Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

Kraft Heinz Co., consolidated income statement

US$ in millions

12 months ended:	Dec 28, 2019	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
Net sales	24,977)	26,268)	26,232)	26,487)	18,338)
Cost of products sold	(16,830)	(17,347)	(16,529)	(16,901)	(12,577)
Gross profit	8,147)	8,921)	9,703)	9,586)	5,761)
Selling, general and administrative expenses, excluding impairment losses	(3,178)	(3,205)	(2,881)	(3,444)	(3,122)
Goodwill impairment losses	(1,197)	(7,008)	—)	—)	—)
Intangible asset impairment losses	(702)	(8,928)	(49)	—)	—)
Selling, general and administrative expenses	(5,077)	(19,141)	(2,930)	(3,444)	(3,122)
Operating income (loss)	3,070)	(10,220)	6,773)	6,142)	2,639)
Interest expense	(1,361)	(1,284)	(1,234)	(1,134)	(1,321)
Other income (expense)	952)	183)	(9)	15)	(305)
Income (loss) before income taxes	2,661)	(11,321)	5,530)	5,023)	1,013)
(Provision for) benefit from income taxes	(728)	1,067)	5,460)	(1,381)	(366)
Net income (loss)	1,933)	(10,254)	10,990)	3,642)	647)
Net (income) loss attributable to noncontrolling interest	2)	62)	9)	(10)	(13)
Net income (loss) attributable to Kraft Heinz	1,935)	(10,192)	10,999)	3,632)	634)
Preferred dividends	—)	—)	—)	(180)	(900)
Net income (loss) attributable to common shareholders	1,935)	(10,192)	10,999)	3,452)	(266)

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 a significant increase in scale during 2016, followed by a period of stagnant revenue and severe volatility in net earnings driven by non-cash impairment charges and tax adjustments.

Revenue and Gross Profit Trends: Net sales experienced a substantial increase between 2015 and 2016, rising from 18.3 billion to 26.5 billion. Following this growth, sales remained relatively flat through 2018 before declining to 25.0 billion in 2019. Gross profit followed a similar trajectory, peaking in 2017 at 9.7 billion and subsequently declining to 8.1 billion by 2019, indicating a compression in gross margins over the final three years of the period.
Operating Performance and Impairments: Operating income demonstrated extreme volatility due to significant one-time charges. After reaching a peak of 6.8 billion in 2017, operating income plummeted to a loss of 10.2 billion in 2018. This decline was almost exclusively driven by impairment losses, totaling approximately 15.9 billion across goodwill and intangible assets. By 2019, operating income recovered to 3.1 billion as impairment charges diminished significantly to a combined 1.9 billion.
Expense Analysis: Selling, general and administrative expenses, excluding impairments, remained relatively stable, fluctuating between 2.9 billion and 3.4 billion. Interest expenses remained consistent throughout the period, ranging between 1.1 billion and 1.4 billion, suggesting a stable debt servicing requirement despite the volatility in operating results.
Net Income and Tax Impacts: Net income attributable to common shareholders exhibited drastic swings. A peak of 11.0 billion in 2017 was heavily influenced by a tax benefit of 5.5 billion. This was followed by a net loss of 10.2 billion in 2018, mirroring the operating loss from impairments. The period concluded with a return to profitability in 2019, with net income reaching 1.9 billion.

Overall, the data indicates a company that expanded its top line rapidly in 2016 but struggled to maintain growth, ultimately facing significant asset write-downs in 2018 that severely impacted the bottom line before a partial recovery in 2019.

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Kraft Heinz Co. (NASDAQ:KHC)

Income Statement