Analysis of Geographic Areas
Kraft Foods Group Inc. operates in 2 regions: United States and Canada.
Area Asset Turnover
Kraft Foods Group Inc., asset turnover by geographic area
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | |
|---|---|---|---|
| United States | 0.95 | 0.95 | 1.00 |
| Canada | 1.34 | 1.34 | 0.84 |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
The analysis of geographic area asset turnover between 2012 and 2014 reveals divergent efficiency patterns between the United States and Canada operations.
- United States Asset Turnover
- A marginal decline in asset efficiency is observed, with the ratio decreasing from 1.00 in 2012 to 0.95 in 2013. This figure remained stagnant at 0.95 through 2014, indicating a stabilization of asset utilization levels following the initial decrease.
- Canada Asset Turnover
- A significant upward trend occurred between 2012 and 2013, where the ratio rose from 0.84 to 1.34. This represents a substantial increase in the effectiveness of generating revenue from the assets deployed in the Canadian market. The ratio remained constant at 1.34 in 2014.
- Comparative Geographic Performance
- While the United States initially demonstrated higher asset turnover in 2012, the Canadian operations surpassed the U.S. market in 2013. By the end of the analyzed period, the Canadian asset turnover ratio remained consistently higher than that of the United States, reflecting a shift in relative operational efficiency across these two regions.
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Area Asset Turnover: United States
Kraft Foods Group Inc.; United States; area asset turnover calculation
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | |
|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||
| Net revenues | 15,753) | 15,676) | 15,820) |
| Long-lived assets | 16,536) | 16,516) | 15,766) |
| Area Activity Ratio | |||
| Area asset turnover1 | 0.95 | 0.95 | 1.00 |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Area asset turnover = Net revenues ÷ Long-lived assets
= 15,753 ÷ 16,536 = 0.95
The financial performance for the United States geographic area indicates a stagnation in revenue generation paired with a steady increase in the asset base, resulting in a decline in overall asset utilization efficiency over the observed period.
- Net Revenue Trends
- Net revenues remained relatively flat between 2012 and 2014. After a marginal decrease from 15,820 million US dollars in 2012 to 15,676 million US dollars in 2013, a slight recovery occurred in 2014, with revenues rising to 15,753 million US dollars. This trajectory suggests a period of revenue stability with no significant growth momentum.
- Long-Lived Asset Growth
- There was a consistent increase in long-lived assets throughout the period. Assets grew from 15,766 million US dollars in 2012 to 16,516 million US dollars in 2013, followed by a minor increase to 16,536 million US dollars in 2014. The most significant expansion occurred between 2012 and 2013, representing a growth in the capital base that was not matched by proportional increases in revenue.
- Area Asset Turnover Performance
- The area asset turnover ratio experienced a downward shift, falling from 1.00 in 2012 to 0.95 in 2013, where it remained constant through 2014. This decline reflects a decrease in the company's ability to generate sales from its long-term investments in the United States. The stability of the ratio at 0.95 in the final two years indicates that the inefficiency in asset utilization persisted, as the growth in the asset base continued to outpace revenue growth.
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Area Asset Turnover: Canada
Kraft Foods Group Inc.; Canada; area asset turnover calculation
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | |
|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||
| Net revenues | 2,177) | 2,302) | 2,305) |
| Long-lived assets | 1,620) | 1,724) | 2,740) |
| Area Activity Ratio | |||
| Area asset turnover1 | 1.34 | 1.34 | 0.84 |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Area asset turnover = Net revenues ÷ Long-lived assets
= 2,177 ÷ 1,620 = 1.34
Analysis of the Canadian market indicates a marked improvement in asset utilization efficiency between 2012 and 2014. While revenue generation experienced a late-period decline, the operational efficiency increased significantly due to a substantial reduction in the asset base.
- Net Revenues
- Net revenues remained nearly stable between 2012 and 2013, with values of 2,305 million US$ and 2,302 million US$, respectively. However, a downward trend emerged in 2014, with revenues contracting to 2,177 million US$, representing a decrease from the previous year.
- Long-lived Assets
- A significant reduction in long-lived assets is observed over the period. Assets decreased sharply from 2,740 million US$ in 2012 to 1,724 million US$ in 2013, followed by a further modest decline to 1,620 million US$ in 2014. This indicates a substantial downsizing of the asset footprint in the region.
- Area Asset Turnover
- The area asset turnover ratio rose from 0.84 in 2012 to 1.34 in 2013 and remained constant at 1.34 in 2014. The improvement in this ratio was primarily driven by the aggressive reduction of long-lived assets rather than revenue growth. In 2014, the ratio remained stable because the decline in net revenues was proportionally offset by the continued decrease in assets.
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Net revenues
Kraft Foods Group Inc., net revenues by geographic area
US$ in millions
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | |
|---|---|---|---|
| United States | 15,753) | 15,676) | 15,820) |
| Canada | 2,177) | 2,302) | 2,305) |
| Exports | 275) | 240) | 214) |
| Total | 18,205) | 18,218) | 18,339) |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
Total net revenues remained relatively stagnant over the three-year period, exhibiting a marginal downward trend. From 2012 to 2014, total revenue decreased from 18,339 million US$ to 18,205 million US$, representing a total contraction of approximately 0.73%.
- United States Market Performance
- The United States represents the primary revenue driver, consistently accounting for the vast majority of total net sales. After a slight decline from 15,820 million US$ in 2012 to 15,676 million US$ in 2013, the market showed a modest recovery to 15,753 million US$ in 2014. The volatility in this segment is minimal, indicating a stable but mature market presence.
- Canadian Market Performance
- Revenues from Canada remained flat between 2012 and 2013, with values of 2,305 million US$ and 2,302 million US$ respectively. However, a more pronounced decline occurred in 2014, where revenues dropped to 2,177 million US$, marking a 5.43% decrease from the previous year.
- Export Growth Trends
- The export segment, while the smallest contributor to overall revenue, demonstrated the most consistent growth. Net revenues increased from 214 million US$ in 2012 to 275 million US$ in 2014. This represents a compound growth trend, with a significant year-over-year increase of 12.15% in 2013 and 14.58% in 2014.
- Geographic Revenue Concentration
- The revenue structure is characterized by high geographic concentration. The United States consistently contributes over 86% of total net revenues, while Canada contributes approximately 12%. The reliance on the North American market is absolute, as export growth, despite its positive trajectory, remains an insignificant portion of the total revenue mix.
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Long-lived assets
Kraft Foods Group Inc., long-lived assets by geographic area
US$ in millions
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | |
|---|---|---|---|
| United States | 16,536) | 16,516) | 15,766) |
| Canada | 1,620) | 1,724) | 2,740) |
| Total | 18,156) | 18,240) | 18,506) |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
The total value of long-lived assets exhibited a marginal downward trend between 2012 and 2014, decreasing from US$ 18,506 million to US$ 18,156 million. This overall decline is the result of divergent trends between the two primary geographic regions reported.
- United States Asset Trends
- Long-lived assets within the United States experienced a growth phase, increasing from US$ 15,766 million in 2012 to US$ 16,516 million in 2013. This upward movement stabilized in 2014, with assets reaching US$ 16,536 million. The domestic market demonstrated resilience and a slight expansion in its asset base over the observed period.
- Canadian Asset Trends
- A significant contraction is observed in the Canadian market. Long-lived assets decreased sharply from US$ 2,740 million in 2012 to US$ 1,724 million in 2013, and further declined to US$ 1,620 million by 2014. This represents a cumulative reduction of approximately 40.9% over the three-year span.
- Geographic Concentration and Distribution
- The distribution of long-lived assets shifted increasingly toward the United States. While the U.S. accounted for approximately 85.2% of the total long-lived assets in 2012, this proportion rose to approximately 91.1% by 2014. This shift indicates a heightened concentration of capital investment within the U.S. market relative to Canadian operations.
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