2018. Despite the decline, the net profit margin remained significantly higher than the 2014 level.
- Return on Equity (ROE)
- Return on equity experienced a notable peak at 68.34% in 2015, followed by a continuous decrease to 45.71% in 2018. Although the downward trend indicates reduced profitability on shareholders’ equity, the ROE stayed relatively high, surpassing 40% in the last recorded year.
- Return on Assets (ROA)
- The return on assets showed some variability but no clear directional trend. It increased from 17.19% in 2014 to 19.67% in 2015, dropped to 16.36% in 2016, then rose again to 18.62% in 2017 before falling to 16.58% in 2018. This suggests fluctuating efficiency in asset utilization over the period.
Return on Sales
Return on Investment
Gross Profit Margin
LyondellBasell Industries N.V., 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 | ||||||
| Sales and other operating revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 ÷ Sales and other operating revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data over the five-year period reveals several notable trends in key performance metrics.
- Sales and Other Operating Revenues
- The revenues exhibit a decline from 45,608 million US dollars in 2014 to 29,183 million in 2016, followed by a recovery to 39,004 million in 2018. This pattern indicates a significant drop over the first three years, with a subsequent partial rebound over the last two years.
- Gross Profit
- Gross profit shows a fluctuating pattern, starting at 6,669 million in 2014 and reaching a peak of 7,052 million in 2015. It then declines in 2016 to 5,992 million, followed by a gradual increase to 6,475 million by 2018. Despite the overall variation, gross profit in 2018 remains slightly lower than the initial 2014 level.
- Gross Profit Margin
- Gross profit margin percentages display an overall downward trend, starting relatively low at 14.62% in 2014, peaking sharply at 21.54% in 2015, then declining steadily each year to 16.6% in 2018. This suggests a decrease in profitability relative to sales, despite fluctuations in absolute gross profit.
In summary, the data indicates that while the company faced a notable decline in sales during the mid-period, it managed to regain some revenue by 2018. Gross profit has been volatile, with a peak in 2015 followed by a decline and partial recovery. The gross profit margin peaked early in the period but subsequently declined, pointing to pressure on profitability margins despite the recovery in sales volume toward the end of the observed timeframe.
Operating Profit Margin
LyondellBasell Industries N.V., 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 | ||||||
| Sales and other operating revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 ÷ Sales and other operating revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- The operating income exhibited fluctuations over the five-year period. It increased from 5,736 million US dollars in 2014 to peak at 6,122 million in 2015. Subsequently, it declined notably to 5,060 million in 2016, followed by a recovery to 5,460 million in 2017. The income slightly decreased again to 5,231 million in 2018, indicating variability but generally remaining above the 2014 level.
- Sales and Other Operating Revenues
- Sales and other operating revenues showed a significant decrease from 45,608 million US dollars in 2014 to 32,735 million in 2015. This was followed by a further decline to 29,183 million in 2016. However, revenues rebounded in the subsequent years, climbing to 34,484 million in 2017 and further to 39,004 million in 2018. Despite the recovery, revenue levels in 2018 remained below those of 2014, revealing a downward trend initially, with signs of gradual improvement towards the end of the period.
- Operating Profit Margin
- The operating profit margin fluctuated over the period, beginning at 12.58% in 2014 and rising sharply to 18.7% in 2015, indicating improved profitability relative to sales. There was a slight decline to 17.34% in 2016 and a further decrease to 15.83% in 2017. By 2018, the margin had diminished to 13.41%, suggesting a trend of compression in profitability after the peak in 2015, although it remained above the initial 2014 figure.
- Overall Trends and Insights
- The data reveals a volatile financial performance over the analyzed period, with operating income and revenues both experiencing significant decreases followed by partial recoveries. The operating profit margin peaked in 2015, demonstrating strong profitability despite lower revenue, but saw a gradual decline thereafter. This pattern may indicate challenges in maintaining profit margins in the face of fluctuating sales, possibly due to cost pressures or changes in market conditions. The partial recovery in revenues and stable, though reduced, profit margins towards 2018 could imply adaptation to market dynamics or operational improvements.
Net Profit Margin
LyondellBasell Industries N.V., 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 attributable to the Company shareholders | ||||||
| Sales and other operating revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 attributable to the Company shareholders ÷ Sales and other operating revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to Company Shareholders
- The net income reflects a fluctuating trend over the analyzed period. Starting from US$4,174 million in 2014, the net income increased to US$4,476 million in 2015. It then experienced a decline to US$3,836 million in 2016, followed by a significant rise to a peak of US$4,879 million in 2017. In 2018, net income slightly decreased to US$4,688 million, maintaining a relatively high level compared to the initial years. This pattern suggests variability in profitability, with a notable recovery after the 2016 dip.
- Sales and Other Operating Revenues
- Sales and other operating revenues exhibit a clear downward trend from 2014 through 2016. The value declined sharply from US$45,608 million in 2014 to US$32,735 million in 2015, followed by a further decrease to US$29,183 million in 2016. However, a recovery is observable from 2017 onwards, with revenues increasing to US$34,484 million in 2017 and further rising to US$39,004 million in 2018. This pattern indicates a period of contraction followed by gradual growth in sales and operating revenues.
- Net Profit Margin
- The net profit margin shows an overall upward movement from 2014 to 2017, with some minor fluctuations. Starting at 9.15% in 2014, the margin increased considerably to 13.67% in 2015 and slightly decreased to 13.14% in 2016. It then reached its highest point in this period at 14.15% in 2017 before declining to 12.02% in 2018. Despite the slight dip in 2018, the margin remained substantially higher than the starting point, reflecting improved profitability relative to sales over most of the period.
- Summary of Observations
- The financial data reveals a company that experienced a contraction in sales and operating revenues from 2014 to 2016, followed by recovery and growth in subsequent years. Net income mirrored this trend with a dip in 2016 and a peak in 2017, indicating resilience and improved operational efficiency despite earlier challenges. The net profit margin consistently improved from 2014 to 2017, supporting the view of enhanced profitability management, though it slightly decreased in 2018. Overall, the company demonstrated recovery and strengthened profitability after a period of declining revenues.
Return on Equity (ROE)
LyondellBasell Industries N.V., ROE calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to the Company shareholders | ||||||
| Total Company share of stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 attributable to the Company shareholders ÷ Total Company share of stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several key trends regarding profitability, equity, and return on equity (ROE) over a five-year period.
- Net Income Attributable to Company Shareholders
- The net income values showed variability over the period. Starting at $4,174 million in 2014, the net income increased to $4,476 million in 2015, representing a growth. However, there was a decline in 2016 to $3,836 million, followed by a strong recovery in 2017 with a peak of $4,879 million. In 2018, net income slightly decreased to $4,688 million but remained above the initial and intermediate years.
- Total Company Share of Stockholders’ Equity
- Stockholders’ equity experienced fluctuations with an overall upward trend towards the end of the period. It started at $8,314 million in 2014 but declined significantly in 2015 and 2016 to $6,550 million and $6,048 million respectively. There was a marked recovery in 2017 when equity reached $8,949 million and continued to grow to $10,257 million in 2018, surpassing the initial levels by a considerable margin.
- Return on Equity (ROE)
- ROE showed generally high levels but with a downward trajectory over time. Beginning at an already strong 50.2% in 2014, ROE increased further to its maximum of 68.34% in 2015. Thereafter, it gradually declined each year: 63.43% in 2016, 54.52% in 2017, and finally 45.71% in 2018. Despite the decline, ROE remained robust, implying effective utilization of equity, though the efficiency diminished over the latter years.
In summary, the company demonstrated solid profitability and strong returns on equity throughout the period, albeit with some volatility. Net income fluctuated, with a notable dip in 2016 but a recovery afterwards. Shareholders’ equity initially contracted but rebounded strongly after 2016. ROE, while consistently high, exhibited a declining trend after peaking in 2015, indicating a reduction in profitability relative to equity invested despite growth in net income and shareholders’ equity in later years.
Return on Assets (ROA)
LyondellBasell Industries N.V., ROA calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to the Company shareholders | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 attributable to the Company shareholders ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to the Company Shareholders
- The net income shows fluctuations over the observed period. Starting at 4,174 million US dollars in 2014, it increased to 4,476 million in 2015, reaching a peak. In 2016, the net income experienced a decline to 3,836 million but rebounded in 2017 to 4,879 million, the highest value in the series. However, in 2018, it slightly decreased to 4,688 million.
- Total Assets
- Total assets demonstrate a general upward trend over the years. There was a minor dip from 24,283 million US dollars in 2014 to 22,757 million in 2015. Afterward, assets increased consistently, rising to 23,442 million in 2016, 26,206 million in 2017, and reaching 28,278 million in 2018.
- Return on Assets (ROA)
- ROA exhibits variability corresponding broadly to the net income changes. It began at 17.19% in 2014, increased to 19.67% in 2015, indicating improved asset efficiency that year. In 2016, ROA declined to 16.36%, reflecting reduced profitability relative to asset base. The ratio improved again in 2017 to 18.62% before slightly decreasing to 16.58% in 2018.
- Overall Trends and Insights
- Over the five-year span, net income and ROA show volatility with periods of both growth and decline. The company's asset base experienced a steady increase after a dip in 2015, suggesting investment or acquisition activities. Despite the growth in assets, ROA did not follow a consistent upward trajectory, implying that asset growth was not always matched by proportional profitability gains. The peak profitability occurred in 2017 in terms of net income and a strong ROA, but both metrics slightly decreased in the subsequent year. This pattern indicates potential challenges in sustaining profitability levels despite expanding assets.