Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Kellanova, solvency ratios
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).
The solvency profile of the entity exhibits a period of consistent deleveraging from 2019 through 2022, followed by a moderate reversal in 2023. While the balance sheet structure improved for several years, recent coverage ratios indicate a decline in the capacity to service debt obligations.
- Debt Leverage Ratios
- The Debt to Equity ratio decreased significantly from 2.88 in 2019 to a low of 1.67 in 2022, before increasing to 1.85 in 2023. A parallel trend is observed in the Debt to Capital and Debt to Assets ratios, which both reached their lowest points in 2022 at 0.62 and 0.35, respectively, before rising slightly in the final period. The inclusion of operating lease liabilities consistently elevates these ratios, though it does not alter the overall trend of deleveraging followed by a slight uptick.
- Financial Leverage
- Financial leverage shows a downward trajectory from 6.39 in 2019 to 4.69 in 2022, indicating a reduction in the use of debt to finance assets. However, this metric rose to 4.92 in 2023, mirroring the increase seen in other leverage ratios.
- Debt Service Coverage
- A divergent trend is evident in coverage metrics. Interest coverage peaked at 9.83 in 2021 but declined sharply to 4.45 by 2023. Similarly, the Fixed Charge Coverage ratio reached a high of 6.44 in 2021 before dropping to 3.38 in 2023. This downward movement in coverage ratios, occurring despite the overall reduction in leverage since 2019, suggests increased financial pressure or reduced operational earnings relative to fixed obligations.
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Debt to Equity
Kellanova, debt to equity 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) | ||||||
| Current maturities of long-term debt | 663) | 780) | 712) | 627) | 620) | |
| Notes payable | 121) | 467) | 137) | 102) | 107) | |
| Long-term debt, excluding current maturities | 5,089) | 5,317) | 6,262) | 6,746) | 7,195) | |
| Total debt | 5,873) | 6,564) | 7,111) | 7,475) | 7,922) | |
| Total Kellanova equity | 3,175) | 3,941) | 3,720) | 3,112) | 2,747) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 1.85 | 1.67 | 1.91 | 2.40 | 2.88 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Coca-Cola Co. | 1.62 | 1.62 | 1.86 | — | — | |
| Mondelēz International Inc. | 0.69 | 0.85 | 0.69 | — | — | |
| PepsiCo Inc. | 2.38 | 2.28 | 2.51 | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Debt to Equity, Sector | ||||||
| Food, Beverage & Tobacco | 2.49 | 2.44 | 2.28 | — | — | |
| Debt to Equity, Industry | ||||||
| Consumer Staples | 1.16 | 1.08 | 1.07 | — | — | |
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 2023 Calculation
Debt to equity = Total debt ÷ Total Kellanova equity
= 5,873 ÷ 3,175 = 1.85
2 Click competitor name to see calculations.
The financial trajectory from 2019 to 2023 indicates a concerted effort to reduce leverage and strengthen the balance sheet, although the most recent period shows a slight deviation from the previous improving trend.
- Total Debt Reduction
- A consistent downward trajectory in total debt is observed, with obligations decreasing from 7,922 million US$ in 2019 to 5,873 million US$ by the end of 2023. This represents a steady year-over-year reduction in total liabilities.
- Equity Performance
- Total Kellanova equity experienced sustained growth between 2019 and 2022, rising from 2,747 million US$ to a peak of 3,941 million US$. However, a contraction occurred in 2023, with equity decreasing to 3,175 million US$.
- Debt to Equity Ratio Analysis
- The debt to equity ratio improved significantly from 2.88 in 2019 to a low of 1.67 in 2022, reflecting a reduction in financial risk and a more balanced capital structure. In 2023, the ratio increased to 1.85, a shift driven primarily by the decrease in total equity despite the continued reduction in total debt.
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Debt to Equity (including Operating Lease Liability)
Kellanova, debt to equity (including operating lease liability) 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) | ||||||
| Current maturities of long-term debt | 663) | 780) | 712) | 627) | 620) | |
| Notes payable | 121) | 467) | 137) | 102) | 107) | |
| Long-term debt, excluding current maturities | 5,089) | 5,317) | 6,262) | 6,746) | 7,195) | |
| Total debt | 5,873) | 6,564) | 7,111) | 7,475) | 7,922) | |
| Current operating lease liabilities | 121) | 121) | 116) | 117) | 114) | |
| Non-current operating lease liabilities | 532) | 486) | 502) | 520) | 433) | |
| Total debt (including operating lease liability) | 6,526) | 7,171) | 7,729) | 8,112) | 8,469) | |
| Total Kellanova equity | 3,175) | 3,941) | 3,720) | 3,112) | 2,747) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 2.06 | 1.82 | 2.08 | 2.61 | 3.08 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | 1.67 | 1.68 | 1.92 | — | — | |
| Mondelēz International Inc. | 0.71 | 0.88 | 0.71 | — | — | |
| PepsiCo Inc. | 2.54 | 2.42 | 2.64 | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Food, Beverage & Tobacco | 2.59 | 2.53 | 2.36 | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 1.28 | 1.20 | 1.19 | — | — | |
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 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Kellanova equity
= 6,526 ÷ 3,175 = 2.06
2 Click competitor name to see calculations.
An analysis of the solvency metrics between 2019 and 2023 reveals a consistent strategic reduction in total leverage, characterized by a steady decline in total liabilities and a fluctuating equity base.
- Total Debt Trend
- A continuous downward trajectory in total debt, including operating lease liabilities, is observed over the five-year period. Debt levels decreased from US$ 8,469 million in 2019 to US$ 6,526 million in 2023, representing a cumulative reduction of approximately 23%. This persistent decline suggests a consistent prioritization of debt repayment or a reduction in borrowing requirements.
- Equity Position
- Total equity exhibited a steady growth phase from 2019 through 2022, increasing from US$ 2,747 million to a peak of US$ 3,941 million. However, this trend reversed in 2023, with equity declining to US$ 3,175 million. This contraction in the final year suggests a significant shift in capital distribution or a reduction in retained earnings.
- Debt to Equity Ratio Dynamics
- The debt to equity ratio improved significantly from 3.08 in 2019 to a minimum of 1.82 in 2022, driven by the simultaneous reduction of debt and the expansion of equity. In 2023, the ratio increased to 2.06; this uptick was primarily driven by the decrease in total equity rather than an increase in debt, as total liabilities continued to fall. Despite the 2023 increase, the overall solvency profile remains stronger than the 2019 baseline.
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Debt to Capital
Kellanova, debt to capital 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) | ||||||
| Current maturities of long-term debt | 663) | 780) | 712) | 627) | 620) | |
| Notes payable | 121) | 467) | 137) | 102) | 107) | |
| Long-term debt, excluding current maturities | 5,089) | 5,317) | 6,262) | 6,746) | 7,195) | |
| Total debt | 5,873) | 6,564) | 7,111) | 7,475) | 7,922) | |
| Total Kellanova equity | 3,175) | 3,941) | 3,720) | 3,112) | 2,747) | |
| Total capital | 9,048) | 10,505) | 10,831) | 10,587) | 10,669) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.65 | 0.62 | 0.66 | 0.71 | 0.74 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Coca-Cola Co. | 0.62 | 0.62 | 0.65 | — | — | |
| Mondelēz International Inc. | 0.41 | 0.46 | 0.41 | — | — | |
| PepsiCo Inc. | 0.70 | 0.69 | 0.72 | — | — | |
| Philip Morris International Inc. | 1.31 | 1.26 | 1.57 | — | — | |
| Debt to Capital, Sector | ||||||
| Food, Beverage & Tobacco | 0.71 | 0.71 | 0.70 | — | — | |
| Debt to Capital, Industry | ||||||
| Consumer Staples | 0.54 | 0.52 | 0.52 | — | — | |
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 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 5,873 ÷ 9,048 = 0.65
2 Click competitor name to see calculations.
The solvency profile from 2019 to 2023 is characterized by a consistent reduction in absolute debt levels and a general improvement in the capital structure, despite a contraction in the total capital base in the final year.
- Total Debt Trend
- A continuous downward trajectory is observed in total debt, which decreased from 7,922 million US dollars in 2019 to 5,873 million US dollars by December 30, 2023. This steady decline indicates a sustained effort to reduce leverage and lower the organization's overall debt burden over the five-year period.
- Total Capital Fluctuations
- Total capital remained relatively stable between 2019 and 2022, maintaining a range between 10,505 million and 10,831 million US dollars. However, a significant contraction occurred in 2023, where total capital dropped to 9,048 million US dollars, representing a notable decrease in the total funding base.
- Debt to Capital Ratio Analysis
- The debt to capital ratio demonstrated a positive trend of deleveraging from 2019 through 2022, falling from 0.74 to 0.62. This suggests that debt was being reduced faster than the total capital base during this interval. In 2023, the ratio experienced a slight increase to 0.65; this uptick is attributed to the substantial reduction in total capital, which offset the continued decrease in total debt.
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Debt to Capital (including Operating Lease Liability)
Kellanova, debt to capital (including operating lease liability) 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) | ||||||
| Current maturities of long-term debt | 663) | 780) | 712) | 627) | 620) | |
| Notes payable | 121) | 467) | 137) | 102) | 107) | |
| Long-term debt, excluding current maturities | 5,089) | 5,317) | 6,262) | 6,746) | 7,195) | |
| Total debt | 5,873) | 6,564) | 7,111) | 7,475) | 7,922) | |
| Current operating lease liabilities | 121) | 121) | 116) | 117) | 114) | |
| Non-current operating lease liabilities | 532) | 486) | 502) | 520) | 433) | |
| Total debt (including operating lease liability) | 6,526) | 7,171) | 7,729) | 8,112) | 8,469) | |
| Total Kellanova equity | 3,175) | 3,941) | 3,720) | 3,112) | 2,747) | |
| Total capital (including operating lease liability) | 9,701) | 11,112) | 11,449) | 11,224) | 11,216) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.67 | 0.65 | 0.68 | 0.72 | 0.76 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | 0.63 | 0.63 | 0.66 | — | — | |
| Mondelēz International Inc. | 0.42 | 0.47 | 0.42 | — | — | |
| PepsiCo Inc. | 0.72 | 0.71 | 0.73 | — | — | |
| Philip Morris International Inc. | 1.30 | 1.26 | 1.55 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Food, Beverage & Tobacco | 0.72 | 0.72 | 0.70 | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 0.56 | 0.54 | 0.54 | — | — | |
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 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 6,526 ÷ 9,701 = 0.67
2 Click competitor name to see calculations.
The solvency profile exhibits a consistent reduction in absolute debt obligations over the five-year period, although the relative debt-to-capital composition experienced a slight reversal in the most recent fiscal year.
- Total Debt Trends
- A sustained downward trajectory is observed in total debt, including operating lease liabilities, which decreased from 8,469 million US dollars in 2019 to 6,526 million US dollars in 2023. This consistent year-over-year decline indicates a steady reduction in total borrowed funds.
- Total Capital Movements
- Total capital remained relatively stable between 2019 and 2022, fluctuating within a narrow range between 11,112 million and 11,449 million US dollars. However, a notable contraction occurred in 2023, with total capital falling to 9,701 million US dollars.
- Debt to Capital Ratio Analysis
- The debt to capital ratio improved steadily from 0.76 in 2019 to a minimum of 0.65 in 2022, reflecting a reduction in the proportion of debt relative to the total capital structure. In 2023, the ratio increased slightly to 0.67; this movement indicates that the reduction in total capital exceeded the reduction in total debt during that period.
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Debt to Assets
Kellanova, debt to assets 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) | ||||||
| Current maturities of long-term debt | 663) | 780) | 712) | 627) | 620) | |
| Notes payable | 121) | 467) | 137) | 102) | 107) | |
| Long-term debt, excluding current maturities | 5,089) | 5,317) | 6,262) | 6,746) | 7,195) | |
| Total debt | 5,873) | 6,564) | 7,111) | 7,475) | 7,922) | |
| Total assets | 15,621) | 18,496) | 18,178) | 17,996) | 17,564) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.38 | 0.35 | 0.39 | 0.42 | 0.45 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Coca-Cola Co. | 0.43 | 0.42 | 0.45 | — | — | |
| Mondelēz International Inc. | 0.27 | 0.32 | 0.29 | — | — | |
| PepsiCo Inc. | 0.44 | 0.42 | 0.44 | — | — | |
| Philip Morris International Inc. | 0.73 | 0.70 | 0.67 | — | — | |
| Debt to Assets, Sector | ||||||
| Food, Beverage & Tobacco | 0.46 | 0.45 | 0.44 | — | — | |
| Debt to Assets, Industry | ||||||
| Consumer Staples | 0.31 | 0.30 | 0.30 | — | — | |
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 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 5,873 ÷ 15,621 = 0.38
2 Click competitor name to see calculations.
A consistent reduction in total debt is observed over the five-year period from 2019 to 2023, contributing to an overall improvement in the solvency profile, despite a significant contraction in total assets during the final year.
- Total Debt Trajectory
- Total debt exhibited a continuous downward trend, decreasing from 7,922 million US$ in 2019 to 5,873 million US$ in 2023. This sustained decline indicates a systematic reduction in long-term liabilities over the analyzed period.
- Asset Base Dynamics
- Total assets experienced steady growth from 17,564 million US$ in 2019 to a peak of 18,496 million US$ in 2022. However, a notable contraction occurred in 2023, where assets decreased to 15,621 million US$, representing a significant shift in the balance sheet composition.
- Debt to Assets Ratio Analysis
- The debt to assets ratio improved steadily from 0.45 in 2019 to 0.35 in 2022, reflecting a decrease in the proportion of assets financed through debt. In 2023, the ratio rose to 0.38; this increase is not due to new borrowing, as total debt continued to fall, but is instead the result of the asset base decreasing at a faster rate than the debt was repaid.
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Debt to Assets (including Operating Lease Liability)
Kellanova, debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 30, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 28, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of long-term debt | 663) | 780) | 712) | 627) | 620) | |
| Notes payable | 121) | 467) | 137) | 102) | 107) | |
| Long-term debt, excluding current maturities | 5,089) | 5,317) | 6,262) | 6,746) | 7,195) | |
| Total debt | 5,873) | 6,564) | 7,111) | 7,475) | 7,922) | |
| Current operating lease liabilities | 121) | 121) | 116) | 117) | 114) | |
| Non-current operating lease liabilities | 532) | 486) | 502) | 520) | 433) | |
| Total debt (including operating lease liability) | 6,526) | 7,171) | 7,729) | 8,112) | 8,469) | |
| Total assets | 15,621) | 18,496) | 18,178) | 17,996) | 17,564) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.42 | 0.39 | 0.43 | 0.45 | 0.48 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | 0.44 | 0.44 | 0.47 | — | — | |
| Mondelēz International Inc. | 0.28 | 0.33 | 0.30 | — | — | |
| PepsiCo Inc. | 0.47 | 0.45 | 0.46 | — | — | |
| Philip Morris International Inc. | 0.74 | 0.71 | 0.69 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Food, Beverage & Tobacco | 0.48 | 0.47 | 0.46 | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 0.34 | 0.33 | 0.33 | — | — | |
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 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 6,526 ÷ 15,621 = 0.42
2 Click competitor name to see calculations.
The solvency profile exhibits a consistent reduction in absolute debt levels combined with a fluctuating asset base, leading to a general improvement in leverage until 2022, followed by a slight reversal in 2023.
- Total Debt Trend
- A continuous downward trajectory is observed in total debt, including operating lease liabilities. The balance decreased every year from US$ 8,469 million in 2019 to US$ 6,526 million in 2023, representing a total reduction of approximately 23% over the five-year period.
- Asset Base Dynamics
- Total assets experienced modest growth between 2019 and 2022, rising from US$ 17,564 million to a peak of US$ 18,496 million. However, a substantial contraction occurred in 2023, with total assets falling to US$ 15,621 million.
- Debt to Assets Ratio Interpretation
- The debt-to-assets ratio improved steadily from 0.48 in 2019 to a low of 0.39 in 2022, driven by the simultaneous reduction of debt and the expansion of the asset base. In 2023, the ratio increased to 0.42. This uptick was not caused by an increase in borrowing, as total debt continued its decline, but was instead the mathematical result of the significant decrease in total assets.
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Financial Leverage
Kellanova, financial leverage 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) | ||||||
| Total assets | 15,621) | 18,496) | 18,178) | 17,996) | 17,564) | |
| Total Kellanova equity | 3,175) | 3,941) | 3,720) | 3,112) | 2,747) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 4.92 | 4.69 | 4.89 | 5.78 | 6.39 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Coca-Cola Co. | 3.77 | 3.85 | 4.10 | — | — | |
| Mondelēz International Inc. | 2.52 | 2.65 | 2.37 | — | — | |
| PepsiCo Inc. | 5.43 | 5.38 | 5.76 | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Financial Leverage, Sector | ||||||
| Food, Beverage & Tobacco | 5.44 | 5.37 | 5.16 | — | — | |
| Financial Leverage, Industry | ||||||
| Consumer Staples | 3.71 | 3.59 | 3.59 | — | — | |
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 2023 Calculation
Financial leverage = Total assets ÷ Total Kellanova equity
= 15,621 ÷ 3,175 = 4.92
2 Click competitor name to see calculations.
An analysis of the solvency profile between 2019 and 2023 reveals a period of consistent deleveraging followed by a notable contraction in the balance sheet scale. While both assets and equity expanded through 2022, the 2023 fiscal year was characterized by a significant reduction in the total resource base.
- Total Asset Evolution
- Total assets demonstrated moderate growth from 2019 to 2022, increasing from US$ 17,564 million to a peak of US$ 18,496 million. This trend reversed sharply in 2023, with assets falling to US$ 15,621 million, indicating a substantial reduction in the company's asset holdings.
- Equity Position and Growth
- Total equity exhibited a steady upward trajectory from 2019 to 2022, rising from US$ 2,747 million to US$ 3,941 million. In 2023, equity decreased to US$ 3,175 million; however, the level remains higher than the initial 2019 position, suggesting a net increase in shareholder equity over the five-year period despite the recent decline.
- Financial Leverage Dynamics
- The financial leverage ratio showed a persistent downward trend from 2019 to 2022, decreasing from 6.39 to 4.69. This movement signifies a reduction in the reliance on debt relative to equity to fund assets. In 2023, the ratio experienced a slight reversal, increasing to 4.92, which reflects a disproportionate contraction in equity relative to the overall decrease in total assets.
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Interest Coverage
Kellanova, interest coverage 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 income attributable to Kellanova | 951) | 960) | 1,488) | 1,251) | 960) | |
| Add: Net income attributable to noncontrolling interest | 13) | 2) | 7) | 13) | 17) | |
| Less: Income from discontinued operations, net of taxes | 176) | —) | —) | —) | —) | |
| Add: Income tax expense | 258) | 244) | 474) | 323) | 321) | |
| Add: Interest expense | 303) | 218) | 223) | 281) | 284) | |
| Earnings before interest and tax (EBIT) | 1,349) | 1,424) | 2,192) | 1,868) | 1,582) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 4.45 | 6.53 | 9.83 | 6.65 | 5.57 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Coca-Cola Co. | 9.48 | 14.25 | 8.78 | — | — | |
| Mondelēz International Inc. | 12.83 | 9.39 | 16.08 | — | — | |
| PepsiCo Inc. | 8.95 | 10.57 | 5.94 | — | — | |
| Philip Morris International Inc. | 7.95 | 16.33 | 17.80 | — | — | |
| Interest Coverage, Sector | ||||||
| Food, Beverage & Tobacco | 9.23 | 12.81 | 9.56 | — | — | |
| Interest Coverage, Industry | ||||||
| Consumer Staples | 11.37 | 15.69 | 11.46 | — | — | |
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 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= 1,349 ÷ 303 = 4.45
2 Click competitor name to see calculations.
The solvency profile of the organization over the five-year period from 2019 to 2023 reflects a significant cyclical shift in the capacity to service debt obligations. After a period of strengthening between 2019 and 2021, a notable deterioration in interest coverage occurred in the final two years of the sequence.
- Earnings Before Interest and Tax (EBIT) Trends
- Operating profitability experienced an initial upward trajectory, increasing from US$ 1,582 million in 2019 to a peak of US$ 2,192 million in 2021. However, this trend reversed sharply starting in 2022, with EBIT falling to US$ 1,424 million and further declining to US$ 1,349 million by December 30, 2023. This represents a substantial contraction in the operating income available to cover interest payments.
- Interest Expense Dynamics
- Interest expenses remained relatively stable or declined between 2019 and 2022, reaching a low of US$ 218 million in 2022. This trend shifted abruptly in 2023, with interest expenses rising to US$ 303 million, the highest level recorded in the analyzed period. This increase occurred simultaneously with the decline in operating earnings, compounding the pressure on solvency.
- Interest Coverage Ratio Analysis
- The interest coverage ratio mirrors the combined impact of fluctuating EBIT and interest costs. The ratio improved from 5.57 in 2019 to a peak of 9.83 in 2021, indicating a strong margin of safety. Subsequently, the ratio declined to 6.53 in 2022 and dropped further to 4.45 in 2023. The 2023 figure represents the lowest coverage level in the five-year period, signaling a reduced cushion for debt servicing compared to the 2019 baseline.
The overall trend indicates that while the company maintained a healthy coverage margin for several years, the combination of diminishing operating profits and rising borrowing costs has led to a contraction in financial flexibility by the end of 2023.
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Fixed Charge Coverage
Kellanova, fixed charge coverage 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 income attributable to Kellanova | 951) | 960) | 1,488) | 1,251) | 960) | |
| Add: Net income attributable to noncontrolling interest | 13) | 2) | 7) | 13) | 17) | |
| Less: Income from discontinued operations, net of taxes | 176) | —) | —) | —) | —) | |
| Add: Income tax expense | 258) | 244) | 474) | 323) | 321) | |
| Add: Interest expense | 303) | 218) | 223) | 281) | 284) | |
| Earnings before interest and tax (EBIT) | 1,349) | 1,424) | 2,192) | 1,868) | 1,582) | |
| Add: Operating lease costs | 137) | 136) | 139) | 135) | 133) | |
| Earnings before fixed charges and tax | 1,486) | 1,560) | 2,331) | 2,003) | 1,715) | |
| Interest expense | 303) | 218) | 223) | 281) | 284) | |
| Operating lease costs | 137) | 136) | 139) | 135) | 133) | |
| Fixed charges | 440) | 354) | 362) | 416) | 417) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 3.38 | 4.41 | 6.44 | 4.81 | 4.11 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Coca-Cola Co. | 7.73 | 10.14 | 7.41 | — | — | |
| Mondelēz International Inc. | 9.42 | 6.60 | 10.28 | — | — | |
| PepsiCo Inc. | 6.43 | 7.28 | 4.85 | — | — | |
| Philip Morris International Inc. | 6.92 | 12.59 | 13.43 | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Food, Beverage & Tobacco | 7.29 | 9.14 | 7.60 | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Consumer Staples | 7.41 | 9.12 | 7.50 | — | — | |
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 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 1,486 ÷ 440 = 3.38
2 Click competitor name to see calculations.
The solvency profile over the five-year period exhibits significant volatility, characterized by an initial strengthening of coverage followed by a notable decline in the most recent two fiscal years.
- Earnings Before Fixed Charges and Tax
- A growth trajectory is observed from 2019 to 2021, with earnings peaking at US$ 2,331 million. However, a sharp contraction occurred in 2022, where earnings fell to US$ 1,560 million, followed by a further slight decline to US$ 1,486 million in 2023.
- Fixed Charges
- Fixed charges remained relatively stable between 2019 and 2020, followed by a period of reduction through 2022, reaching a low of US$ 354 million. This trend reversed in 2023, as charges increased to US$ 440 million, representing the highest expenditure level in the observed period.
- Fixed Charge Coverage Ratio
- The coverage ratio peaked in 2021 at 6.44, indicating a substantial margin of safety for meeting fixed obligations. This ratio subsequently deteriorated to 4.41 in 2022 and declined further to 3.38 by the end of 2023. This erosion of the coverage margin is the direct result of the simultaneous decrease in earnings and the rise in fixed charges during the final year.
The overall trend indicates a weakening of the capacity to service fixed obligations relative to earnings, with the 2023 ratio marking the lowest point of solvency within the analyzed timeframe.
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