Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Statement of Comprehensive Income
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- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Geographic Areas
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2005
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- Analysis of Debt
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Return on Invested Capital (ROIC)
Kellanova, ROIC calculation, comparison to benchmarks
| Dec 30, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 28, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).
1 NOPAT. See details »
2 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals distinct trends in net operating profit after taxes (NOPAT), invested capital, and return on invested capital (ROIC) over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows an initial notable increase from 1016 million USD in 2019 to a peak of 1799 million USD in 2021. This growth suggests a period of improving operational profitability. However, this upward trajectory reverses sharply in 2022, with NOPAT declining to 1089 million USD, and continuing to decrease slightly in 2023 to 1013 million USD, returning near to the initial 2019 level.
- Invested Capital
- Invested capital remains relatively stable between 2019 and 2022, fluctuating modestly from 13101 million USD to 13188 million USD, indicating a steady level of capital investment during these years. In 2023, invested capital decreases significantly to 11675 million USD, representing a notable reduction in the asset base or capital commitment.
- Return on Invested Capital (ROIC)
- ROIC follows a pattern consistent with the trends in NOPAT. It rises from 7.75% in 2019 to a peak of 13.24% in 2021, reflecting enhanced efficiency in generating returns from invested capital. Subsequently, ROIC declines to 8.26% in 2022 and slightly improves to 8.68% in 2023. Despite the improvement in 2023, it remains significantly below the 2021 peak, indicating reduced profitability relative to invested capital compared to the earlier peak period.
Overall, the data illustrates a phase of growing profitability and return efficiency up to 2021, followed by a substantial downturn in operating profit and returns, along with a considerable reduction in invested capital in the latest year. The trends suggest potential challenges in maintaining previous profit levels and capital productivity in recent years.
Decomposition of ROIC
Kellanova, decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 30, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 28, 2019 | = | × | × |
Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin exhibited an upward trend from 11.43% in 2019, reaching a peak of 15.5% in 2021. However, this was followed by a significant decline to 9.33% in 2022. A moderate recovery occurred in 2023, with the margin rising to 10.51%, though it remained below the levels observed in 2020 and 2021.
- Turnover of Capital (TO)
- The turnover of capital remained stable at 1.04 for three consecutive years from 2019 to 2021, suggesting consistent efficiency in using capital during that period. In 2022, the ratio increased to 1.16, indicating improved utilization of capital, but slightly declined in 2023 to 1.12, maintaining a level above the initial years.
- Effective Cash Tax Rate (1 – CTR)
- There was an upward movement in the effective cash tax rate from 65.45% in 2019 to a high of 83.14% in 2020, followed by a marginal decrease in 2021 to 81.85%. The tax rate then declined more noticeably to 76.22% in 2022 and further to 73.51% in 2023, showing a trend towards lower effective taxation in recent years.
- Return on Invested Capital (ROIC)
- Return on invested capital increased steadily from 7.75% in 2019 to 13.24% in 2021, reflecting improved profitability relative to invested capital. Nonetheless, the ROIC sharply dropped to 8.26% in 2022 and showed a slight recovery to 8.68% in 2023, remaining considerably below the peak levels of 2020 and 2021.
Operating Profit Margin (OPM)
Kellanova, OPM calculation, comparison to benchmarks
| Dec 30, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 28, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial performance over the five-year period demonstrates notable fluctuations in profitability and sales metrics.
- Net Operating Profit Before Taxes (NOPBT)
- There is an increase in NOPBT from US$1,552 million in 2019 to a peak of US$2,198 million in 2021. This upward trend reverses sharply in subsequent years, falling to US$1,429 million in 2022 and further to US$1,379 million in 2023. This represents a significant decline in profitability after 2021, with the most recent values being lower than those in 2020.
- Net Sales
- Net sales exhibit modest growth from US$13,578 million in 2019 to US$15,315 million in 2022. However, in 2023, net sales decrease substantially to US$13,122 million, declining below the 2020 level. This decrease after steady growth suggests possible market challenges or reduced demand during the latest period.
- Operating Profit Margin (OPM)
- The operating profit margin improves consistently from 11.43% in 2019 to a high of 15.5% in 2021, reflecting enhanced operational efficiency or cost management. However, this margin deteriorates sharply to 9.33% in 2022 before a slight recovery to 10.51% in 2023. Despite the partial rebound, the margin remains well below the peak observed in 2021.
Overall, the data highlights a period of growth and improved profitability up to 2021, followed by a decline in both sales and profitability metrics in the subsequent two years. The decrease in both net sales and operating profit margin after 2021 points to possible operational challenges or market conditions adversely affecting financial performance in the most recent years.
Turnover of Capital (TO)
Kellanova, TO calculation, comparison to benchmarks
| Dec 30, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 28, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).
1 Invested capital. See details »
2 2023 Calculation
TO = Net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Net Sales
- Over the five-year period, net sales exhibited an overall upward trend from 2019 to 2022, increasing from 13,578 million USD in 2019 to a peak of 15,315 million USD in 2022. However, in 2023, net sales declined significantly to 13,122 million USD, marking a notable decrease compared to the previous year and almost returning to the 2019 level.
- Invested Capital
- Invested capital demonstrated a relatively stable pattern from 2019 through 2022, with slight fluctuations around 13,100 to 13,587 million USD. In 2023, there was a marked reduction in invested capital to 11,675 million USD, representing the lowest value in the observed period and suggesting a contraction in capital deployment.
- Turnover of Capital
- The turnover of capital ratio remained steady at 1.04 from 2019 through 2021, indicating consistent efficiency in utilizing invested capital to generate sales. This ratio improved to 1.16 in 2022, aligning with the peak in net sales and reflecting better capital utilization. In 2023, the turnover ratio decreased slightly to 1.12, indicating a modest reduction in capital efficiency but remaining above the initial years' levels.
Effective Cash Tax Rate (CTR)
Kellanova, CTR calculation, comparison to benchmarks
| Dec 30, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 28, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited an overall upward trend from 2019 through 2021, increasing from 1,552 million US dollars in 2019 to a peak of 2,198 million US dollars in 2021. However, this was followed by a marked decline over the next two years, dropping to 1,429 million US dollars in 2022 and further down to 1,379 million US dollars in 2023. This indicates a period of growth followed by contraction in operating profitability.
- Cash Operating Taxes
- Cash operating taxes saw a decline from 536 million US dollars in 2019 to 317 million US dollars in 2020, representing a significant decrease. Afterward, taxes increased moderately to 399 million US dollars in 2021 but declined again in 2022 to 340 million US dollars. A slight increase was noted in 2023, with taxes rising to 365 million US dollars. This pattern reflects some fluctuation in tax payments, with values not directly mirroring the trend in operating profit.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate declined sharply from 34.55% in 2019 to 16.86% in 2020, indicating a substantial reduction in the proportion of taxes paid relative to net operating profit. This rate remained relatively stable in 2021 at 18.15% but increased steadily in the following years to 23.78% in 2022 and further to 26.49% in 2023. These changes suggest evolving tax dynamics and possibly shifting tax strategies or regulatory impacts over the period.
- Overall Insights
- The data reveals a phase of expanding operating profit until 2021, succeeded by two years of decline. Cash operating taxes do not follow a directly proportional path to profits, indicating other influencing factors such as tax planning or rate changes. The effective cash tax rate’s significant drop in 2020 followed by gradual increases points to possible external or internal adjustments impacting tax efficiency. Together, these trends suggest an environment of initial growth with subsequent challenges impacting profitability and tax outcomes.