Kellanova Raises 2024 Forecasts Amid Stable Snacks Demand in North America, Reports Reuters

Kellanova has updated its annual forecasts for organic sales and profits, reporting an increase in consumer demand for its breakfast cereals and ready-to-eat snacks like Pringles, despite the rise in prices.

Shares of the company rose by 4% in pre-market trading after it exceeded Wall Street’s expectations for its second-quarter performance. Kellanova was formed following the split of Kellogg’s North American cereal division from its global snacking business. This restructuring aimed to enhance the focus on each segment.

The company, which offers brands such as MorningStar Farms, Pringles, and Pop-Tarts, has maintained steady demand even after multiple price hikes. In the current quarter, Kellanova reported a rebound in volumes across North America, resulting in a 21% increase in operating profit, and a 25% jump in Latin America.

However, the situation in Europe was less favorable, with organic net sales declining 1% compared to the previous year. The improvement in Kellanova’s profit margins can be attributed to productivity gains and easing cost inflation, with the adjusted gross margin rising to 36.5% from 33.1% last year.

In contrast to Kellanova, other packaged food companies, including Kraft Heinz, Hershey, and Mondelez, reported weaker quarterly results this week, affected by a decline in consumer interest in ready-to-eat meals and higher-priced chocolates.

Kellanova generated net sales of $3.19 billion for the quarter ending June 29, surpassing analysts’ expectations of $3.15 billion. The adjusted profit of $1.01 per share also exceeded the anticipated 90 cents.

Looking ahead, Kellanova has raised its forecast for full-year organic net sales growth to 3.5% or more, up from a previous outlook of about 3%. The anticipated range for adjusted earnings per share has also been increased to approximately $3.65 to $3.75, compared to the previous range of $3.55 to $3.65.