Kraft Heinz Co. (NASDAQ:KHC)

Asset Turnover

The reported and adjusted total asset turnover ratios exhibit a generally positive trend from 2015 to 2019. Starting at 0.15 in 2015, they steadily increased to 0.25 by 2018 and remained stable at 0.25 in 2019. This indicates an improvement in the effectiveness of asset utilization to generate sales over the period.

Current Ratio

The current ratio, both reported and adjusted, shows variability with an initial decline from 1.41 in 2015 to 0.72 in 2017. It then improves in 2018 to 1.21 before decreasing again to 1.03 in 2019. This pattern suggests fluctuations in short-term liquidity, with a notable dip around 2017, possibly indicating constrained liquidity management in that year, followed by some recovery.

Debt to Equity Ratio

Reported debt to equity ratios rise from 0.44 in 2015 to 0.6 in 2018, then slightly decrease to 0.57 in 2019. The adjusted ratios follow a similar pattern but consistently remain lower, rising from 0.32 to 0.5 in 2018, then declining to 0.47 in 2019. This indicates an overall increase in leverage over the timeline, with a slight reduction at the end, implying moderate growth in reliance on debt financing relative to shareholders' equity with some improvement towards the close of the period.

Debt to Capital Ratio

This ratio mirrors the debt to equity trend, showing an upward movement from 0.3 to 0.38 (reported) and 0.24 to 0.33 (adjusted) between 2015 and 2018, then a marginal decrease in 2019. The data suggests a gradual increase in debt as a component of total capital, reflecting the company’s increased financing through debt but with slight deleveraging in 2019.

Financial Leverage

Reported financial leverage ratios decline gently from 2.13 in 2015 to 1.82 in 2017, then rise to 2 in 2018 before a minor decrease to 1.97 in 2019. Adjusted ratios show a steadier, slight downward trend from 1.55 to 1.5 by 2017, increasing to 1.62 in 2018, then decreasing slightly to 1.59 in 2019. These fluctuations reflect moderate changes in the extent to which the company uses debt relative to equity to finance its assets.

Net Profit Margin

The reported net profit margin exhibits high volatility, with significant growth peaking at 41.93% in 2017, followed by a sharp decline to -38.8% in 2018, and partial recovery to 7.75% in 2019. Adjusted margins are generally lower but follow a similar pattern, peaking at 19.26% in 2017, plunging to -50.08% in 2018, and recovering to 6.25% in 2019. This volatility suggests considerable fluctuations in profitability, with a notable loss in 2018 indicating potential exceptional items or operational challenges that year.

Return on Equity (ROE)

Reported ROE increases from 1.1% in 2015 to 16.66% in 2017, then sharply reverses to -19.73% in 2018, finishing at 3.75% in 2019. Adjusted ROE shows a similar trend on a reduced scale, rising to 6.29% in 2017, then dropping to -20.54% in 2018, and recovering slightly to 2.45% in 2019. These swings in ROE highlight substantial variations in shareholder returns, primarily influenced by the performance in 2018.

Return on Assets (ROA)

The reported ROA follows the pattern of profitability ratios, improving from 0.52% in 2015 to 9.15% in 2017, then declining to -9.85% in 2018 before rising to 1.91% in 2019. Adjusted ROA shows smaller magnitudes but similar changes, peaking at 4.19% in 2017, dropping to -12.65% in 2018, and rising to 1.54% in 2019. The data indicates fluctuations in asset efficiency to generate net income, with 2018 being a notably difficult year.

The financial data indicates that net sales experienced a significant increase from 18,338 million US dollars in 2015 to a peak of approximately 26,487 million in 2016. Following this peak, net sales remained relatively stable through 2018, with minor fluctuations, before experiencing a slight decline to 24,977 million in 2019.

Total assets showed a declining trend over the five-year period. The assets decreased from 122,973 million in 2015 to 101,450 million in 2019, indicating a reduction of roughly 17.5%. This downward movement suggests a possible divestiture, asset sales, or depreciation outpacing asset additions during these years.

The reported total asset turnover ratio increased steadily from 0.15 in 2015 to 0.25 in both 2018 and 2019. This trend indicates an improvement in the efficiency with which the company utilized its assets to generate sales, as a higher turnover ratio points to more net sales per unit of asset.

Adjusted total assets mirrored the behavior of total assets closely, declining from 123,526 million in 2015 to 101,386 million in 2019. Correspondingly, the adjusted total asset turnover ratio continued the upward trajectory similar to the reported figures, rising from 0.15 to 0.25 over the same period.

In summary, the data reveals a period of growth in net sales early in the timeline, stabilization in sales figures afterward, and a notable reduction in asset base. Despite the shrinking asset base, the improvement in asset turnover ratios evidences enhanced operational efficiency in asset utilization. This suggests that the company succeeded in generating higher sales volumes relative to its available assets, reflecting a potentially positive shift in management effectiveness or asset deployment strategy.

The analysis of the annual financial data reveals several notable trends and fluctuations in the liquidity position over the five-year period under consideration.

Current Assets

Current assets exhibited a general decline from US$ 9,780 million in 2015 to US$ 7,266 million in 2017. Thereafter, an increase occurred in 2018 rising to US$ 9,075 million, followed by a decrease to US$ 8,097 million in 2019. This indicates variability in asset levels, with a significant dip during 2016 and 2017 before partial recovery.

Current Liabilities

Current liabilities rose sharply from US$ 6,932 million in 2015 to a peak of US$ 10,132 million in 2017. After this peak, liabilities decreased noticeably to US$ 7,503 million in 2018, then slightly increased again to US$ 7,875 million in 2019. This pattern shows considerable volatility, especially the large increase up to 2017 and subsequent reduction.

Reported Current Ratio

The current ratio, an indicator of liquidity, declined significantly from 1.41 in 2015 to 0.72 in 2017, reflecting a weakening liquidity position primarily caused by rising current liabilities combined with falling current assets. The ratio improved markedly to 1.21 in 2018, suggesting stronger short-term financial health, before declining to 1.03 in 2019, indicating a marginal liquidity buffer.

Adjusted Current Assets and Adjusted Current Ratio

The adjusted current assets followed a similar trend to the reported current assets, confirming the consistency of the observed patterns. Accordingly, the adjusted current ratio mirrored the trend of the reported ratio across all years, validating the robustness of the liquidity assessment.

Overall, the data indicate that the company experienced challenging liquidity conditions between 2016 and 2017, marked by reduced current assets and increased current liabilities, leading to suboptimal current ratios below 1.0. The subsequent recovery in 2018 suggests an improvement in working capital management or operational improvements. However, the marginal decrease in the current ratio in 2019 signals a need for continued attention to maintain sufficient liquidity going forward.

The financial data over the five-year period indicates notable fluctuations in key balance sheet components including debt, equity, and related leverage ratios.

Total Debt

Total debt rose significantly from 25,234 million USD at the end of 2015 to a peak of 32,404 million USD in 2016. It then experienced a gradual decline over the subsequent years, reaching 29,244 million USD by the end of 2019. This pattern suggests an initial increase in leverage or borrowing followed by a period of moderate deleveraging.

Shareholders’ Equity

Shareholders’ equity presented a different trajectory. It started at 57,685 million USD in 2015, remained relatively stable in 2016, and then rose substantially to 66,034 million USD by the end of 2017. However, equity decreased sharply in 2018 to 51,657 million USD, with a slight further decline to 51,623 million USD in 2019. This decline after 2017 may reflect significant losses, dividend payments, or other adjustments impacting retained earnings or equity balances.

Reported Debt to Equity Ratio

The reported debt to equity ratio increased from 0.44 in 2015 to 0.56 in 2016, indicating higher leverage. It decreased somewhat in 2017 to 0.48, before rising again to 0.60 in 2018, and then moderating slightly to 0.57 in 2019. This fluctuation aligns with the changes observed in both debt and equity, reflecting variable leverage and potential volatility in the company’s capital structure.

Adjusted Total Debt and Equity

Adjusted total debt follows a pattern similar to reported total debt, increasing from 25,825 million USD in 2015 to 32,787 million USD in 2016, and then declining gradually to 29,845 million USD in 2019. Adjusted total equity, however, is consistently higher than reported equity, beginning at 79,638 million USD in 2015, peaking at 80,368 million USD in 2017, and then falling sharply to 64,027 million USD in 2018 and slightly decreasing further to 63,609 million USD in 2019. This suggests that adjustments may include components such as goodwill, intangible assets, or other factors affecting equity valuation.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio also shows an increasing trend, rising from a low of 0.32 in 2015 to a high of 0.50 in 2018 before decreasing slightly to 0.47 in 2019. This ratio remains consistently lower than the reported debt to equity ratio, reflecting the impact of adjustments to the equity base.

Overall, the data reveals a period of increased leverage peaking around 2016-2018, followed by efforts to reduce debt levels. Equity figures demonstrate volatility with a peak in 2017 and a notable decline afterward, impacting leverage ratios. The consistent difference between reported and adjusted figures indicates important reclassifications or accounting treatments affecting the company’s financial structure during this time. The leverage ratios’ fluctuations highlight a dynamic financial position requiring monitoring of debt management and equity stability.

Total Debt

The total debt exhibited an overall increase from 25,234 million US dollars in 2015 to a peak of 32,404 million in 2016, followed by a gradual decline over the subsequent years, reaching 29,244 million by the end of 2019. This indicates the company initially increased its debt levels before undertaking some deleveraging.

Total Capital

Total capital grew steadily from 82,919 million US dollars in 2015 to 97,570 million by 2017, before contracting to 80,867 million by 2019. The decline in total capital in the latter years suggests a reduction in either equity or a combination of equity and debt components.

Reported Debt to Capital Ratio

The reported debt to capital ratio rose from 0.30 in 2015 to 0.36 in 2016, then decreased slightly to 0.32 in 2017, before peaking again at 0.38 in 2018 and slightly decreasing to 0.36 in 2019. This indicates fluctuating leverage levels with a general tendency toward higher leverage in the middle of the period, followed by marginal improvement.

Adjusted Total Debt

Adjusted total debt followed a similar pattern to total debt, increasing from 25,825 million in 2015 to 32,787 million in 2016, then moderately declining to 29,845 million in 2019. This adjustment reflects consideration of additional debt-like obligations but follows the same general trend as total debt.

Adjusted Total Capital

Adjusted total capital increased from 105,463 million in 2015 to 112,321 million in 2017, then sharply declined to 93,454 million by 2019. This pattern mirrors that of total capital but on a larger scale, suggesting significant changes in the components considered for adjusted capital during the latter years.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio increased from 0.24 in 2015 to 0.29 in 2016, remained relatively stable at 0.28 in 2017, then rose to 0.33 in 2018 and slightly decreased to 0.32 in 2019. This trend closely parallels the reported debt to capital ratio but shows consistently lower leverage levels due to adjustments made in capital and debt calculations.

Total Assets

Total assets show a declining trend over the five-year period, decreasing from $122,973 million in 2015 to $101,450 million in 2019. The reduction appears steady year-over-year, with a notable drop between 2017 and 2018.

Shareholders’ Equity

Shareholders' equity fluctuates during the period, initially remaining relatively stable between 2015 and 2016, then increasing significantly in 2017 to $66,034 million. However, it subsequently declines sharply in 2018 to $51,657 million and remains at a similar level in 2019.

Reported Financial Leverage

The reported financial leverage ratio decreases gradually from 2.13 in 2015 to 1.82 in 2017, indicating a reduction in leverage during this period. However, it increases again to 2.00 in 2018 and slightly decreases to 1.97 in 2019, suggesting a reversal of the earlier deleveraging trend.

Adjusted Total Assets

Adjusted total assets closely mirror the trend observed in total assets, declining from $123,526 million in 2015 to $101,386 million in 2019. The pattern is consistent with a steady contraction in asset base.

Adjusted Total Equity

Adjusted total equity shows a more stable pattern relative to reported equity, increasing from $79,638 million in 2015 to a peak of $80,368 million in 2017 before declining to $63,609 million in 2019. This suggests that adjustments moderate some of the volatility seen in reported equity figures.

Adjusted Financial Leverage

The adjusted financial leverage ratio decreases modestly from 1.55 in 2015 to 1.50 in 2017, indicating reduced reliance on debt relative to equity. However, it then rises to 1.62 in 2018 before slightly decreasing to 1.59 in 2019. This pattern reflects a slight increase in leverage after 2017 but remains lower than the reported leverage values.

The financial data indicates considerable volatility in profitability metrics over the five-year period. Net income attributable to the company shows a notable increase from 2015 to 2017, reaching a peak in 2017 before declining sharply in 2018 to a significant loss, followed by a partial recovery in 2019. This volatility is mirrored in the reported net profit margin, which reached an impressive high in 2017 but fell dramatically into negative territory in 2018, indicating a period of substantial financial distress or impairment events, before rebounding moderately in 2019.

Net sales demonstrate less variability relative to profitability, with an increase from 2015 through 2016, stabilizing around 26 billion US dollars for the subsequent two years, then experiencing a slight decline in 2019. This suggests that while sales were relatively stable with modest fluctuations, profitability was subject to more pronounced fluctuations, likely influenced by factors beyond just top-line revenue.

Adjusted net income data follows a similar trend to the reported net income, with growth until 2017, a severe downturn in 2018, and a recovery phase in 2019. The adjusted net profit margin supports this pattern, peaking in 2017 at nearly 20%, then turning sharply negative in 2018, even lower than the reported margin, before improving again in 2019. This emphasizes the impact of extraordinary items or adjustments on the company's reported results and highlights 2018 as an anomalous year with substantial financial challenges.

Net Income Trends

Consistent growth from 2015 (US$634 million) to 2017 (US$10,999 million), followed by a steep loss in 2018 (US$-10,192 million) and a partial recovery in 2019 (US$1,935 million).

Net Sales Patterns

Increased from US$18.3 billion in 2015 to US$26.5 billion in 2016, stable around US$26.2 billion in 2017 and 2018, with a slight decline to US$24.9 billion in 2019.

Profit Margin Analysis

Reported net profit margin grew substantially from 3.46% in 2015 to a peak of 41.93% in 2017, then plummeted to -38.8% in 2018, improving to 7.75% in 2019. Adjusted net profit margin shows a similar trajectory, reaching 19.26% in 2017, dropping to -50.08% in 2018, and increasing to 6.25% in 2019.

Overall, the company experienced a significant profitability spike in 2017, likely driven by non-recurring items or operational improvements, followed by a sharp decline in 2018, indicative of extraordinary losses or impairments. The partial recovery in 2019 suggests stabilization but not a full return to prior peak profitability. Sales volume was relatively stable, implying that the profitability swings were not primarily driven by changes in sales but rather by cost structure, extraordinary items, or other financial events.

Net Income (Loss) Attributable to Kraft Heinz

The net income exhibited substantial volatility over the five-year period. Starting at $634 million in 2015, it surged dramatically to $3,632 million in 2016 and further peaked at $10,999 million in 2017. However, the figure experienced a significant decline in 2018, reporting a net loss of $10,192 million before recovering somewhat to a positive $1,935 million in 2019. This pattern indicates episodic fluctuations with a marked deterioration in 2018 followed by a partial rebound.

Shareholders’ Equity

Shareholders’ equity remained relatively stable but showed a downward trend towards the end of the period. Initially reported at $57,685 million in 2015, the equity level slightly decreased to $57,358 million in 2016 before increasing to $66,034 million in 2017. Subsequently, there was a notable decline to $51,657 million in 2018, which persisted into 2019 with a marginal further decrease to $51,623 million. This decline corresponds with the reported net loss in 2018, reflecting a possible impairment or loss recognition.

Reported Return on Equity (ROE)

The reported ROE followed a similar trend to net income, demonstrating growth until 2017, followed by a steep fall. It rose from a low 1.1% in 2015 to 6.33% in 2016 and peaked at 16.66% in 2017. The metric sharply reversed course in 2018, turning negative at -19.73%, and partially recovered to 3.75% in 2019. This pattern emphasizes the detrimental financial performance in 2018 impacting shareholder returns.

Adjusted Net Income (Loss)

Adjusted net income also displayed considerable variation, increasing from $389 million in 2015 to $2,539 million in 2016 and $5,053 million in 2017. However, similar to reported net income, it showed a drastic downturn in 2018 with an adjusted loss of $13,154 million, followed by a recovery to $1,560 million in 2019. These adjustments likely account for extraordinary or non-recurring items, yet the trend mirrors the overall earnings volatility.

Adjusted Total Equity

Adjusted total equity values were consistently higher than reported shareholders’ equity but followed a comparable trend over the years. From $79,638 million in 2015, it slightly declined to $78,535 million in 2016, then increased modestly to $80,368 million in 2017. A significant decrease occurred in 2018, falling to $64,027 million and remained mostly steady in 2019 at $63,609 million. The decline aligns with the adjusted net loss and underlying financial challenges during that period.

Adjusted Return on Equity (ROE)

Adjusted ROE exhibited a gradual improvement from 0.49% in 2015 to 3.23% in 2016 and further to 6.29% in 2017, indicating improving profitability when excluding certain items. This trend was interrupted in 2018 by a substantial negative return of -20.54%, reflecting severe operational or financial difficulties. The metric showed some recovery in 2019, improving to 2.45%, though remaining below pre-2018 levels.

Overall Summary

The data reveals a period of growth in profitability and equity up to 2017, followed by a sharp downturn in 2018 characterized by significant losses and declining equity. The partial recovery seen in 2019 indicates a stabilization phase but with performance metrics still below their peak levels. Both reported and adjusted figures exhibit the same cyclical pattern, suggesting that the company faced substantial operational or external challenges particularly in 2018 impacting net income, equity, and returns.

Net Income (Loss) Attributable to Kraft Heinz

The net income exhibited considerable volatility over the analyzed period. Starting at US$634 million in 2015, net income surged sharply to US$3,632 million in 2016 and further increased to a peak of US$10,999 million in 2017. However, the company experienced a significant reversal in 2018 with a substantial net loss of US$10,192 million, followed by a recovery to a positive net income of US$1,935 million in 2019. This indicates a period of strong profitability followed by a severe downturn and partial recovery.

Total Assets

Total assets showed a gradual declining trend from US$122,973 million in 2015 to US$101,450 million in 2019. The decrease was relatively steady with minor fluctuations, indicating a reduction in the asset base, potentially due to divestitures, depreciation, or asset impairments over the period.

Reported Return on Assets (ROA)

The reported ROA followed a pattern consistent with the net income results. The measure improved from 0.52% in 2015 to 9.15% in 2017, reflecting enhanced asset profitability. Subsequently, it dropped sharply to -9.85% in 2018, aligning with the net loss, before partially recovering to 1.91% in 2019. This pattern underscores the impact of income fluctuations on asset efficiency.

Adjusted Net Income (Loss)

The adjusted net income, which likely accounts for one-time or non-recurring items, mirrored the volatility of net income but with generally lower levels. Starting at US$389 million in 2015, it rose to US$2,539 million in 2016 and reached US$5,053 million in 2017. A significant adjusted loss of US$13,154 million was recorded in 2018, larger than the reported loss, followed by a recovery to US$1,560 million in 2019. This indicates that adjustments intensified the negative results in 2018.

Adjusted Total Assets

Adjusted total assets also showed a declining trend similar to total assets, decreasing from US$123,526 million in 2015 to US$101,386 million in 2019. This consistent reduction suggests a contraction in the asset base when considering adjustments.

Adjusted Return on Assets (ROA)

The adjusted ROA exhibited lower peaks and deeper troughs than the reported ROA. It started at 0.31% in 2015, rose to 4.19% in 2017, then declined sharply to -12.65% in 2018, reflecting the significant adjusted loss. In 2019, it improved to 1.54% but remained below the peak levels seen in 2017. The adjusted ROA trends suggest that excluding certain items reveals more pronounced operational challenges, especially in 2018.