Kellogg Co beat Wall Street estimates for quarterly sales as higher product prices offset pressure from reduced demand for its snacks and cereals.
Increasing costs for freight and ingredients such as wheat, corn and edible oils due to global supply chain snarls have significantly hurt margins for packaged food companies, leaving them with little choice but to hike prices.
Reported net sales for full-year 2021 increased by approximately 3% year-on-year, to $14.2 billion (€12.5 billion), driven by positive price/mix in all four regions as well as modestly favourable foreign currency translation.
On an organic basis, net sales increased by 3.5%, despite lapping unusually strong, pandemic-aided organic growth in 2020, the company noted.
Operating profit decreased by less than 1% year-on-year, and closer to flat on an adjusted basis, due to global supply disruptions, labour strike in the fourth quarter and a fire incident in the third quarter.
Commenting on the company's performance, Steve Cahillane, Kellogg Company's chairman and chief executive officer, said, "As we've closed the books on fiscal year 2021, I could not be more proud of our organisation’s focus and determination to work through challenges and deliver on our financial commitments.
"Facing significant cost inflation, worldwide bottlenecks and shortages, and even a labour strike at all of our US cereal facilities in the fourth quarter, the team executed with agility to deliver another year of on-guidance results."
Net income attributable to Kellogg rose to $433 million (€380.11 million), or $1.26 per share in the fourth quarter ended 1 January, from $205 million, or 59 cents per share, a year earlier.
Net sales fell to $3.42 billion (€3 billion) in the fourth quarter from $3.46 billion (€3.04 billion) a year earlier. Analysts on average had expected sales of $3.39 billion (€2.98 billion), according to Refinitiv IBES.
The company's European unit saw net sales growth of approximately 7%, while reported operating profit grew by around 16%, due to lower one-time charges and the impact of higher net sales.
In North America, reported net sales declined by 2%, while operating profit dropped 10% due to several factors including, among others, inflation and supply bottlenecks and shortages.
In Latin America's reported net sales grew by 9%, supported by strong price/mix growth, favourable foreign currency translation and business momentum.
Cahillane added, "We enter 2022 with growth momentum, financial flexibility from strong cash flow and balance sheet, and enhanced capabilities that will continue to enable us to manage through challenging business conditions."