Analysis of Profitability Ratios
Quarterly Data
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2012
- Total Asset Turnover since 2012
- Price to Operating Profit (P/OP) since 2012
- Price to Book Value (P/BV) since 2012
- Analysis of Revenues
- Aggregate Accruals
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Profitability Ratios (Summary)
Kraft Foods Group Inc., profitability ratios (quarterly data)
Based on: 10-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
- Gross Profit Margin
- The gross profit margin exhibited a rising trend from March 2013 through March 2014, increasing from approximately 31.85% to a peak of 38.26%. However, subsequent quarters revealed a declining trajectory, with the margin falling sharply to 25.38% by March 2015. This progression indicates an initial improvement in core profitability, followed by a significant contraction in gross profit efficiency towards the end of the period.
- Operating Profit Margin
- Operating profit margin mirrored the pattern of gross profit margin, showing growth from 14.88% in March 2013 to a high of 25.94% in March 2014. After this peak, margins contracted substantially, ending at 9.49% by March 2015. The steep decline in operating profitability during the last four quarters suggests increased operating costs or reduced operating efficiency impacting earnings before interest and taxes.
- Net Profit Margin
- Net profit margin demonstrated consistent improvement through the first five quarters, advancing from 8.78% to 15.34%. This positive performance was reversed in the final quarters, declining to 5.27% by March 2015. The reduction in net margins corresponds with declining operating profitability and may also relate to other financial or extraordinary items affecting bottom-line results.
- Return on Equity (ROE)
- The return on equity showed considerable volatility, initially fluctuating around the low 40% range with a peak of 52.34% in December 2013. Thereafter, ROE experienced a pronounced decrease, dropping to 21.23% by March 2015. Although still reflecting relatively strong equity returns compared to many industry peers, this downward trend signals diminishing effectiveness in generating profits from shareholders’ equity.
- Return on Assets (ROA)
- Return on assets followed a similar pattern, increasing steadily from 6.94% to 11.87% in the span up to March 2014, indicating enhanced efficiency in asset utilization. Subsequently, ROA declined significantly, reaching 4.15% by the last reported quarter. This decline suggests a reduction in the company’s ability to generate earnings from its asset base over the final year of the period.
Return on Sales
Return on Investment
Gross Profit Margin
Kraft Foods Group Inc., gross profit margin calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||
| Gross profit | |||||||||||||
| Net revenues | |||||||||||||
| Profitability Ratio | |||||||||||||
| Gross profit margin1 | |||||||||||||
| Benchmarks | |||||||||||||
| Gross Profit Margin, Competitors2 | |||||||||||||
| lululemon athletica inc. | |||||||||||||
| Nike Inc. | |||||||||||||
Based on: 10-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
1 Q1 2015 Calculation
Gross profit margin = 100
× (Gross profitQ1 2015
+ Gross profitQ4 2014
+ Gross profitQ3 2014
+ Gross profitQ2 2014)
÷ (Net revenuesQ1 2015
+ Net revenuesQ4 2014
+ Net revenuesQ3 2014
+ Net revenuesQ2 2014)
= 100 × ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
The financial data exhibits fluctuations in both gross profit and net revenues over the analyzed periods, revealing varying performance trends across quarters.
- Gross Profit
- Gross profit figures demonstrate notable volatility. Initial quarters show an increase from 1,470 million USD in March 2013 to a peak of 1,936 million USD in June 2013. This trend repeats in December quarters with higher values, for example, 1,931 million USD in December 2013 compared to surrounding quarters. However, a significant decline is observed in December 2014, where gross profit plummets to 472 million USD, before a partial recovery to 1,333 million USD by March 2015. This sudden decrease suggests an exceptional event or expense impacting profitability in late 2014.
- Net Revenues
- Net revenues remain relatively stable with minor fluctuations, oscillating between approximately 4,350 million USD and 4,700 million USD. There is no clear growth or decline trend; revenues maintain a consistent range throughout the reported periods. This stability suggests steady sales volumes or steady pricing strategies without significant expansion or contraction.
- Gross Profit Margin
- The gross profit margin reveals an overall decreasing trajectory towards the end of the period. Starting from 31.85% in March 2013, margins increase modestly to reach a high of 38.26% in March 2014, indicating improved efficiency or pricing power in the first half of the timeline. Subsequently, margins decline steadily, dropping to 26.61% in December 2014 and further to 25.38% in March 2015. This decline aligns with the sharp drop in gross profit in late 2014, signaling pressure on profit margins possibly due to higher costs, pricing pressures, or other operational challenges.
In summary, while net revenues remain relatively stable, the company's gross profit and gross profit margins exhibit significant variability, with particularly adverse conditions emerging in late 2014. The data suggests that the company faced profitability challenges during this period, which merit further investigation into possible cost increases or revenue quality issues.
Operating Profit Margin
Kraft Foods Group Inc., operating profit margin calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||
| Operating income | |||||||||||||
| Net revenues | |||||||||||||
| Profitability Ratio | |||||||||||||
| Operating profit margin1 | |||||||||||||
| Benchmarks | |||||||||||||
| Operating Profit Margin, Competitors2 | |||||||||||||
| lululemon athletica inc. | |||||||||||||
| Nike Inc. | |||||||||||||
Based on: 10-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
1 Q1 2015 Calculation
Operating profit margin = 100
× (Operating incomeQ1 2015
+ Operating incomeQ4 2014
+ Operating incomeQ3 2014
+ Operating incomeQ2 2014)
÷ (Net revenuesQ1 2015
+ Net revenuesQ4 2014
+ Net revenuesQ3 2014
+ Net revenuesQ2 2014)
= 100 × ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
- Net Revenues
- Net revenues demonstrate moderate fluctuations over the observed periods, ranging between approximately $4.35 billion and $4.75 billion. There is no clear upward or downward trend, indicating a relatively stable revenue stream without significant growth or decline during this timeframe.
- Operating Income
- Operating income presents notable volatility across the quarters. Initial quarters show positive operating income, peaking at $1.514 billion in December 2013. However, the subsequent periods experience a decline, culminating in a negative operating income of $614 million at December 2014, which represents a significant deterioration in profitability. There is a partial recovery in the final quarter to $740 million, but profitability remains below earlier peak levels.
- Operating Profit Margin
- The operating profit margin corroborates the trends seen in operating income. Margins improve from 14.88% in March 2013 to a peak of 25.94% in March 2014, indicating enhanced operational efficiency or favorable cost management during that period. Following this peak, the margin declines sharply, reaching a low of 9.49% by March 2015. This decline reflects pressures on profitability, consistent with the negative operating income values observed in late 2014.
- Summary
- Overall, the data indicates stable net revenues but significant volatility in operating income and operating margin. The company achieved strong profitability increases up to early 2014 but faced a pronounced downturn in operating performance during the latter half of 2014. This suggests challenges in maintaining operational efficiency or increased costs, which impacted profitability despite steady sales levels.
Net Profit Margin
Kraft Foods Group Inc., net profit margin calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||
| Net earnings | |||||||||||||
| Net revenues | |||||||||||||
| Profitability Ratio | |||||||||||||
| Net profit margin1 | |||||||||||||
| Benchmarks | |||||||||||||
| Net Profit Margin, Competitors2 | |||||||||||||
| lululemon athletica inc. | |||||||||||||
| Nike Inc. | |||||||||||||
Based on: 10-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
1 Q1 2015 Calculation
Net profit margin = 100
× (Net earningsQ1 2015
+ Net earningsQ4 2014
+ Net earningsQ3 2014
+ Net earningsQ2 2014)
÷ (Net revenuesQ1 2015
+ Net revenuesQ4 2014
+ Net revenuesQ3 2014
+ Net revenuesQ2 2014)
= 100 × ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends over the quarterly periods analyzed. Net revenues exhibit fluctuations without a clear upward or downward trajectory, generally oscillating around the 4,300 to 4,700 million US dollar range. This suggests a relatively stable revenue base with periodic variability that does not indicate strong growth or decline.
Net earnings show considerable volatility. Initial quarters display positive earnings with notable peaks in the second quarter of 2013 and the last quarter of 2013. However, a significant downturn is observed in the last quarter of 2014, where net earnings turn negative, indicating a loss. The following quarter recovers to positive earnings, but at a lower level than previously observed peaks.
The net profit margin follows a somewhat similar pattern to net earnings. It increases from single digits to a peak of over 15% in the first quarter of 2014. Following this peak, the margin declines steadily, dropping sharply in the last quarter of 2014 alongside the net earnings loss, and remains low in the subsequent quarter. This sharp decline in profitability margin signals a reduction in efficiency or increased costs relative to revenues during that period.
- Net Revenues
- Despite minor fluctuations, revenues remain within a consistent band between approximately 4,300 and 4,700 million US dollars, implying stable sales performance with no sustained growth trend over these quarters.
- Net Earnings
- The earnings demonstrate pronounced variability, ranging from notable profits to a quarter with a significant loss, illustrating episodic financial challenges or unusual expenses impacting profitability.
- Net Profit Margin
- The margin initially improves, reaching over 15%, but then experiences a sharp decline coinciding with the period of loss, suggesting deteriorating profitability linked to either increased costs or pressures on product pricing.
Overall, the company's profitability shows periods of strength interrupted by a significant downturn towards the end of the analyzed timeline, underlining a need for closer attention to cost control or operational efficiencies to restore and sustain profit levels.
Return on Equity (ROE)
Kraft Foods Group Inc., ROE calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||
| Net earnings | |||||||||||||
| Equity | |||||||||||||
| Profitability Ratio | |||||||||||||
| ROE1 | |||||||||||||
| Benchmarks | |||||||||||||
| ROE, Competitors2 | |||||||||||||
| lululemon athletica inc. | |||||||||||||
| Nike Inc. | |||||||||||||
Based on: 10-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
1 Q1 2015 Calculation
ROE = 100
× (Net earningsQ1 2015
+ Net earningsQ4 2014
+ Net earningsQ3 2014
+ Net earningsQ2 2014)
÷ Equity
= 100 × ( + + + )
÷ =
2 Click competitor name to see calculations.
An analysis of the quarterly financial performance reveals several notable trends. Net earnings experienced fluctuations over the observed periods, with significant peaks and troughs. The highest net earnings were recorded at the end of 2013, followed by a decline leading to a negative value by the last quarter of 2014. However, there was a rebound in the subsequent quarter of early 2015.
Equity showed a general upward trend through most of the periods, indicating growth in the company's net assets. Beginning at approximately $3.7 billion, equity increased steadily until the third quarter of 2014, after which there was a noticeable decline by the end of 2014. This decline persisted slightly into the first quarter of 2015 but remained significantly higher than the initial quarter in 2013.
Return on equity (ROE) mirrored some of the volatility in net earnings. It remained relatively high for most quarters, peaking above 50% in two separate periods at the end of 2013 and early 2014. Following that, ROE declined progressively, falling below 25% by the end of 2014 and further to around 21% by the first quarter of 2015.
- Net Earnings
- Showed variability with a peak in late 2013, a significant drop reaching negative territory in late 2014, and partial recovery in early 2015.
- Equity
- Generally increased over the period, indicating growth in net assets, except for a downturn starting in the last quarter of 2014 continuing into 2015.
- Return on Equity (ROE)
- Demonstrated a declining trend after reaching high levels in 2013 and early 2014, indicating reduced profitability relative to equity in later periods.
Return on Assets (ROA)
Kraft Foods Group Inc., ROA calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||
| Net earnings | |||||||||||||
| Total assets | |||||||||||||
| Profitability Ratio | |||||||||||||
| ROA1 | |||||||||||||
| Benchmarks | |||||||||||||
| ROA, Competitors2 | |||||||||||||
| lululemon athletica inc. | |||||||||||||
| Nike Inc. | |||||||||||||
Based on: 10-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
1 Q1 2015 Calculation
ROA = 100
× (Net earningsQ1 2015
+ Net earningsQ4 2014
+ Net earningsQ3 2014
+ Net earningsQ2 2014)
÷ Total assets
= 100 × ( + + + )
÷ =
2 Click competitor name to see calculations.
The financial data reveals several key trends concerning net earnings, total assets, and return on assets (ROA) over the analyzed quarterly periods.
- Net Earnings
- Net earnings exhibited significant volatility throughout the reported quarters. Starting at 456 million USD in the first quarter of 2013, earnings rose sharply to a peak of 930 million USD by the end of that year. In 2014, net earnings showed a declining trend, decreasing from 513 million USD in the first quarter to 446 million USD in the third quarter, followed by a considerable negative value of -398 million USD in the last quarter. The data for the first quarter of 2015 showed a partial recovery to 429 million USD. This fluctuation suggests periods of both strong profitability and losses, particularly evident in the sharp decline and negative result toward the end of 2014.
- Total Assets
- Total assets remained relatively stable across the periods, fluctuating mildly between approximately 22,803 million USD and 23,361 million USD. There was no significant upward or downward trend, indicating that the company's asset base was relatively consistent during this timeframe. Minor decreases and increases in the asset base do not suggest large-scale acquisitions or disposals impacting the balance sheet substantially over these quarters.
- Return on Assets (ROA)
- ROA mirrored the pattern observed in net earnings, starting at 6.94% in the first quarter of 2013 and rising steadily to a peak of 11.87% by the first quarter of 2014. Thereafter, ROA declined progressively, falling to 4.15% by the first quarter of 2015. The significant drop in ROA in the final quarters of 2014 corresponds with the negative net earnings, indicating a decrease in profitability relative to the assets employed. This decline in ROA highlights a period of reduced efficiency in using assets to generate profit.
In summary, the financial performance showed strong earnings and efficiency gains through early 2014, followed by a notable downturn in profitability and asset utilization. The asset base remained stable, suggesting that operational factors rather than changes in asset structure primarily influenced earnings and ROA fluctuations.