Carrier Global (NYSE:CARR) appears to be facing financial difficulties as key indicators such as Return on Capital Employed (ROCE) and total capital employed are on a downward trend, suggesting lower returns on existing investments and a decrease in investments.
The company's ROCE stands at 11% for the trailing twelve months up to June 2023, equating to US$2.1 billion. However, when compared with the building industry's average ROCE of 15%, Carrier Global's performance appears lackluster. This discrepancy indicates that the company's operations may not be performing up to industry standards.
A review of the company's past ROCE trends reveals a concerning pattern. Five years ago, Carrier Global's capital returns were at a healthier 16%, but this figure has since declined significantly to its current level.
In tandem with this decline, Carrier Global has been employing approximately the same amount of capital as it did five years ago. This trend suggests that while there are still opportunities for capital deployment within the company, the returns generated are less substantial than before. This could be due to increased market competition or shrinking profit margins.
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