Name: Kraft Heinz Co. (NASDAQ:KHC) | Income Statement
Creator: Stock Analysis on Net

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.

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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 an initial surge in scale followed by a period of revenue stagnation and significant non-cash asset write-downs. While the organization experienced a substantial increase in net sales between 2015 and 2016, subsequent years show a gradual contraction in both top-line growth and gross profitability.

Revenue and Gross Margin Trends: Net sales increased sharply from 18,338 million US$ in 2015 to 26,487 million US$ in 2016, remaining relatively flat through 2018 before declining to 24,977 million US$ in 2019. During this same period, gross profit peaked in 2017 at 9,703 million US$ and declined to 8,147 million US$ by 2019. This indicates a compression of gross margins, as the cost of products sold did not decrease proportionally with the decline in sales toward the end of the period.
Operating Income and Impairment Volatility: Operating income exhibited extreme volatility, moving from a peak of 6,773 million US$ in 2017 to a severe operating loss of 10,220 million US$ in 2018. This downturn was driven primarily by a massive spike in selling, general and administrative expenses, which rose to 19,141 million US$ in 2018. This increase was almost entirely attributable to non-cash impairment losses, specifically 7,008 million US$ in goodwill impairment and 8,928 million US$ in intangible asset impairment. While operating income recovered to 3,070 million US$ in 2019, further impairment losses totaling 1,899 million US$ continued to weigh on the results.
Net Income and Tax Impact: Net income attributable to common shareholders fluctuated significantly, reflecting both the operational volatility and substantial tax adjustments. A notable anomaly occurred in 2017, where net income reached 10,999 million US$, heavily supported by a tax benefit of 5,460 million US$. The subsequent year, 2018, saw a net loss of 10,192 million US$ due to the aforementioned impairment charges. By 2019, the company returned to profitability with a net income of 1,935 million US$, though this remained well below the 2016 and 2017 levels.
Interest and Other Income: Interest expenses remained relatively stable throughout the five-year period, fluctuating between 1,134 million US$ and 1,361 million US$. This stability suggests a consistent debt service obligation despite the volatility in operating earnings. Other income showed a positive trend toward the end of the period, reaching 952 million US$ in 2019, which provided a marginal buffer to the pre-tax income.

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