Common-Size Income Statement
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The analysis of the financial performance over the five-year period reveals several notable trends and patterns across key profitability and expense categories.
- Gross Profit
- The gross profit margin displayed relative stability from 2018 to 2021, fluctuating slightly between approximately 59.39% and 60.82%. However, a marked decline occurred in 2022, with gross profit margin dropping to 57.04%, indicating increased cost pressures or pricing challenges impacting the core profitability.
- Cost of Sales
- The cost of sales as a percentage of net sales initially decreased slightly from -40.61% in 2018 to -39.18% in 2020, suggesting improved cost efficiency or favorable input costs. This trend reversed beginning in 2021, rising progressively to -42.96% by 2022, which corresponds with the observed contraction in gross profit margin.
- Selling, General and Administrative Expenses (SG&A)
- SG&A expenses as a percentage of net sales increased steadily from -34.67% in 2018 to a peak of -36.78% in 2021 before marginally retreating to -36.54% in 2022. This relative consistency in elevated SG&A levels indicates sustained operational expenditures despite fluctuating sales conditions.
- Special Items and Non-Recurring Components
- Several non-recurring or special items influenced operating results during the period. Notably, impairment charges on goodwill and intangible assets were introduced in 2021 (-3.28%) and deepened in 2022 (-4.01%), substantially weighing on operating profit margins. Concurrently, gains from marketable securities and other assets increased progressively from negligible levels to 0.12% of net sales by 2022, partially offsetting negative effects.
- Operating Profit
- Operating profit margins deteriorated in recent years after relatively stable performance between 2018 and 2020 (around 22-24%). This ratio dropped to 19.13% in 2021 and further to 16.10% in 2022, impacted significantly by impairments and elevated costs.
- Net Income and Income Taxes
- Net income attributable to the company peaked in 2020 at 16.36% of net sales but declined substantially thereafter, reaching 9.93% in 2022. This downward trend is mirrored by income before taxes, which fell from a high of 22.29% in 2018 to 14.80% in 2022. The provision for income taxes decreased both in absolute and relative terms, from -5.83% to -3.86%, suggesting a lower effective tax burden.
- Interest and Financing Costs
- Interest expense decreased over the period from -1.24% in 2018 to a low of -0.67% in 2021 but increased again to -0.93% in 2022. Interest income declined progressively, resulting in a net interest expense ratio that improved slightly but remained near -0.85% in the latest year.
- Other Income and Expenses
- Other income (expense), net showed improvement after a significant negative ratio in earlier years (-0.95% to -1.25%), narrowing to -0.37% to -0.38% in the last two years. The fluctuations in various minor items such as global productivity initiatives, acquisition costs, and indirect tax refunds indicate episodic impacts on profitability that require monitoring but do not overshadow the primary expense and income trends.
Overall, the data shows that the company faced increasing cost pressures and non-recurring impairment charges in recent years, which compressed operating and net profit margins. Operational efficiency gains evident in the early part of the period were eroded by rising costs and special charges, culminating in a contraction of profitability in 2021 and 2022. The declining trend in net income margins, despite reductions in income tax provision and manageable interest expenses, highlights the challenges to sustaining profitability in the evolving business environment during these years.