Common-Size Income Statement
Kraft Heinz Co., common-size consolidated income statement
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 financial data reveals a series of notable trends over the five-year period examined. Net sales remain constant as a baseline measure, set at 100% for all years.
- Cost of Products Sold
- This item shows variability, starting relatively high at -68.58% of net sales in 2015, dropping to its lowest level of -63.01% in 2017 before rising again to -67.38% by 2019. The decline in cost of sales in 2016 and 2017 contributed to improvements in profitability metrics during those years.
- Gross Profit
- Gross profit displayed a positive trend from 31.42% in 2015 to a peak of 36.99% in 2017, benefiting from lower cost of products sold. However, it declined thereafter to 32.62% by 2019, consistent with rising product costs.
- Selling, General and Administrative Expenses (SG&A)
- Excluding impairment losses, SG&A expenses significantly decreased from -17.02% in 2015 to -10.98% in 2017, indicating improved operational efficiency. Nevertheless, the total SG&A expenses sharply increased in 2018 to -72.87%, driven by substantial goodwill and intangible asset impairment losses, which were recorded at -26.68% and -33.99% respectively. These impairments persisted at lower levels in 2019, moderating total SG&A to -20.33%.
- Operating Income (Loss)
- Operating income demonstrated a strong upward trajectory from 14.39% in 2015 to 25.82% in 2017, reflecting improved profitability. However, 2018 experienced a severe downturn with an operating loss of -38.91%, primarily due to the heavy impairment charges. By 2019, operating income had partially recovered to 12.29%.
- Interest Expense
- Interest expenses declined substantially from -7.2% in 2015 to around -4.28% to -4.89% range between 2016 and 2018 but increased again to -5.45% in 2019, indicating some variability in financing costs.
- Other Income (Expense)
- Other income/expenses remained minimal and close to neutral through 2015 to 2017, with a slight positive swing in 2018 and a significant positive contribution of 3.81% in 2019, helping to temper losses and improve pre-tax income.
- Income (Loss) Before Income Taxes
- The pattern mirrors operating income, rising from 5.52% in 2015 to a high of 21.08% in 2017, followed by a sharp negative swing to -43.10% in 2018, and a recovery to positive territory at 10.65% in 2019.
- Provision for Income Taxes
- The tax provision fluctuated widely, moving from a small negative value to a significant positive benefit in 2017 (20.81%), then back to modest positive and negative values in following years. These swings impacted net earnings volatility.
- Net Income (Loss)
- Net income attributable to Kraft Heinz showed remarkable improvement up to 2017, peaking at 41.93%. However, a sharp reversal occurred in 2018 with a steep loss of -38.8%, mainly due to the impairment losses mentioned earlier. In 2019, net income rebounded to 7.75%, indicating partial recovery but not reaching the peak levels observed in 2017.
- Preferred Dividends
- Preferred dividends were significant in 2015 and sharply decreased afterward, disappearing from reported figures after 2016, suggesting changes in capital structure or dividend policy.
- Net Income Attributable to Common Shareholders
- This metric reflects overall net income trends but starts from a negative base in 2015 (-1.45%), sharply improving to a notable 41.93% in 2017 before the significant downturn in 2018 and subsequent partial recovery in 2019. This underlines volatility in shareholder returns over the period.