Kraft Heinz Co. (NASDAQ:KHC)

Return on Equity (ROE) exhibited significant fluctuations between 2015 and 2019. Initial values were relatively low, followed by a substantial increase, a dramatic decline, and a partial recovery. These shifts correlate directly with changes in net income and shareholders’ equity over the same period.

ROE Trend (2015-2019)

In 2015, ROE stood at 1.10%. This value increased considerably to 6.33% in 2016, and continued its upward trajectory, reaching a peak of 16.66% in 2017. A sharp reversal occurred in 2018, with ROE plummeting to -19.73%. The final year observed, 2019, showed a partial recovery to 3.75%, though remaining well below the 2017 high.

Net Income Influence

The substantial increase in ROE from 2015 to 2017 appears largely driven by a significant rise in net income. Net income increased from US$634 million in 2015 to nearly US$11 billion in 2017. The negative ROE in 2018 directly corresponds to a substantial net loss of over US$10 billion. The return to positive ROE in 2019 is linked to a net income of US$1,935 million.

Shareholders’ Equity Impact

Shareholders’ equity demonstrated a more moderate pattern of change. It decreased slightly from 2015 to 2016, then increased to US$66,034 million in 2017. A significant decrease was observed in 2018, falling to US$51,657 million, and remained relatively stable in 2019. While changes in shareholders’ equity influenced ROE, the primary driver of the observed fluctuations was net income.

The volatility in ROE suggests a sensitivity to net income, and potentially, underlying business performance or significant accounting events. The large negative ROE in 2018 warrants further investigation to understand the factors contributing to the substantial net loss.