On Thursday, Kellanova (NYSE: K) raised its annual organic sales and profit forecasts as consumers opted for its breakfast cereals and ready-to-eat snacks like Pringles despite higher prices.
Shares of the company were up 4% before the bell after it also beat Wall Street expectations for second-quarter results.
The company, which previously made up Kellogg’s global snacking business, was created following the spin-off of the packaged foods giant’s North American cereal unit in a move to sharpen focus on each division.
Kellanova houses the MorningStar Farms label along with Pringles, Pop-Tarts, and other snack brands. It has been one of the few companies to witness steady demand even after several rounds of price increases.
It saw volumes return to growth in North America in the reported quarter, with operating profit up 21%. Operating profit jumped 25% in Latin America.
Demand in Europe remained tepid, with organic net sales down 1% from last year.
Helped by productivity gains and moderating cost inflation, Kellanova’s profit margins improved, with adjusted gross margin up 36.5%, from 33.1% last year.
The company’s results are in contrast to other packaged food companies such as Kraft Heinz (NASDAQ: KHC), Hershey (NYSE: HSY), and Mondelez (NASDAQ: MDLZ), which posted weaker quarterly results this week hurt by slowing consumer appetite for ready-to-eat meals and pricier chocolates.
Kellanova (NYSE: K) reported net sales of $3.19 billion in the three months ended June 29, edging past analysts’ expectations of $3.15 billion, according to LSEG data. Adjusted profit of $1.01 per share also surpassed expectations of 90 cents.
For the full year, organic net sales are now forecast to grow 3.5% or more, from its prior outlook of about a 3% rise or higher.
The forecast range for adjusted earnings per share is now raised to about $3.65 to $3.75, from a prior range of $3.55 to $3.65.
(Source: Reuters)
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
