Kellanova Posts Upbeat Q1 Results Amid Steady Demand

By Reuters
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Kellanova Posts Upbeat Q1 Results Amid Steady Demand

Pop-Tarts maker Kellanova beat Wall Street estimates for first-quarter sales and profit boosted by higher prices and firm demand for its breakfast cereals and ready-to-eat snacks.

The Rice Krispies maker's shares were up nearly 2% in premarket trading.

Kellanova, which rebranded itself late last year, is known for its diverse portfolio of brands like Grahams Crackers, Nutri-Grain breakfast bars and frozen food like Morningstar Farms.

"In the near-term, however, it is evident volumes will be critical for the company to see top-line growth as there's likely no more room to push pricing further as consumers remain under pressure," Third Bridge analyst John Oh said.

The company, like other major brands in the packaged food industry, has ramped up prices, banking on the popularity of its premium products among consumers, particularly in North America.


Despite price increases and sticky inflation, consumers remain loyal to their favourite snack brands, shunning cheaper alternatives.

Quarterly Highlights

Kellanova, also home to internationally recognised cereal brands such as Frosties and Special K, said its prices rose by 8.5% in the quarter, while organic sales volumes fell 3.1%.

The strong results echo sentiments from packaged food peer Conagra Brands that posted upbeat quarterly results last month, helped by a rebound in demand for its pantry staples and frozen foods.

Kellanova's snacking business, formerly known as Kellogg, reported net sales of $3.20 billion (€3 billion) in the three months ended 30 March, above analysts' expectations of $3.16 billion (€2.95 billion), according to LSEG data.


Higher prices also helped drive its adjusted gross margin to 35.7% from 31.0% a year earlier.

The company, which spun-off its North American cereal business into WK Kellogg last year, posted an adjusted profit of $1.01 per share for the quarter, surpassing expectations of 85 cents per share.

Read More: How Food Companies Like Coca-Cola, Kraft-Heinz Are Targeting Low-Income Americans

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