Analysis of Property, Plant and Equipment
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- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Operating Profit Margin since 2012
- Return on Equity (ROE) since 2012
- Total Asset Turnover since 2012
- Price to Book Value (P/BV) since 2012
- Analysis of Debt
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Property, Plant and Equipment Disclosure
Kraft Foods Group Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
The financial data for property, plant, and equipment reveals notable trends over the three-year period. The gross value of property, plant, and equipment showed a decline from 2012 to 2013, followed by a moderate increase in 2014. This indicates some degree of investment activity after a contraction year.
Land assets experienced a significant decrease between 2012 and 2013, falling from 119 million USD to 72 million USD, then a modest recovery to 79 million USD in 2014. This pattern suggests possible divestiture or revaluation in 2013 with slight acquisition or appreciation subsequently.
Buildings and improvements decreased by approximately 9.5% from 2012 to 2013, then rose slightly in 2014 but remained below the 2012 level. This may reflect asset disposals or impairments in the earlier period, with restrained capital expenditure afterward.
Machinery and equipment demonstrated a downward trend from 2012 to 2013, showing a reduction from 5922 million USD to 5584 million USD, and a marginal increase to 5619 million USD in 2014. The decline and limited rebound could be linked to asset replacement cycles, efficiency improvements, or asset sales.
Construction in progress remained relatively stable from 2012 to 2013 but increased substantially in 2014, indicating heightened investment in ongoing projects or expansions during the latter year.
Accumulated depreciation decreased in absolute value from 4198 million USD in 2012 to 3707 million USD in 2013, then rose slightly to 3851 million USD in 2014. The initial decrease may indicate asset disposals or a change in depreciation policies, while the subsequent increase is consistent with asset aging and ongoing usage.
The net value of property, plant, and equipment followed a pattern of slight decline from 2012 to 2013, dropping from 4204 million USD to 4115 million USD, then a modest recovery to 4192 million USD in 2014. Overall, the net asset base remained relatively stable, reflecting balanced asset management despite fluctuations in gross values and accumulated depreciation.
- Summary of Key Insights
- The data suggests a period of initial contraction or asset reduction between 2012 and 2013, followed by moderate reinvestment or stabilization in 2014. The patterns in land, buildings, and machinery indicate selective divestments or impairments early on, with restrained or targeted capital expenditures later. The increase in construction in progress towards 2014 points to renewed development efforts. Changes in accumulated depreciation align with these asset movements, impacting the net book value moderately but maintaining overall stability in the company’s property, plant, and equipment base.
Asset Age Ratios (Summary)
Kraft Foods Group Inc., asset age ratios
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Average age ratio | ||||
| Estimated total useful life (years) | ||||
| Estimated age, time elapsed since purchase (years) | ||||
| Estimated remaining life (years) |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
- Average Age Ratio
- The average age ratio declined from 50.68% in 2012 to 47.83% in 2013, indicating a reduction in the relative age of the property, plant, and equipment. In 2014, it slightly increased to 48.36%, but remained below the 2012 level. This trend suggests a modest rejuvenation in asset age, potentially reflecting asset retirements or new acquisitions.
- Estimated Total Useful Life
- The estimated total useful life of the assets increased incrementally over the three years, from 19 years in 2012 to 20 years in 2013, and further to 21 years in 2014. This progression implies a reassessment or extension of the expected duration of asset usability, possibly due to improvements in asset maintenance or adjustments in accounting estimates.
- Estimated Age (Time Elapsed Since Purchase)
- The estimated age of the assets showed a decrease from 10 years in 2012 to 9 years in 2013, followed by an increase back to 10 years in 2014. The initial decrease might indicate the acquisition of newer assets or a revision in the age estimation methodology. The subsequent increase suggests a stabilization or return to the prior asset age profile.
- Estimated Remaining Life
- The estimated remaining life of the assets remained stable at 10 years in both 2012 and 2013, with an increase to 11 years in 2014. This indicates a perceived improvement in the longevity or utility of the assets, consistent with the lengthening of the total useful life.
Average Age
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Accumulated depreciation | ||||
| Property, plant and equipment, gross | ||||
| Land | ||||
| Asset Age Ratio | ||||
| Average age1 | ||||
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
2014 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, gross – Land)
= 100 × ÷ ( – ) =
The analysis of the property, plant, and equipment data reveals several noteworthy trends over the three-year period from 2012 to 2014.
- Accumulated Depreciation
- The accumulated depreciation shows a decrease from US$4,198 million in 2012 to US$3,707 million in 2013, followed by a slight increase to US$3,851 million in 2014. This indicates a significant reduction in depreciation recorded in 2013, which partially reversed in 2014.
- Property, Plant and Equipment, Gross
- The gross property, plant, and equipment values declined from US$8,402 million in 2012 to US$7,822 million in 2013, then experienced a modest recovery to US$8,043 million in 2014. This suggests a reduction in asset acquisitions or possible disposals in 2013 with some new investments or asset revaluations in the subsequent year.
- Land
- Land values decreased notably from US$119 million in 2012 to US$72 million in 2013, and then increased slightly to US$79 million in 2014. This pattern may reflect asset sales or write-downs in 2013, followed by minor acquisitions or reassessments in 2014.
- Average Age Ratio
- The average age ratio, indicating the average age of the asset base relative to its useful life, showed a decline from 50.68% in 2012 to 47.83% in 2013, then rose marginally to 48.36% in 2014. The initial decrease suggests a rejuvenation of the asset base in 2013, likely due to acquisitions or disposals of older assets. The slight increase in 2014 indicates some aging of the assets thereafter.
Overall, the data suggests a period of asset reduction or disposal in 2013, followed by stabilization and mild growth in asset holdings in 2014. The fluctuating accumulated depreciation aligns with these changes, and the average age ratio further supports a trend of asset renewal in 2013 with gradual aging in the subsequent year.
Estimated Total Useful Life
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Property, plant and equipment, gross | ||||
| Land | ||||
| Depreciation expense | ||||
| Asset Age Ratio (Years) | ||||
| Estimated total useful life1 | ||||
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
2014 Calculations
1 Estimated total useful life = (Property, plant and equipment, gross – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property, Plant and Equipment, Gross
- The gross value of property, plant, and equipment shows a declining trend from 2012 to 2013, dropping from $8,402 million to $7,822 million. However, in 2014 there is a slight recovery with the value increasing to $8,043 million, though it remains below the 2012 level.
- Land
- The value of land decreases significantly between 2012 and 2013, from $119 million to $72 million. In 2014, there is a modest increase to $79 million, indicating some level of reinvestment or acquisition of land, but it remains substantially lower than the initial figure in 2012.
- Depreciation Expense
- Depreciation expense consistently decreases over the three years, moving from $428 million in 2012 to $393 million in 2013, and further down to $384 million in 2014. This decline suggests either a reduction in depreciable assets or changes in depreciation methods or schedules.
- Estimated Total Useful Life
- The estimated total useful life of the assets has gradually increased over the period. Starting at 19 years in 2012, it extends to 20 years in 2013 and reaches 21 years in 2014. This trend indicates an adjustment in asset longevity assumptions, potentially reflecting better maintenance practices or changes in asset composition.
Estimated Age, Time Elapsed since Purchase
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Accumulated depreciation | ||||
| Depreciation expense | ||||
| Asset Age Ratio (Years) | ||||
| Time elapsed since purchase1 | ||||
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
2014 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
The financial data for property, plant, and equipment reveals several notable trends over the three-year period analyzed.
- Accumulated Depreciation
- The accumulated depreciation value shows a decline from 4,198 million USD in late 2012 to 3,707 million USD in late 2013, followed by a moderate increase to 3,851 million USD in late 2014. This initial decrease and subsequent partial recovery may indicate asset disposals, write-downs, or changes in depreciation policies during these years.
- Depreciation Expense
- Depreciation expense exhibits a gradual decreasing trend, moving from 428 million USD in 2012 to 393 million USD in 2013, and further down to 384 million USD in 2014. This consistent reduction in expense suggests possible extensions of asset useful lives, lower asset additions, or improvements in asset maintenance reducing depreciation charges.
- Time Elapsed Since Purchase
- The measure of the average age of assets fluctuates slightly, starting at 10 years in 2012, decreasing to 9 years in 2013, and returning back to 10 years in 2014. This variation may reflect periodic asset acquisitions and retirements, affecting the average age of the company's property, plant, and equipment.
Overall, the data depict a company managing its fixed assets with a focus on maintaining a relatively stable asset age profile while experiencing a decrease in the annual depreciation expense. The temporary dip in accumulated depreciation in 2013 followed by an increase in 2014 suggests some level of asset turnover or revaluation during this timeframe.
Estimated Remaining Life
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Property, plant and equipment, net | ||||
| Land | ||||
| Depreciation expense | ||||
| Asset Age Ratio (Years) | ||||
| Estimated remaining life1 | ||||
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
2014 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Depreciation expense
= ( – ) ÷ =
The annual data for property, plant, and equipment presents several notable trends over the three-year period ending in December 2014.
- Property, Plant and Equipment, Net
- The net value of property, plant, and equipment remained relatively stable, with a slight decrease from $4204 million in 2012 to $4115 million in 2013, followed by an increase to $4192 million in 2014. This indicates a period of minor fluctuations but overall maintained asset base levels.
- Land
- There was a sharp decline in the value of land assets from $119 million in 2012 to $72 million in 2013, representing a significant reduction within one year. In 2014, the value modestly rose to $79 million, suggesting some acquisition or revaluation after the prior year's decrease.
- Depreciation Expense
- Depreciation expense showed a consistent downward trend, decreasing year-over-year from $428 million in 2012 to $393 million in 2013, and further to $384 million in 2014. This trend may reflect asset base changes, shifts in depreciation methods, or the aging of assets.
- Estimated Remaining Life
- The estimated remaining life of the property, plant, and equipment was stable at 10 years in 2012 and 2013 but increased to 11 years in 2014. This extension suggests either the acquisition of assets with longer useful lives or a reassessment of the existing assets' longevity.
Overall, the data indicate a stable net investment in physical assets with some volatility in land holdings and a gradual reduction in depreciation expense. The increase in estimated remaining life further implies a potentially more extended utilization period of the company's fixed assets going forward.