Return on Equity (ROE)
since 2012
Calculation
Kraft Foods Group Inc., ROE, long-term trends, calculation
| ROE | = | 100 | × | Net earnings1 | ÷ | Equity1 | |
|---|---|---|---|---|---|---|---|
| Dec 27, 2014 | 23.89% | = | 100 | × | 1,043) | ÷ | 4,365) |
| Dec 28, 2013 | 52.34% | = | 100 | × | 2,715) | ÷ | 5,187) |
| Dec 29, 2012 | 45.97% | = | 100 | × | 1,642) | ÷ | 3,572) |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 US$ in millions
The financial data indicates significant fluctuations in the company's net earnings over the three-year period. Net earnings increased sharply from 1,642 million USD in 2012 to a peak of 2,715 million USD in 2013, followed by a considerable decline to 1,043 million USD in 2014. This suggests a period of strong profitability in 2013, which was not sustained into the subsequent year.
Equity also showed a notable upward trend from 3,572 million USD in 2012 to 5,187 million USD in 2013 before decreasing to 4,365 million USD in 2014. The increase in equity during 2013 may reflect retained earnings or capital injections, while the decline in 2014 could indicate losses, dividend distributions, or share repurchases that reduced the equity base.
The Return on Equity (ROE), measured as a percentage, mirrors the pattern observed in net earnings. The ROE increased from 45.97% in 2012 to a higher 52.34% in 2013, indicating enhanced efficiency in generating profits from shareholders' equity during that year. However, the ROE then dropped substantially to 23.89% in 2014, reflecting a decrease in profitability relative to equity employed.
- Overall trends and insights:
- The company experienced a peak performance year in 2013, marked by record net earnings and high ROE, supported by an expanded equity base. Despite this strong performance, 2014 showed a downturn in profitability and a reduction in equity, which lowered the efficiency of equity as measured by ROE. This volatility suggests the company faced challenges in sustaining its 2013 performance into 2014.
- The sharp decline in net earnings and ROE in 2014 might warrant further investigation into underlying operational issues, market conditions, or extraordinary items affecting financial results. The decrease in equity concurrently implies possible strategic decisions affecting the capital structure or the carrying value of assets.
Comparison to Competitors
Kraft Foods Group Inc., ROE, long-term trends, comparison to competitors
| Kraft Foods Group Inc. | lululemon athletica inc. | Nike Inc. | |
|---|---|---|---|
| Dec 27, 2014 | 23.89% | 25.49% | 24.88% |
| Dec 28, 2013 | 52.34% | 30.49% | 22.28% |
| Dec 29, 2012 | 45.97% | 30.61% | 21.41% |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
Comparison to Sector (Consumer Durables & Apparel)
Kraft Foods Group Inc., ROE, long-term trends, comparison to sector (consumer durables & apparel)
| Kraft Foods Group Inc. | Consumer Durables & Apparel | |
|---|---|---|
| Dec 27, 2014 | 23.89% | 24.94% |
| Dec 28, 2013 | 52.34% | 22.88% |
| Dec 29, 2012 | 45.97% | 21.92% |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
Comparison to Industry (Consumer Discretionary)
Kraft Foods Group Inc., ROE, long-term trends, comparison to industry (consumer discretionary)
| Kraft Foods Group Inc. | Consumer Discretionary | |
|---|---|---|
| Dec 27, 2014 | 23.89% | 20.60% |
| Dec 28, 2013 | 52.34% | 20.34% |
| Dec 29, 2012 | 45.97% | 21.97% |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).