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Kraft Heinz Co. (NASDAQ:KHC)

This company has been moved to the archive! The financial data has not been updated since July 31, 2020.

Common-Size Income Statement

Kraft Heinz Co., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 31, 2015
Net sales 100.00 100.00 100.00 100.00 100.00
Cost of products sold -67.38 -66.04 -63.01 -63.81 -68.58
Gross profit 32.62% 33.96% 36.99% 36.19% 31.42%
Selling, general and administrative expenses, excluding impairment losses -12.72 -12.20 -10.98 -13.00 -17.02
Goodwill impairment losses -4.79 -26.68 0.00 0.00 0.00
Intangible asset impairment losses -2.81 -33.99 -0.19 0.00 0.00
Selling, general and administrative expenses -20.33% -72.87% -11.17% -13.00% -17.02%
Operating income (loss) 12.29% -38.91% 25.82% 23.19% 14.39%
Interest expense -5.45 -4.89 -4.70 -4.28 -7.20
Other income (expense) 3.81 0.70 -0.03 0.06 -1.66
Income (loss) before income taxes 10.65% -43.10% 21.08% 18.96% 5.52%
(Provision for) benefit from income taxes -2.91 4.06 20.81 -5.21 -2.00
Net income (loss) 7.74% -39.04% 41.90% 13.75% 3.53%
Net (income) loss attributable to noncontrolling interest 0.01 0.24 0.03 -0.04 -0.07
Net income (loss) attributable to Kraft Heinz 7.75% -38.80% 41.93% 13.71% 3.46%
Preferred dividends 0.00 0.00 0.00 -0.68 -4.91
Net income (loss) attributable to common shareholders 7.75% -38.80% 41.93% 13.03% -1.45%

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 performance from 2015 to 2019 is characterized by an initial period of margin expansion followed by a severe contraction in 2018, primarily driven by non-cash impairment charges, and a subsequent partial recovery in 2019.

Gross Profitability and Production Costs
A positive trend in gross margin is observed from 2015 to 2017, with gross profit increasing from 31.42% to a peak of 36.99% of net sales. This improvement was driven by a reduction in the cost of products sold, which fell from 68.58% in 2015 to 63.01% in 2017. However, this trend reversed after 2017, as costs rose to 67.38% by 2019, compressing the gross profit margin back down to 32.62%.
Operating Expense Management and Impairments
Selling, general, and administrative (SG&A) expenses, excluding impairment losses, showed a steady decline from 17.02% of net sales in 2015 to 10.98% in 2017, suggesting successful operational cost-reduction initiatives. However, the operating profile was fundamentally altered in 2018 by massive write-downs. Goodwill and intangible asset impairment losses combined for approximately 60.67% of net sales in 2018, resulting in an operating loss of 38.91%. While impairments continued into 2019, they were significantly lower at a combined 7.6%, allowing operating income to return to a positive 12.29%.
Net Income Volatility and Tax Impact
Net income attributable to common shareholders exhibited extreme volatility. A notable anomaly occurred in 2017, where net income reached 41.93% of net sales; this was heavily influenced by a substantial tax benefit representing 20.81% of net sales rather than purely operational growth. The subsequent collapse to a net loss of 38.80% in 2018 aligns with the aforementioned impairment charges. By 2019, the company returned to profitability with a net income of 7.75% of net sales.
Interest and Other Income
Interest expense as a percentage of net sales decreased from 7.20% in 2015 to 4.28% in 2016, remaining relatively stable between 4.3% and 5.5% through 2019. Other income showed a marked increase in 2019, contributing 3.81% to net sales, which provided a modest buffer to the bottom line during the recovery phase.

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