Analysis of Property, Plant and Equipment
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- Income Statement
- Common-Size Income Statement
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2015
- Price to Earnings (P/E) since 2015
- Price to Operating Profit (P/OP) since 2015
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Property, Plant and Equipment Disclosure
Kraft Heinz Co., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The analysis of the annual property, plant, and equipment financial data reveals several notable trends over the five-year period.
- Land
- The value of land steadily declined from $297 million in 2015 to $210 million in 2019, indicating a gradual reduction in land holdings or possible disposals over time.
- Buildings and improvements
- There was a consistent upward trend in the value of buildings and improvements, increasing from $1,700 million in 2015 to $2,447 million in 2019. This suggests ongoing investments or enhancements in infrastructure during the period.
- Equipment and other
- This category showed a strong growth trajectory, rising from $4,432 million in 2015 to $6,552 million in 2019. The continuous increase indicates significant capital expenditure on equipment or other related assets.
- Construction in progress
- Values for construction in progress fluctuated, peaking at $1,600 million in 2016 before decreasing steadily to $1,033 million in 2019. This pattern could imply a peak in active construction projects around 2016, followed by completion of several projects or slowing new starts.
- Property, plant and equipment, gross
- The total gross property, plant, and equipment increased consistently from $7,430 million in 2015 to $10,242 million in 2019, reflecting overall growth in asset base likely driven by acquisitions and capital investments.
- Accumulated depreciation
- Accumulated depreciation expanded significantly from -$906 million in 2015 to -$3,187 million in 2019. The increasing negative balance is expected and indicates ongoing asset usage and corresponding depreciation charges over the years.
- Property, plant and equipment, net
- The net property, plant, and equipment values increased moderately from $6,524 million in 2015 to a peak of $7,120 million in 2017 before slightly declining to $7,055 million in 2019. This suggests that despite gross asset growth, depreciation and asset disposals have tempered net asset value growth in later years.
Asset Age Ratios (Summary)
Kraft Heinz Co., asset age ratios
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Average Age Ratio
- The average age ratio shows a consistent upward trend over the observed periods, increasing from 12.7% in 2015 to 31.77% by the end of 2019. This indicates that, on average, the property, plant, and equipment assets are aging, and a greater portion of their useful lives has been consumed over time.
- Estimated Total Useful Life
- The estimated total useful life of assets was unspecified for the years 2015 and 2016 but recorded as 12 years in 2017, followed by an increase to 14 years in 2018 and 2019. This suggests a reassessment or extension in the expected lifespan of the assets starting from 2017.
- Estimated Age (Time Elapsed Since Purchase)
- The estimated age of the assets increased consistently from 3 years in 2017 to 5 years in 2019, reflecting the natural passage of time since acquisition. The data is missing for 2015 and 2016.
- Estimated Remaining Life
- The remaining useful life of the assets rose from 9 years in 2017 to 10 years in 2018 and remained steady at 10 years in 2019. This stability, alongside the increase in total useful life, indicates an extension of asset longevity and sustained usability beyond the original estimates.
Average Age
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, gross – Land)
= 100 × ÷ ( – ) =
- Accumulated Depreciation
- There is a consistent upward trend in accumulated depreciation over the five-year period, increasing from 906 million US dollars in 2015 to 3,187 million US dollars in 2019. This represents a more than threefold increase, indicating ongoing depreciation expenses likely associated with the aging of assets and continued use of property, plant, and equipment.
- Property, Plant, and Equipment, Gross
- The gross value of property, plant, and equipment shows a steady increase across the years, rising from 7,430 million US dollars in 2015 to 10,242 million US dollars in 2019. This upward trend suggests ongoing investments or capital expenditures to acquire or improve long-term assets.
- Land
- Contrary to other asset categories, the value attributed to land exhibits a gradual decline from 297 million US dollars in 2015 to 210 million US dollars in 2019. This decrease may be due to disposals or revaluation adjustments over the period.
- Average Age Ratio
- The average age ratio, expressed as a percentage, shows a marked increase throughout the time frame, rising from 12.7% in 2015 to 31.77% in 2019. This trend indicates aging assets relative to the total gross value of property, plant, and equipment, which may signal a longer remaining useful life or a slowing pace of asset renewal.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 Estimated total useful life = (Property, plant and equipment, gross – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property, plant and equipment, gross
- There is a consistent upward trend in the gross value of property, plant, and equipment over the observed period. The value increases steadily from US$7,430 million in 2015 to US$10,242 million in 2019, showing sustained investment or acquisition of assets.
- Land
- The value of land exhibits a gradual decline throughout the time frame, decreasing from US$297 million in 2015 to US$210 million in 2019. This downward trend may suggest disposals, revaluation adjustments, or other strategic changes regarding land holdings.
- Depreciation expense
- Depreciation expense data is only available from 2017 onwards. It shows a decrease from US$753 million in 2017 to US$693 million in 2018, followed by a slight increase to US$708 million in 2019. This fluctuation could be due to changes in asset base, depreciation methods, or useful life estimates.
- Estimated total useful life
- The estimated total useful life of the assets increased from 12 years in 2017 to 14 years in both 2018 and 2019. The extension in useful life estimates likely impacts depreciation calculations and could reflect improved durability or changes in asset management policies.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation exhibits a consistent and notable upward trend over the five-year period. Starting at $906 million in 2015, it approximately doubles by 2016, reaching $1,830 million, and continues to increase steadily through to $3,187 million in 2019. This growth indicates a continuous allocation of depreciation expense each year, reflecting ongoing wear and tear or usage of the property, plant, and equipment assets.
- Depreciation Expense
- Data for depreciation expense is available from 2017 onwards. It registers at $753 million in 2017, slightly decreases to $693 million in 2018, and then marginally increases to $708 million in 2019. This pattern suggests a relative stabilization of depreciation expense in the later years, with no significant fluctuations, which might indicate a steady state of fixed asset base or consistent depreciation policies during this time frame.
- Time Elapsed Since Purchase
- The indicated time elapsed since purchase increases linearly by one year each period from 3 years in 2017 to 5 years in 2019. This trend aligns logically with the passage of time, implying that assets bought or placed into service are aging consistently without any major refresh or disposal events evident from the provided data.
Estimated Remaining Life
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property, Plant, and Equipment, Net
- The net value of property, plant, and equipment shows a generally increasing trend from 2015 to 2017, rising from $6,524 million to $7,120 million. However, from 2017 to 2019, the net value slightly declines and stabilizes around $7,055 million, indicating a plateau in asset growth or potential increases in depreciation or disposals balancing new investments.
- Land
- The value assigned to land declines steadily throughout the observed period, decreasing from $297 million in 2015 to $210 million in 2019. This downward trend suggests either the sale of land assets or revaluation downward, which could impact the asset base.
- Depreciation Expense
- Data on depreciation expense is only available for the years 2017 to 2019. Depreciation expense decreases from $753 million in 2017 to $693 million in 2018 and then increases slightly to $708 million in 2019. This fluctuation may reflect changes in asset usage, acquisition timing, or depreciation policies.
- Estimated Remaining Life
- The estimated remaining life of property, plant, and equipment remained consistent at 9 to 10 years for the years 2017 through 2019. This stability indicates a relatively steady expectation of asset utility periods during this time frame.