Kellanova earnings beat estimates and CEO strikes bullish tone
By Ciara Linnane
CEO sees 'tangible signs that this year's return to full commercial activity is taking hold in the marketplace'
An earlier version of this report omitted the company's adjusted EPS number, which was better than consensus. It has been corrected.
Kellanova, the packaged-food giant spun out of the former Kellogg, posted better-than-expected earnings on Thursday and its chief executive struck a bullish tone.
Steve Cahillane said the snacks maker was operating in challenging macroeconomic and industry conditions but there were reasons to be upbeat.
Cahillane cited "tangible signs that this year's return to full commercial activity is taking hold in the marketplace and beginning to restore volume and share."
Chicago-based Kellanova (K) had net income of $267 million, or 78 cents a share, in the quarter, down from $298 million, or 86 cents a share, in the year-earlier period. Adjusted per-share earnings came to $1.01, ahead of the 85-cent FactSet consensus.
Sales fell to $3.200 billion from $3.342 billion a year ago but were ahead of the The FactSet consensus of $3.163 billion.
Sales were hurt by the strong dollar and the 2023 divestiture of the company's business in Russia. Excluding those items, organic sales remained at the top of the company's long-term range.
The company again backed full-year guidance calling for adjusted EPS of $3.55 to $3.65. The company is expecting organic-basis net sales to grow about 3%, within its long-term target range, led by premium snacks brands and emerging markets.
By geography, North America sales rose slightly while operating profit was boosted by recovering gross profit margin and reimbursement for expenses related to transition services provided to WK Kellogg Co. (KLG), the company that now houses Kellogg's cereals business.
Europe sales fell 1%, and operating profit was down 70% due to upfront charges related to a network optimization project.
Latin America sales rose 11%, while operating profit was up 21%.
Asia Pacific, Middle East and Africa sales fell 22%, hurt by the weakness in the Nigerian naira.
The stock was up 7% and has gained 9% in the year to date, while the S&P 500 is up 5%.
-Ciara Linnane
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05-02-24 1325ET
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