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Kellogg Serves up a Soggy End to Fiscal 2020, but Shares Still Poised for a Pop

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

On the surface, Kellogg’s fourth-quarter results (2.5% organic sales growth and 70 basis points of adjusted operating margin degradation to 11.8%) look quite bleak relative to the mid- to high-single-digit COVID-19-induced demand levels that have characterized its results of late. However, we aren’t wavering on our contention that management has been positioning the business for sustained, long-term improvement by divesting noncore brands and stock-keeping units, while also upping investments in capabilities and brands since transitioning its entire operation over to warehouse distribution in 2017.

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Company Profile

Business Description

Founded in 1906, Kellogg is a leading global manufacturer and marketer of cereal, cookies, crackers, and other packaged foods. Its offerings are manufactured in 21 countries and marketed in more than 180 countries. Its product mix includes well-known brands such as Special K, Frosted Flakes, Froot Loops, Rice Krispies, Pop-Tarts, Eggo, Kashi, and Morningstar Farms. The firm added the Pringles brand to its mix in 2012. Sales outside its home turf account for around 40% of Kellogg's consolidated sales base.

One Kellogg Square
Battle Creek, MI, 49016-3599
T +1 269 961-2000
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 31,000