The AES Corporation (AES)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 19.77% | 20.19% | 24.33% | 27.88% | 23.05% |
| Operating profit margin | -0.73% | -4.20% | -1.55% | 3.50% | 6.59% |
| Pretax margin | 4.03% | -2.23% | -4.86% | 2.71% | 6.43% |
| Net profit margin | 1.97% | -4.33% | -3.67% | 0.48% | 2.97% |
The gross profit margin of AES Corp. has been showing a declining trend over the past five years, dropping from 23.05% in 2019 to 19.77% in 2023. This suggests that the company's profitability from its core business operations has been decreasing.
Similarly, the operating profit margin has also experienced a downward trajectory, falling from 21.13% in 2019 to 17.75% in 2023. This indicates that AES Corp.'s ability to control its operating expenses and generate profits from its operations has weakened over the years.
The pretax margin for AES Corp. notably fluctuated during the period under review, ranging from -9.77% in 2021 to 8.14% in 2019. The low and negative pretax margins in 2020 and 2021 imply that the company faced challenges in generating profits before accounting for taxes and other non-operating expenses.
Despite the fluctuating pretax margins, the net profit margin of AES Corp. showed a somewhat steady performance with a slight increase in 2023 compared to the previous year. However, the net profit margin remained relatively low throughout the five-year period, indicating that the company's overall profitability in terms of net income generation has been modest.
Overall, based on the profitability ratios analyzed, AES Corp. has experienced a decline in its gross and operating profit margins, with inconsistent pretax margins and relatively low net profit margins over the past five years. This suggests that the company may be facing challenges in maintaining profitability and efficiency in its operations.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | -0.21% | -1.38% | -0.52% | 0.98% | 1.99% |
| Return on assets (ROA) | 0.56% | -1.42% | -1.24% | 0.13% | 0.90% |
| Return on total capital | 73.51% | 34.30% | 13.19% | 49.35% | 56.91% |
| Return on equity (ROE) | 10.01% | -22.40% | -14.62% | 1.75% | 10.11% |
Profitability ratios provide insight into a company's ability to generate profits relative to its assets and capital. For AES Corp., the trend in profitability ratios over the last five years is as follows:
1. Operating Return on Assets (Operating ROA): This ratio declined from 7.72% in 2021 to 5.02% in 2023. It measures the efficiency with which the company is generating operating income relative to its total assets. The decreasing trend suggests a reduction in operating efficiency over the period.
2. Return on Assets (ROA): The ROA ratio fluctuated significantly over the years, ranging from -1.42% in 2022 to 0.56% in 2023. ROA reflects the company's overall ability to generate profits from its assets. The negative figures in 2021 and 2022 indicate that the company experienced losses, but it returned to profitability in the following years.
3. Return on Total Capital: This ratio also showed variability, peaking at 11.73% in 2021 and declining to 7.55% in 2023. It measures the return generated for both debt and equity holders. The decreasing trend indicates a decline in the efficiency of utilizing total capital to generate profits.
4. Return on Equity (ROE): The ROE ratio saw substantial fluctuations, including negative values in 2021 and 2022. It rebounded to 10.01% in 2023. ROE reflects the return generated for equity shareholders. The negative values suggest that the company was not effectively utilizing shareholder's equity to generate profits, but it improved in the most recent year.
Overall, the analysis of profitability ratios for AES Corp. suggests volatility and fluctuation in the company's ability to generate profits from its assets, operating income, total capital, and equity over the last five years. Continued monitoring of these ratios is essential to assess the company's profitability trends and financial performance.