IPG Photonics Corporation (IPGP)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 34.61% | 42.08% | 38.85% | 47.67% | 44.89% |
| Operating profit margin | -21.31% | 17.99% | 20.52% | 25.18% | 16.54% |
| Pretax margin | -16.57% | 21.35% | 12.83% | 25.09% | 17.13% |
| Net profit margin | -18.58% | 17.00% | 7.69% | 19.06% | 13.29% |
IPG Photonics Corporation's profitability ratios exhibit fluctuations over the years based on the data provided.
1. Gross Profit Margin:
- The gross profit margin increased from 44.89% in 2020 to 47.67% in 2021, indicating improved efficiency in generating sales revenue after deducting the cost of goods sold.
- However, there was a decline to 38.85% in 2022 before a slight rebound to 42.08% in 2023, and a further drop to 34.61% in 2024. This suggests that the company may be facing challenges in managing production costs or pricing strategy.
2. Operating Profit Margin:
- The operating profit margin surged from 16.54% in 2020 to 25.18% in 2021, indicating effective cost management and potentially higher operating income.
- Subsequently, there was a decline to 20.52% in 2022 and a further drop to 17.99% in 2023. The operating profit margin turned negative at -21.31% in 2024, suggesting that the company may have incurred significant operating losses.
3. Pretax Margin:
- The pretax margin increased from 17.13% in 2020 to 25.09% in 2021, reflecting higher profitability before accounting for taxes.
- However, there was a significant decline to 12.83% in 2022 followed by a moderate recovery to 21.35% in 2023. The pretax margin turned negative at -16.57% in 2024, indicating that the company may be experiencing challenges in generating taxable income.
4. Net Profit Margin:
- The net profit margin improved from 13.29% in 2020 to 19.06% in 2021, signaling higher profitability after accounting for all expenses.
- There was a notable decrease to 7.69% in 2022 before a rebound to 17.00% in 2023. The net profit margin turned negative at -18.58% in 2024, suggesting that the company may be facing substantial net losses due to various factors.
In conclusion, IPG Photonics Corporation's profitability ratios have shown fluctuations over the years, indicating varying levels of efficiency, cost management, and overall profitability. It is crucial for the company to address the factors contributing to the declining margins to ensure sustained financial performance.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | -9.10% | 8.58% | 10.69% | 11.60% | 6.77% |
| Return on assets (ROA) | -7.93% | 8.11% | 4.01% | 8.78% | 5.44% |
| Return on total capital | 0.72% | 9.59% | 12.37% | 13.41% | 8.93% |
| Return on equity (ROE) | -8.97% | 9.06% | 4.61% | 10.14% | 6.15% |
IPG Photonics Corporation's profitability ratios show some fluctuations over the years.
1. Operating return on assets (Operating ROA) improved from 6.77% in December 2020 to 11.60% in December 2021, indicating a positive trend in the company's operational efficiency. However, it declined to 10.69% by December 2022 and further to 8.58% by December 2023 before turning negative at -9.10% by December 2024. This negative Operating ROA in 2024 could be a red flag that warrants further investigation.
2. Return on assets (ROA) also displayed variability, starting at 5.44% in December 2020, increasing to 8.78% by December 2021, then dropping to 4.01% by December 2022, before rising again to 8.11% by December 2023. However, it significantly turned negative to -7.93% by December 2024. The negative ROA in 2024 suggests that the company faced challenges generating profits from its assets during that period.
3. Return on total capital peaked at 13.41% in December 2021, indicating strong returns generated from the total invested capital. However, it declined to 12.37% by December 2022 and continued to decrease to 9.59% by December 2023, before dropping significantly to 0.72% by December 2024. This sharp decline in return on total capital in 2024 indicates a potential deterioration in the company's ability to generate returns for its capital providers.
4. Return on equity (ROE) demonstrated mixed performance, starting at 6.15% in December 2020, increasing to 10.14% by December 2021, then decreasing to 4.61% by December 2022. It rose to 9.06% by December 2023 before turning negative at -8.97% by December 2024. The negative ROE in 2024 implies that the company's shareholders may have experienced a loss in their equity investment during that period.
In conclusion, while there were periods of improvement in profitability ratios, especially in 2021, the declining and negative trends observed in 2024 raise concerns about IPG Photonics Corporation's profitability and efficiency in utilizing its assets and capital. Further investigation and corrective measures may be required to address these negative trends and enhance the company's profitability performance.