Analysis of Property, Plant and Equipment
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- Income Statement
- Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Aggregate Accruals
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Property, Plant and Equipment Disclosure
Hershey Co., balance sheet: property, plant and equipment
US$ in thousands
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).
- Land
- The value of land demonstrates a consistent upward trend over the five-year period, increasing from 102,074 thousand US dollars at the end of 2018 to 155,963 thousand US dollars by the end of 2022. This reflects a steady appreciation or acquisition of land assets.
- Buildings
- The investment in buildings also shows continual growth, rising from 1,211,011 thousand US dollars in 2018 to 1,545,053 thousand US dollars in 2022. The incremental increase each year suggests ongoing capital expenditures or improvements linked to building assets.
- Machinery and Equipment
- Machinery and equipment values have increased overall from 2,988,027 thousand US dollars in 2018 to 3,592,251 thousand US dollars in 2022. The growth pattern is steady, with a notable acceleration between 2020 and 2022, indicating possible additional investments or upgrades in operational capacity.
- Construction in Progress
- The construction in progress category shows variability. It decreased from 280,559 thousand US dollars in 2018 to 209,788 thousand US dollars in 2019, followed by subsequent increases up to 416,220 thousand US dollars in 2022. This fluctuation may indicate timing differences in project initiation and completion, with a significant increase in ongoing capital projects in the latest year.
- Property, Plant and Equipment, Gross
- The gross value of property, plant, and equipment steadily increased from 4,581,671 thousand US dollars in 2018 to 5,709,487 thousand US dollars in 2022. This continuous growth supports the observation of sustained capital investment across asset categories.
- Accumulated Depreciation
- Accumulated depreciation increased steadily in absolute terms, moving from -2,451,377 thousand US dollars in 2018 to -2,939,785 thousand US dollars in 2022. This trend reflects the ongoing use and aging of fixed assets and consistent depreciation expense recognition.
- Property, Plant and Equipment, Net
- Net property, plant, and equipment values rose from 2,130,294 thousand US dollars in 2018 to 2,769,702 thousand US dollars in 2022. The net increase indicates that capital additions have outpaced depreciation expenses, suggesting ongoing expansion or asset renewal strategies.
Asset Age Ratios (Summary)
Hershey Co., asset age ratios
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).
- Average Age Ratio
- The average age ratio exhibits a gradual decrease over the five-year period, starting at 54.72% in 2018 and declining to 52.94% by the end of 2022. This reflects a slight reduction in the relative age of the property, plant, and equipment, suggesting ongoing additions or replacements within the asset base.
- Estimated Total Useful Life
- The estimated total useful life of the assets generally increased from 19 years in 2018 to 23 years by the end of 2021, before a minor adjustment downward to 22 years in 2022. This upward trend may indicate improvements in asset longevity, changes in asset mix, or updated management estimates reflecting newer or more durable assets.
- Estimated Age (Time Elapsed Since Purchase)
- The estimated age of assets increased from 11 years in 2018 to 12 years by 2019 and remained steady at 12 years through to 2022. This stability suggests that the asset base's average acquisition date is being maintained, potentially balancing retirements with new acquisitions at a similar rate.
- Estimated Remaining Life
- The estimated remaining life of the assets experienced a slight increase from 9 years in 2018 and 2019 to 11 years in 2021, followed by a slight decrease to 10 years in 2022. This fluctuation aligns inversely with the total useful life estimates and may reflect ongoing reassessments of asset condition or changes in usage expectations.
Average Age
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).
2022 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, gross – Land)
= 100 × ÷ ( – ) =
- Accumulated Depreciation
- The accumulated depreciation exhibits a steady increase over the analyzed period, rising from approximately 2.45 billion USD at the end of 2018 to nearly 2.94 billion USD by the end of 2022. This upward trend suggests continuous utilization and aging of property, plant, and equipment assets, reflecting ongoing wear and amortization in line with asset usage or depreciation policies.
- Property, Plant, and Equipment, Gross
- Gross property, plant, and equipment also shows consistent growth, moving from around 4.58 billion USD in 2018 to about 5.71 billion USD in 2022. This indicates sustained capital investment and expansion in fixed assets over the five-year period, signaling potential capacity increases or modernization efforts.
- Land
- Land values have increased steadily, from roughly 102 million USD in 2018 to nearly 156 million USD in 2022. The significant jump between 2019 and 2020 suggests acquisitions or revaluations during that timeframe, followed by continued moderate increases up to the last reported date.
- Average Age Ratio
- The average age ratio, indicative of the relative maturity of the asset base, has shown a gradual decline from 54.72% in 2018 to 52.94% in 2022. This decrease suggests that the portfolio of assets is, on average, becoming slightly younger, which may reflect recent additions outpacing the rate of depreciation and replacement of older assets.
Estimated Total Useful Life
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).
2022 Calculations
1 Estimated total useful life = (Property, plant and equipment, gross – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property, Plant, and Equipment, Gross
- The gross value of property, plant, and equipment has demonstrated a steady upward trend over the five-year period. Starting at approximately $4.58 billion at the end of 2018, it increased consistently each year, reaching nearly $5.71 billion by the end of 2022. This represents an overall growth rate of roughly 24.5%, indicating ongoing investment or acquisition in fixed assets.
- Land
- The land asset value also showed a positive trend, increasing from about $102 million in 2018 to approximately $156 million by 2022. The most notable jump occurred between 2019 and 2021, where the value rose significantly. The growth in land values suggests either purchases of additional land or revaluation over the period.
- Depreciation Expense
- Depreciation expense exhibited some fluctuations but an overall increase, starting at roughly $231 million in 2018 and rising to about $254 million in 2022. There was a dip in depreciation expense in 2019, followed by stabilization in 2020, and then a gradual increase through 2022. This pattern might reflect changes in asset composition, depreciation policies, or asset retirements.
- Estimated Total Useful Life
- The estimated total useful life of assets increased from 19 years in 2018 to 23 years in 2021, before slightly decreasing to 22 years in 2022. This suggests a reassessment of the useful life assumptions, potentially reflecting improved maintenance, technology, or asset quality over time.
- Summary
- Overall, the data indicates a consistent expansion in the company's property, plant, and equipment base, supported by increased land holdings and a rising gross asset value. The depreciation expense trends align with the expanding asset base but fluctuate in a manner suggesting occasional adjustments in depreciation methodology or asset portfolio changes. The increase in estimated useful life implies an optimization or reevaluation of asset longevity assumptions, which could impact future depreciation scheduling and asset management strategies.
Estimated Age, Time Elapsed since Purchase
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).
2022 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
- Accumulated Depreciation
- Accumulated depreciation shows a consistent upward trend over the five-year period from December 31, 2018, to December 31, 2022. The balance increased from 2,451,377 thousand US dollars to 2,939,785 thousand US dollars. This steady growth suggests ongoing depreciation of property, plant, and equipment assets, reflecting the aging and utilization of these assets over time.
- Depreciation Expense
- Depreciation expense exhibits some fluctuations but remains generally stable with a slight increase over the analyzed period. Starting at 231,012 thousand US dollars in 2018, it decreased to 218,096 thousand US dollars in 2019 and remained close to that level in 2020. From 2021 onwards, the expense rose again, reaching 253,582 thousand US dollars in 2022, which is the highest in the period considered. This increase in depreciation expense could indicate recent asset acquisitions or changes in the depreciation methodology or asset lives.
- Time Elapsed Since Purchase
- The time elapsed since purchase remained nearly constant at around 12 years from 2019 to 2022, reflecting a stable asset age profile in the fleet of property, plant, and equipment. The initial year 2018 shows 11 years, indicating that as time progresses, the average age of assets has slightly increased. This stability in asset age, combined with rising accumulated depreciation, suggests no significant asset turnover or replacement activities that would drastically alter the average asset age.
Estimated Remaining Life
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).
2022 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property, Plant, and Equipment, Net
- The net value of property, plant, and equipment shows an upward trend from 2,130,294 thousand USD in 2018 to 2,769,702 thousand USD in 2022. This represents a consistent increase over the five-year period, indicating ongoing investments or asset additions exceeding depreciation and disposals. The increase is particularly notable between 2020 and 2021, where the value rose substantially by approximately 300,000 thousand USD.
- Land
- The value of land also demonstrates a steady increase over the same period, rising from 102,074 thousand USD in 2018 to 155,963 thousand USD in 2022. This suggests acquisitions or revaluations related to land assets. The most significant increase occurred between 2019 and 2021, with growth from approximately 105,627 thousand USD to 154,494 thousand USD, stabilizing thereafter.
- Depreciation Expense
- Depreciation expense exhibits minor fluctuations but generally trends upward from 231,012 thousand USD in 2018 to 253,582 thousand USD in 2022. After a slight decline in 2019, the depreciation expense gradually increased, reflecting the aging of fixed assets or increased capital expenditures. The increase in depreciation aligns with the growing net property, plant, and equipment base.
- Estimated Remaining Life
- The estimated remaining life of the property, plant, and equipment fluctuates slightly between 9 and 11 years over the period. It remained stable at 9 years through 2019, increased to 10 and 11 years in 2020 and 2021 respectively, before settling back at 10 years in 2022. This suggests asset renewals or reassessments impacting the useful life estimates.