Kraft Foods Group Inc. (NASDAQ:KRFT)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes shows a significant increase from 2012 to 2013, rising from 2340 million US dollars to 3734 million US dollars. However, in 2014, there is a sharp decline to 989 million US dollars, which represents a substantial reduction compared to the previous years.

Invested Capital

The invested capital exhibits a growth trend from 2012 to 2013, increasing from 13807 million US dollars to 16041 million US dollars. In 2014, this value decreases to 14787 million US dollars, indicating a partial reduction following the prior year's expansion, but it still remains higher than the 2012 level.

Return on Invested Capital (ROIC)

The return on invested capital (%), which measures the efficiency of the invested capital, rises notably from 16.95% in 2012 to 23.28% in 2013, reflecting enhanced profitability. This trend reverses dramatically in 2014, with the ROIC dropping to 6.69%, signaling a significant decline in capital efficiency and overall performance.

Summary of Trends

There is a general pattern of improvement in financial performance from 2012 to 2013, as shown by increasing NOPAT, invested capital, and ROIC. However, 2014 demonstrates a marked deterioration, with a considerable drop in profitability and return metrics despite a slight reduction in invested capital. This suggests challenges in sustaining prior performance levels and potential issues affecting operational efficiency or market conditions in 2014.

Operating Profit Margin (OPM)

The operating profit margin experienced significant fluctuation over the three-year period. It increased notably from 15.15% in 2012 to a peak of 25.16% in 2013, indicating improved operational efficiency or cost management. However, in 2014, the margin declined sharply to 10.37%, suggesting potential challenges impacting profitability during that year.

Turnover of Capital (TO)

This ratio showed a downward trend initially, decreasing from 1.33 in 2012 to 1.14 in 2013, indicating a slight reduction in asset utilization efficiency. There was a modest recovery in 2014 with the turnover ratio increasing to 1.23, yet it remained below the 2012 level.

Effective Cash Tax Rate (CTR) (expressed as 1 - CTR)

The metric representing one minus the effective cash tax rate declined steadily from 84.25% in 2012 to 81.47% in 2013, and then more sharply to 52.37% in 2014. This indicates an increase in the effective cash tax rate over the years, meaning the company retained a smaller portion of its earnings after taxes in 2014 compared to prior years.

Return on Invested Capital (ROIC)

The return on invested capital showed a pronounced rise from 16.95% in 2012 to 23.28% in 2013, marking an improvement in the efficiency of invested capital usage. Nevertheless, this metric dropped significantly to 6.69% in 2014, reflecting decreased effectiveness in generating returns from invested capital during that period.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes experienced a significant increase from 2012 to 2013, rising from 2,778 million US dollars to 4,584 million US dollars. However, in 2014, there was a sharp decline to 1,888 million US dollars, representing a drop well below the 2012 level.

Net Revenues

Net revenues remained relatively stable across the three years, with a slight decrease from 18,339 million US dollars in 2012 to 18,218 million US dollars in 2013, and a further marginal decrease to 18,205 million US dollars in 2014. This indicates minimal variation in sales or total income during the period.

Operating Profit Margin (OPM)

The operating profit margin showed notable volatility over the three years. It improved markedly from 15.15% in 2012 to 25.16% in 2013, reflecting enhanced operational efficiency or cost management. However, in 2014, the margin considerably dropped to 10.37%, indicating decreased profitability relative to revenues.

Overall Analysis

While net revenues remained essentially flat, the profitability metrics revealed considerable fluctuations. The year 2013 stands out as an exceptional period with a substantial increase in net operating profit and operating profit margin, suggesting favorable internal or external conditions during that time. In contrast, 2014 saw a significant downturn in operating performance, with both NOPBT and OPM falling sharply below 2012 levels. This pattern highlights volatility in profitability that may warrant further investigation into underlying causes such as cost changes, pricing strategy, or market factors.

Net Revenues

The net revenues remained relatively stable over the three-year period, with a slight decrease from $18,339 million in 2012 to $18,218 million in 2013, and a marginal further decline to $18,205 million in 2014. This indicates that the company's sales or income from its core operations did not experience significant growth or contraction during this timeframe.

Invested Capital

Invested capital showed an upward trend from 2012 to 2013, increasing from $13,807 million to $16,041 million. However, in 2014, the invested capital decreased to $14,787 million. This suggests that the company initially expanded its investment base in 2013 but scaled back in 2014, possibly reflecting adjustments in asset allocation or divestitures.

Turnover of Capital (TO)

The turnover of capital ratio declined from 1.33 in 2012 to 1.14 in 2013, indicating a reduction in efficiency or effectiveness in using invested capital to generate revenues during that year. In 2014, the ratio improved to 1.23 but did not return to the 2012 level. This trend suggests fluctuating capital utilization efficiency, with some recovery in the final year observed but not a full restoration to previous performance levels.

The financial data indicates notable changes in key operating and tax-related metrics over the three-year period ending in 2014.

Cash Operating Taxes

There is a clear upward trend in cash operating taxes paid, increasing from $437 million in 2012 to $849 million in 2013, followed by a more moderate rise to $899 million in 2014. This more than doubling from 2012 to 2013 suggests either increased profitability subject to tax or changes in tax regulations or enforcement.

Net Operating Profit Before Taxes (NOPBT)

The NOPBT shows a significant increase from $2,778 million in 2012 to $4,584 million in 2013, representing substantial growth in operating profitability. However, in 2014, the NOPBT declines sharply to $1,888 million, dropping below the 2012 level. This volatility could be indicative of operational challenges, changes in market conditions, or extraordinary items impacting profitability.

Effective Cash Tax Rate (CTR)

The effective cash tax rate exhibits a rising trend across the period. Starting at 15.75% in 2012, it increases moderately to 18.53% in 2013, then surges to 47.63% in 2014. The sharp rise in 2014 suggests that the company faced a significantly higher tax burden relative to taxable income, possibly due to lower profitability, reduced tax shields, or changes in tax strategy or legislation.

Overall, the data reflects a period of fluctuating profitability with an increasing trend in tax expenses and rates. The sharp decline in operating profit in 2014 alongside a substantially higher effective tax rate may warrant further investigation into the underlying causes, such as operational setbacks or changes in tax policy impact.