Net Profit Margin
since 2005
Calculation
Reynolds American Inc., net profit margin, long-term trends, calculation
| Net profit margin | = | 100 | × | Net income1 | ÷ | Net sales, includes excise taxes1 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2016 | 36.05% | = | 100 | × | 6,073) | ÷ | 16,846) |
| Dec 31, 2015 | 22.24% | = | 100 | × | 3,253) | ÷ | 14,625) |
| Dec 31, 2014 | 12.15% | = | 100 | × | 1,470) | ÷ | 12,096) |
| Dec 31, 2013 | 14.36% | = | 100 | × | 1,718) | ÷ | 11,966) |
| Dec 31, 2012 | 10.40% | = | 100 | × | 1,272) | ÷ | 12,227) |
| Dec 31, 2011 | 11.12% | = | 100 | × | 1,406) | ÷ | 12,648) |
| Dec 31, 2010 | 8.63% | = | 100 | × | 1,113) | ÷ | 12,891) |
| Dec 31, 2009 | 7.79% | = | 100 | × | 962) | ÷ | 12,346) |
| Dec 31, 2008 | 12.46% | = | 100 | × | 1,338) | ÷ | 10,735) |
| Dec 31, 2007 | 11.84% | = | 100 | × | 1,308) | ÷ | 11,049) |
| Dec 31, 2006 | 11.38% | = | 100 | × | 1,210) | ÷ | 10,634) |
| Dec 31, 2005 | 9.99% | = | 100 | × | 1,042) | ÷ | 10,431) |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
1 US$ in millions
The analysis of financial performance between 2005 and 2016 reveals a period of relative stability followed by a sharp escalation in profitability. While net sales exhibited moderate growth over the decade, net income experienced a non-linear trajectory, culminating in a significant expansion of the net profit margin in the final two years of the period.
- Profit Margin Trends (2005-2014)
- From 2005 to 2008, the net profit margin increased steadily from 9.99% to 12.46%. This growth was interrupted in 2009, when the margin fell to a period low of 7.79%. Subsequently, the margin fluctuated between 8.63% and 14.36% through 2014, indicating a period of operational volatility despite net sales remaining relatively consistent.
- Revenue and Income Divergence
- Net sales remained within a narrow band of approximately US$ 10.4 billion to US$ 12.8 billion between 2005 and 2014. However, net income showed greater variability, specifically the contraction seen in 2009 to US$ 962 million. The relationship between sales and income during this interval suggests that profitability was more heavily influenced by cost fluctuations than by revenue expansion.
- Exponential Profitability Acceleration (2015-2016)
- A fundamental shift in financial performance occurred starting in 2015, with the net profit margin jumping to 22.24% and further accelerating to 36.05% by 2016. This correlates with a substantial increase in net income, which rose from US$ 1.47 billion in 2014 to US$ 6.07 billion in 2016. The rapid growth in the margin, far outpacing the growth in net sales, indicates a significant increase in bottom-line efficiency or the impact of non-operating gains.
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Comparison to Competitors
Reynolds American Inc., net profit margin, long-term trends, comparison to competitors
| Reynolds American Inc. | Coca-Cola Co. | Mondelēz International Inc. | PepsiCo Inc. | Philip Morris International Inc. | |
|---|---|---|---|---|---|
| Dec 31, 2016 | 36.05% | 15.59% | 6.40% | 10.08% | 26.11% |
| Dec 31, 2015 | 22.24% | 16.60% | 24.52% | 8.65% | 25.65% |
| Dec 31, 2014 | 12.15% | 15.43% | 6.38% | 9.77% | 25.17% |
| Dec 31, 2013 | 14.36% | 18.32% | 11.09% | 10.15% | 27.47% |
| Dec 31, 2012 | 10.40% | 18.78% | 8.65% | 9.43% | 28.05% |
| Dec 31, 2011 | 11.12% | 18.42% | 6.49% | 9.69% | 27.63% |
| Dec 31, 2010 | 8.63% | 33.63% | 8.36% | 10.93% | 26.68% |
| Dec 31, 2009 | 7.79% | 22.02% | 7.48% | 13.75% | 25.33% |
| Dec 31, 2008 | 12.46% | 18.18% | 6.87% | 11.89% | 26.80% |
| Dec 31, 2007 | 11.84% | 20.73% | 6.95% | 14.33% | — |
| Dec 31, 2006 | 11.38% | 21.09% | 8.91% | 16.06% | — |
| Dec 31, 2005 | 9.99% | 21.09% | 7.72% | 12.52% | — |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Sector (Food, Beverage & Tobacco)
Reynolds American Inc., net profit margin, long-term trends, comparison to sector (food, beverage & tobacco)
| Reynolds American Inc. | Food, Beverage & Tobacco | |
|---|---|---|
| Dec 31, 2016 | 36.05% | 13.66% |
| Dec 31, 2015 | 22.24% | 16.45% |
| Dec 31, 2014 | 12.15% | 13.18% |
| Dec 31, 2013 | 14.36% | 15.47% |
| Dec 31, 2012 | 10.40% | 15.02% |
| Dec 31, 2011 | 11.12% | 13.67% |
| Dec 31, 2010 | 8.63% | 17.42% |
| Dec 31, 2009 | 7.79% | 15.85% |
| Dec 31, 2008 | 12.46% | 14.49% |
| Dec 31, 2007 | 11.84% | 13.48% |
| Dec 31, 2006 | 11.38% | 14.73% |
| Dec 31, 2005 | 9.99% | 12.90% |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Industry (Consumer Staples)
Reynolds American Inc., net profit margin, long-term trends, comparison to industry (consumer staples)
| Reynolds American Inc. | Consumer Staples | |
|---|---|---|
| Dec 31, 2016 | 36.05% | 5.88% |
| Dec 31, 2015 | 22.24% | 5.62% |
| Dec 31, 2014 | 12.15% | 6.00% |
| Dec 31, 2013 | 14.36% | 6.75% |
| Dec 31, 2012 | 10.40% | 6.65% |
| Dec 31, 2011 | 11.12% | 6.99% |
| Dec 31, 2010 | 8.63% | 7.59% |
| Dec 31, 2009 | 7.79% | 6.93% |
| Dec 31, 2008 | 12.46% | 6.75% |
| Dec 31, 2007 | 11.84% | 6.11% |
| Dec 31, 2006 | 11.38% | 6.35% |
| Dec 31, 2005 | 9.99% | 6.29% |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).