Kennametal Inc (KMT)
Profitability ratios
Return on sales
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 30.41% | 30.64% | 31.11% | 32.20% | 30.00% |
| Operating profit margin | 7.28% | 8.32% | 9.26% | 10.84% | 7.61% |
| Pretax margin | 6.71% | 7.06% | 7.68% | 10.27% | 3.51% |
| Net profit margin | 4.73% | 5.34% | 5.70% | 7.19% | 2.96% |
The analysis of Kennametal Inc.'s profitability ratios over the specified period reveals several noteworthy trends. The gross profit margin exhibited relative stability, fluctuating modestly from 30.00% in June 2021 to 30.41% in June 2025. This suggests that the company's ability to control direct costs associated with production has remained fairly consistent over these years.
The operating profit margin experienced a significant increase from 7.61% in June 2021 to a peak of 10.84% in June 2022. However, this margin declined thereafter, ending at 7.28% in June 2025. The initial rise indicates improved operational efficiencies or favorable sales mix during that period, while the subsequent decline points to increased operating expenses or pressures impacting operational profitability.
Pre-tax margins followed a similar pattern, rising sharply from 3.51% in June 2021 to 10.27% in June 2022, before declining to 6.71% in June 2025. The peak suggests improved pretax profitability driven by factors such as cost management or favorable revenue growth, with the subsequent decrease possibly reflecting rising costs, lower margins, or other external factors affecting pre-tax profitability.
Net profit margins, which account for all expenses including taxes, increased from 2.96% in June 2021 to 7.19% in June 2022. After reaching this peak, the margin declined gradually to 4.73% in June 2025. The trend indicates that while the company achieved improved bottom-line profitability in 2022, subsequent years faced pressures that reduced net profitability, potentially due to increased tax burdens, higher expenses, or other operational challenges.
Overall, Kennametal Inc.'s profitability ratios illustrate a period of improvement followed by a gradual decline, with the gross profit margin remaining relatively stable. The fluctuations in operating, pretax, and net profit margins suggest that while the company experienced some efficiency gains or favorable market conditions initially, these benefits were not entirely sustained in the subsequent years, leading to narrowing profit margins at various levels of profitability.
Return on investment
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 5.62% | 6.80% | 7.55% | 8.48% | 5.26% |
| Return on assets (ROA) | 3.66% | 4.37% | 4.65% | 5.62% | 2.04% |
| Return on total capital | 12.22% | 13.76% | 15.61% | 19.12% | 11.75% |
| Return on equity (ROE) | 7.25% | 8.75% | 9.29% | 11.55% | 4.09% |
The analysis of Kennametal Inc.’s profitability ratios over the period from June 2021 to June 2025 reveals trends indicative of fluctuations and gradual changes in the company's profitability performance.
Starting with the Operating Return on Assets (Operating ROA), the data indicates an increase from 5.26% as of June 2021 to a peak of 8.48% in June 2022. Subsequently, there is a slight decline to 7.55% in June 2023, followed by a modest decrease to 6.80% in June 2024, and further down to 5.62% by June 2025. This pattern suggests that the company's operating efficiency in generating profit from its operating assets improved markedly in 2022 but experienced a declining trend afterward, though still remaining above the 2021 level.
The Return on Assets (ROA), which encompasses net income relative to total assets, shows a similar trajectory. It increased significantly from 2.04% in June 2021 to 5.62% in June 2022, indicating improved overall profitability. However, this ratio decreased to 4.65% in June 2023, then exhibited slight reductions to 4.37% in June 2024 and further down to 3.66% in June 2025. The declining trend in ROA reflects diminishing net income efficiency relative to total assets over the recent years.
The Return on Total Capital, capturing the effectiveness of all capital invested in the company, experienced a sharp rise from 11.75% in June 2021 to a peak of 19.12% in June 2022. After this peak, the ratio decreased to 15.61% in June 2023, then continued downward to 13.76% and finally to 12.22% by June 2025. This consistent decline post-2022 indicates a reduction in the company's ability to generate profits from its total capital base.
Regarding the Return on Equity (ROE), the ratios reflect a pronounced increase from 4.09% in June 2021 to 11.55% in June 2022, signifying improved profitability attributable to shareholders’ equity. Since then, the ROE has gradually decreased, reaching 9.29% in June 2023, with further declines to 8.75% in June 2024 and 7.25% in June 2025. The declining ROE trend suggests decreasing efficiency in transforming shareholders’ equity into profits over recent years.
Overall, over the analyzed period, Kennametal Inc. demonstrated an improvement in profitability in 2022, followed by a steady decline in subsequent years across all key ratios. These trends may indicate increased operational challenges, changes in asset utilization effectiveness, or shifts in capital efficiency affecting the company's profitability metrics.