Applied Industrial Technologies (AIT)
Profitability ratios
Return on sales
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 30.31% | 29.84% | 29.16% | 29.05% | 28.91% |
| Operating profit margin | 10.92% | 11.07% | 10.72% | 9.39% | 6.35% |
| Pretax margin | 10.98% | 11.12% | 10.19% | 8.65% | 5.47% |
| Net profit margin | 8.61% | 8.61% | 7.86% | 6.76% | 4.47% |
The analysis of Applied Industrial Technologies' profitability ratios over the period from June 30, 2021, to June 30, 2025, reveals a consistent upward trend, reflecting improving profitability margins year over year.
Gross Profit Margin:
The gross profit margin shows a steady increase from 28.91% in 2021 to 30.31% in 2025. This incremental improvement indicates that the company has been progressively enhancing its ability to generate gross profit from sales, possibly through cost control, pricing strategies, or product mix optimization. The margin increased by approximately 1.4 percentage points over the period, signifying a favorable trend in gross profitability.
Operating Profit Margin:
The operating profit margin experienced a significant rise from 6.35% in 2021 to 10.92% in 2025. The notable growth, particularly between 2021 and 2023, suggests improved operational efficiency and cost management. This upward trajectory indicates the company's increasing ability to convert sales into operating income, emphasizing effective operating leverage and expense control measures.
Pre-tax Margin:
The pre-tax margin also increased from 5.47% in 2021 to 10.98% in 2025. The almost twofold improvement underscores enhanced overall profitability before tax expenses, likely driven by operational efficiency gains and possibly better financial management strategies. The pre-tax margin's growth aligns with the trends observed in gross and operating margins, reinforcing the notion of consistent profitability improvement.
Net Profit Margin:
The net profit margin demonstrates continuous growth from 4.47% in 2021 to 8.61% in 2024, stabilizing at that level through 2025. This reflects the company's effective management of expenses beyond operating costs, including interest, taxes, and other non-operating items. The doubling of the net profit margin over this period signals substantial improvements in overall profitability, with the stabilization at approximately 8.6% suggesting a potentially new, sustainable level of bottom-line profit.
Overall Interpretation:
Throughout the analyzed period, Applied Industrial Technologies has shown consistent and meaningful improvements across all profitability ratios. The upward trends in gross, operating, pre-tax, and net profit margins indicate enhanced operational efficiency, effective cost control, and favorable pricing strategies, all contributing to increased profitability. The data suggests a positive trajectory towards higher profitability levels, with the company maintaining stable margins in the most recent year, which could imply steady-state operational performance and margin sustainability.
Return on investment
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 15.70% | 16.80% | 17.25% | 14.59% | 9.04% |
| Return on assets (ROA) | 12.38% | 13.07% | 12.64% | 10.50% | 6.37% |
| Return on total capital | 27.19% | 29.61% | 32.04% | 31.08% | 23.53% |
| Return on equity (ROE) | 21.31% | 22.84% | 23.77% | 22.40% | 15.52% |
The analysis of Applied Industrial Technologies’ profitability ratios over the period from June 30, 2021, to June 30, 2025, indicates a general trend of improvement followed by a slight decline towards the most recent period.
First, the Operating Return on Assets (Operating ROA) increased substantially from 9.04% in 2021 to a peak of 17.25% in 2023, signifying an enhanced ability to generate operating income from its assets. However, this ratio experienced a marginal decline thereafter, reaching 16.80% in 2024 and further reducing to 15.70% in 2025, suggesting a potential slight decrease in operating efficiency or increased operating expenses relative to assets.
The Return on Assets (ROA), which accounts for both operating and non-operating considerations, followed a similar upward trend, rising from 6.37% in 2021 to 12.64% in 2023, indicating improved overall profitability. Post-2023, the ROA experienced a moderate decline, settling at 12.38% in 2025, which may reflect slight deterioration in net income relative to total assets or increased asset base not matched by proportional income growth.
Return on Total Capital (ROTC) portrayed a consistent increase from 23.53% in 2021 to a high of 32.04% in 2023, reflecting effective utilization of both debt and equity capital to generate earnings. After reaching this peak, the ROTC declined to 29.61% in 2024 and further to 27.19% in 2025, indicating a moderate reduction in capital efficiency, potentially due to increased capital investment or higher capital costs.
Finally, the Return on Equity (ROE) demonstrated a significant rise from 15.52% in 2021 to 23.77% in 2023, highlighting improved shareholder value creation during this period. However, the ROE declined slightly afterward, down to 22.84% in 2024 and 21.31% in 2025, suggesting that the rate of return generated for shareholders has slightly decreased in recent years, potentially due to increased equity or changes in net income margins.
Overall, the profitability ratios suggest that Applied Industrial Technologies experienced notable improvements in profitability metrics through 2023, likely driven by operational efficiencies and optimized capital utilization. The subsequent slight declines could indicate stabilization or emerging challenges affecting net income, asset efficiency, or capital effectiveness in the latest fiscal years.