Kraft Heinz Co. (NASDAQ:KHC)

The operating profit margin exhibited significant fluctuations between 2015 and 2019. Initial years showed a positive trend, followed by a substantial decline and subsequent partial recovery.

Operating Profit Margin Trend

In 2015, the operating profit margin stood at 14.39%. This figure increased notably to 23.19% in 2016, continuing its upward trajectory to reach a peak of 25.82% in 2017. A dramatic shift occurred in 2018, with the margin plummeting to -38.91%, indicating a substantial operating loss relative to net sales. The margin partially recovered in 2019, rising to 12.29%, though remaining below the levels observed between 2015 and 2017.

Relationship to Operating Income

The operating profit margin’s performance closely mirrors the trend in operating income. The increases in margin from 2015 to 2017 align with rising operating income figures. The negative margin in 2018 directly corresponds to the reported operating loss of -10,220 US$ millions. The improvement in margin to 12.29% in 2019 is consistent with the return to positive operating income of 3,070 US$ millions.

Relationship to Net Sales

Net sales demonstrated an initial increase from 18,338 US$ millions in 2015 to 26,487 US$ millions in 2016, followed by relative stability around 26,200 US$ millions in 2017 and 2018, and a decrease to 24,977 US$ millions in 2019. While net sales generally remained high, the significant decline in operating profit margin in 2018 suggests that cost of goods sold and/or operating expenses increased disproportionately to sales, resulting in the substantial operating loss.

The volatility in the operating profit margin highlights potential challenges in maintaining profitability. The substantial loss in 2018 warrants further investigation to understand the underlying causes and assess the sustainability of the partial recovery observed in 2019.