Packaged food company Kellanova topped Wall Street estimates for third-quarter sales, driven by resilient demand for its ready-to-eat breakfast items and snacks despite rising prices.
The Cheez-It maker has capitalised on its brand strength to steadily raise product prices over the past few years to strengthen its margins.
Higher prices, however, have not dented demand for its products unlike packaged food peers such as Kraft Heinz and Conagra Brands, which reported disappointing sales earlier this month as customers traded down to cheaper alternatives.
Packaged foods giant Kellogg Company spun off its North American cereal business into WK Kellogg and rebranded itself as Kellanova in October last year.
Acquisition
In August, Family-owned candy giant Mars said it would buy Kellanova for nearly $36 billion (€33.2 billion), bringing together brands such as M&M's, Snickers, Pringles and Pop-Tarts, as they bet on continued consumer indulgence in branded snacks amid stalling growth in the packaged food sector.
Kellanova said that due to the pending merger with Mars, it would not be providing forward-looking forecast.
A let-up in costs tied to transportation, raw materials and labour has helped the company boost its adjusted gross margin to 35% in the third quarter from 33.2% a year earlier.
Net sales of $3.23 billion (€3 billion) in the three months ended 28 September beat analysts' expectation of $3.16 billion (€2.9 billion), according to data compiled by LSEG.
Kellanova posted an adjusted profit of 91 cents per share in the quarter, also surpassing expectations of 85 cents.
'Growth-Oriented' Portfolio
“Our strong third-quarter results reflect once again our strategy and more growth-oriented and profitable portfolio as Kellanova,” commented Steve Cahillane, Kellanova’s chair, president, and chief executive officer.
“This performance is also a testament to the talent and engagement of a Kellanova organization that is executing at a high level as we prepare for our exciting next chapter as part of a global snacking powerhouse with Mars.”
News by Reuters, additional reporting by ESM.
