Armillary Return on Capital Employed Report 2023

We are delighted to present the thirteenth Armillary Return on Capital Employed (“ROCE”) report. This year the total number of entities in our data set of NZX, Unlisted Securities Exchange (“USX”), Private and selected Crown-owned companies is 334. With some differences in the companies included in each category, not all of this year’s results are directly comparable with prior reports.

The ROCE methodology we use in this report was developed by Du Pont Corporation and is therefore not proprietary to us - although we are proponents. As it is simple to apply, anyone who understands the methodology can use it. We regularly use this methodology as a tool in our client engagements and our financial training curriculum.

A benefit of the ROCE methodology is that the performance of an entity can be broken down into its components of Profitability and Activity, for deeper analysis. Profitability, as measured by EBIT margin, provides an indication of operational efficiency; Activity, as measured by asset turnover, provides an indication of balance-sheet efficiency. When combined, the two ratios give overall ROCE. A full explanation is provided in Appendix 1.

Click the link for our full ROCE report.