Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Kellanova, profitability 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 profitability profile between 2019 and 2023 is characterized by a period of expansion and efficiency gains peaking in 2020 and 2021, followed by a notable contraction in 2022 and a subsequent recovery phase in 2023.
- Margin Performance
- Gross profit margins exhibited volatility, peaking at 34.33% in 2020 before descending to a five-year low of 30.13% in 2022. A recovery to 32.64% was observed by the end of 2023. Operating margins followed a similar trajectory, reaching a high of 12.79% in 2020 and dipping to 10.68% in 2022. Net profit margins showed the most significant variance, climbing steadily to 10.49% in 2021 before dropping sharply to 6.27% in 2022, and returning to 7.25% in 2023.
- Investment Returns
- Return on Equity (ROE) demonstrated strong performance in 2020 and 2021, maintaining levels at or above 40%. A significant decline occurred in 2022, where ROE fell to 24.36%, before improving to 29.95% in 2023. Return on Assets (ROA) mirrored this pattern, peaking at 8.19% in 2021 and hitting a low of 5.19% in 2022, with a subsequent increase to 6.09% in 2023.
The synchronization of the declines across all profitability ratios in 2022 suggests a systemic impact on the cost structure or revenue streams during that fiscal year. However, the 2023 results indicate a stabilization of operational efficiency and a trend toward reclaiming historical performance levels.
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Return on Sales
Return on Investment
Gross Profit Margin
Kellanova, gross profit margin 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) | ||||||
| Gross profit | 4,283) | 4,615) | 4,560) | 4,727) | 4,381) | |
| Net sales | 13,122) | 15,315) | 14,181) | 13,770) | 13,578) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 32.64% | 30.13% | 32.16% | 34.33% | 32.27% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | 59.52% | 58.14% | 60.27% | — | — | |
| Mondelēz International Inc. | 38.22% | 35.92% | 39.19% | — | — | |
| PepsiCo Inc. | 54.21% | 53.03% | 53.35% | — | — | |
| Philip Morris International Inc. | 63.35% | 64.10% | 68.06% | — | — | |
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
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 4,283 ÷ 13,122 = 32.64%
2 Click competitor name to see calculations.
An analysis of the profitability ratios between 2019 and 2023 reveals a period of fluctuation in gross profit margins, characterized by a peak in 2020 followed by a contraction and a subsequent recovery in 2023.
- Gross Profit Margin Trends
- The gross profit margin exhibited volatility over the five-year period. After starting at 32.27% in 2019, it reached a peak of 34.33% in 2020. A downward trend followed, with the margin declining to 32.16% in 2021 and reaching a period low of 30.13% in 2022. However, a recovery was observed in 2023, where the margin increased to 32.64%.
- Revenue and Profit Correlation
- A divergence between net sales and profitability is evident in 2022. During this year, net sales reached a five-year high of US$ 15,315 million, yet the gross profit margin declined to its lowest point of 30.13%. This suggests that the growth in sales volume was offset by a disproportionate increase in the cost of goods sold.
- Efficiency and Cost Management in 2023
- The 2023 fiscal year showed a significant contraction in net sales, which fell to US$ 13,122 million, the lowest level within the analyzed timeframe. Despite this decrease in top-line revenue, the gross profit margin improved to 32.64%. This indicates a successful reduction in cost of sales or a strategic shift toward higher-margin product mixes during a period of lower overall sales volume.
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Operating Profit Margin
Kellanova, operating profit margin 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) | ||||||
| Operating profit | 1,505) | 1,635) | 1,752) | 1,761) | 1,401) | |
| Net sales | 13,122) | 15,315) | 14,181) | 13,770) | 13,578) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 11.47% | 10.68% | 12.35% | 12.79% | 10.32% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | 24.72% | 25.37% | 26.67% | — | — | |
| Mondelēz International Inc. | 15.28% | 11.22% | 16.20% | — | — | |
| PepsiCo Inc. | 13.10% | 13.33% | 14.04% | — | — | |
| Philip Morris International Inc. | 32.85% | 38.56% | 41.32% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Food, Beverage & Tobacco | 19.36% | 19.83% | 21.93% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Consumer Staples | 7.31% | 8.44% | 8.48% | — | — | |
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
Operating profit margin = 100 × Operating profit ÷ Net sales
= 100 × 1,505 ÷ 13,122 = 11.47%
2 Click competitor name to see calculations.
The financial performance from 2019 to 2023 exhibits a period of volatility in both top-line revenue and operational efficiency. While net sales experienced growth through 2022, the operating profit margin followed a non-linear trajectory, peaking in 2020 before experiencing compression and a subsequent partial recovery in 2023.
- Net Sales Trends
- Revenue demonstrated a consistent upward trend from December 28, 2019, through December 31, 2022, increasing from 13,578 million US$ to a peak of 15,315 million US$. However, this growth trend reversed sharply in 2023, with net sales declining to 13,122 million US$, representing the lowest revenue level within the analyzed five-year period.
- Operating Profit Analysis
- Operating profit peaked in 2020 at 1,761 million US$, a significant increase from the 1,401 million US$ reported in 2019. Following this peak, a continuous downward trend is observed, with profits declining to 1,752 million US$ in 2021, 1,635 million US$ in 2022, and finally 1,505 million US$ in 2023.
- Operating Profit Margin Dynamics
- The operating profit margin reflects shifting operational efficiency. The margin expanded from 10.32% in 2019 to a maximum of 12.79% in 2020. Between 2021 and 2022, the margin contracted to 10.68%, coinciding with a period where sales were increasing but operating profits were falling, suggesting an increase in operating expenses relative to revenue. In 2023, despite the significant drop in net sales, the margin improved to 11.47%, indicating a more efficient cost structure or effective expense management during the revenue contraction.
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Net Profit Margin
Kellanova, net profit margin 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) | |
| Net sales | 13,122) | 15,315) | 14,181) | 13,770) | 13,578) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 7.25% | 6.27% | 10.49% | 9.08% | 7.07% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | 23.42% | 22.19% | 25.28% | — | — | |
| Mondelēz International Inc. | 13.77% | 8.63% | 14.97% | — | — | |
| PepsiCo Inc. | 9.92% | 10.31% | 9.59% | — | — | |
| Philip Morris International Inc. | 22.21% | 28.49% | 29.00% | — | — | |
| Net Profit Margin, Sector | ||||||
| Food, Beverage & Tobacco | 15.62% | 15.68% | 17.28% | — | — | |
| Net Profit Margin, Industry | ||||||
| Consumer Staples | 5.47% | 6.11% | 6.21% | — | — | |
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
Net profit margin = 100 × Net income attributable to Kellanova ÷ Net sales
= 100 × 951 ÷ 13,122 = 7.25%
2 Click competitor name to see calculations.
The financial performance from 2019 to 2023 reflects a period of initial growth and margin expansion followed by a notable contraction and subsequent stabilization. Profitability peaked in 2021, after which the company experienced a decline in both absolute net income and overall sales efficiency.
- Net Sales Trends
- Net sales exhibited a consistent upward trajectory from 2019 through 2022, rising from US$ 13,578 million to a peak of US$ 15,315 million. However, this growth trend reversed sharply in 2023, with sales falling to US$ 13,122 million, representing a level lower than that recorded at the start of the five-year period.
- Net Income Performance
- Net income attributable to Kellanova grew steadily during the first three years, increasing from US$ 960 million in 2019 to a peak of US$ 1,488 million in 2021. A significant correction occurred in 2022, where net income returned to US$ 960 million, and it remained relatively flat in 2023 at US$ 951 million.
- Net Profit Margin Dynamics
- The net profit margin demonstrates a clear bell-shaped pattern over the analyzed period. Efficiency improved from 7.07% in 2019 to a maximum of 10.49% in 2021. A sharp contraction followed in 2022, with the margin dropping to its lowest point of 6.27%. By 2023, a partial recovery to 7.25% was observed, indicating an improvement in profit conversion despite the overall decline in net sales volume.
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Return on Equity (ROE)
Kellanova, ROE 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) | |
| Total Kellanova equity | 3,175) | 3,941) | 3,720) | 3,112) | 2,747) | |
| Profitability Ratio | ||||||
| ROE1 | 29.95% | 24.36% | 40.00% | 40.20% | 34.95% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Coca-Cola Co. | 41.30% | 39.59% | 42.48% | — | — | |
| Mondelēz International Inc. | 17.50% | 10.11% | 15.21% | — | — | |
| PepsiCo Inc. | 49.04% | 51.96% | 47.48% | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| ROE, Sector | ||||||
| Food, Beverage & Tobacco | 52.90% | 51.06% | 53.84% | — | — | |
| ROE, Industry | ||||||
| Consumer Staples | 30.71% | 32.10% | 31.40% | — | — | |
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
ROE = 100 × Net income attributable to Kellanova ÷ Total Kellanova equity
= 100 × 951 ÷ 3,175 = 29.95%
2 Click competitor name to see calculations.
The analysis of the five-year period from 2019 to 2023 reveals a volatile trajectory in return on equity (ROE). Following a period of expansion and peak performance between 2020 and 2021, a significant contraction occurred in 2022, followed by a moderate recovery in 2023.
- Net Income Trends
- Net income exhibited a strong upward trend during the first three years of the period, rising from US$ 960 million in 2019 to a peak of US$ 1,488 million in 2021. This growth was followed by a sharp correction in 2022, where net income returned to US$ 960 million, and remained relatively stagnant at US$ 951 million in 2023.
- Equity Base Evolution
- Total equity showed consistent year-over-year growth from 2019 through 2022, increasing from US$ 2,747 million to a high of US$ 3,941 million. However, a notable reduction in the equity base occurred in 2023, with total equity declining to US$ 3,175 million.
- Return on Equity (ROE) Dynamics
- ROE peaked in 2020 and 2021, maintaining a level of approximately 40%. The substantial decline to 24.36% in 2022 was the result of a dual impact: a significant decrease in net income coupled with a continued expansion of the equity base. The subsequent increase in ROE to 29.95% in 2023 was primarily driven by the contraction of total equity rather than an improvement in earnings, as net income remained nearly flat compared to the previous year.
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Return on Assets (ROA)
Kellanova, ROA 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) | |
| Total assets | 15,621) | 18,496) | 18,178) | 17,996) | 17,564) | |
| Profitability Ratio | ||||||
| ROA1 | 6.09% | 5.19% | 8.19% | 6.95% | 5.47% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Coca-Cola Co. | 10.97% | 10.29% | 10.36% | — | — | |
| Mondelēz International Inc. | 6.95% | 3.82% | 6.41% | — | — | |
| PepsiCo Inc. | 9.03% | 9.67% | 8.25% | — | — | |
| Philip Morris International Inc. | 11.96% | 14.67% | 22.06% | — | — | |
| ROA, Sector | ||||||
| Food, Beverage & Tobacco | 9.72% | 9.51% | 10.44% | — | — | |
| ROA, Industry | ||||||
| Consumer Staples | 8.28% | 8.95% | 8.75% | — | — | |
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
ROA = 100 × Net income attributable to Kellanova ÷ Total assets
= 100 × 951 ÷ 15,621 = 6.09%
2 Click competitor name to see calculations.
The analysis of profitability ratios from 2019 to 2023 reveals a period of fluctuation in asset utilization efficiency. The return on assets (ROA) experienced an initial growth phase, followed by a significant contraction, and a subsequent moderate recovery driven by changes in the balance sheet structure.
- Efficiency Growth Period (2019–2021)
- A consistent upward trend in ROA is observed between 2019 and 2021, rising from 5.47% to a peak of 8.19%. This improvement was driven by a substantial increase in net income, which grew from 960 million US$ to 1,488 million US$, outpacing the modest growth in total assets during the same interval.
- Profitability Decline (2022)
- A sharp decline in ROA occurred in 2022, falling to 5.19%. This downturn was primarily attributed to a significant reduction in net income, which decreased to 960 million US$, while total assets continued to expand to a period high of 18,496 million US$. The combination of lower earnings and a larger asset base resulted in the lowest efficiency ratio of the five-year period.
- Asset Base Adjustment (2023)
- In 2023, ROA recovered to 6.09% despite a slight further decrease in net income to 951 million US$. This increase in the ratio was not driven by earnings growth, but rather by a substantial reduction in total assets, which fell to 15,621 million US$. The contraction of the asset base improved the relative efficiency of the remaining assets in generating profit.
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