Kellanova has raised its 2024 organic net sales guidance on the back of better-than- expected second-quarter results.
The company, which previously made up US cereal giant Kellogg’s global snacking business, was spun off last year and now has a portfolio made up of snacks, frozen food and cereal (outside of North America) with brands including Pringles, Eggo, Pop-Tarts and Nutri-Grain.
In the three months ended 29 June, Kellanova reported net sales of $3.19bn, which although down 4.7% year-on-year beat analysts’ expectations of $3.15bn, with key brand sales holding up despite several rounds of price increases.
It is now forecasting organic net sales will grow 3.5% or more for the year, compared to its prior outlook of about 3% or higher.
The forecast range for adjusted earnings per share has also been raised, to $3.65 to $3.75, from a previous range of $3.55 to $3.65.
CEO Steve Callahane said: “Our top-line growth featured a return to volume growth in two of our regions and improvements in other markets, led by our biggest brand Pringles.”
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By GlobalData
He said growth was supported by “fully restored” commercial activity, including a double-digit increase in brand-building investment.
Kellanova said sales were down year-on-year as a result of “significantly adverse” foreign-currency translation and last year’s Russia divesture. It pointed out that on an organic basis, excluding the impact of currencies and divestures, net sales increased by 4%.
Reported operating profit of $493m for the quarter was up 18% year-on-year, partly as a result of “continued improvement in gross profit margin”.
Kellanova’s adjusted gross margin rose to 36.5%, from 33.1% last year.
It saw volumes return to growth in North America in the quarter, with operating profit up 21%, but demand in Europe disappointed, with organic net sales down 1% from last year.
Earlier this year, Kellanova set out plans to close two factories – in the US and UK – as part of efforts to drive efficiency and increase productivity.
