Kellogg Co raised its full-year forecast for sales and adjusted operating profit, banking on higher prices and resilient demand for its breakfast cereals and snacks.
Kellogg, like other global packaged food makers, has been steadily raising product prices over the past year to counter spiralling costs of freight, labour, and ingredients such as wheat, corn and edible oils owing to supply chain constraints.
Although demand, especially for Kellogg's pricier cereals, has held up quite well so far this year, analysts have warned that it could slow as consumers look to economise amid raging inflation that shows no sign of cooling.
The company expects annual core net sales to increase in the range of 7-8%, compared with its prior forecast of about 4% growth.
It also expects adjusted full-year operating profit to rise 4-5% on a currency-neutral basis, above its previous expectation of 1-2% growth.
The company's net sales increased 9% year on year, to $3.9 billion, in the second quarter, driven by positive price/mix and in-market momentum in snacks, noodles and other categories.
Reported operating profit decreased nearly 18% compared to the second quarter of 2021, as net sales growth was more than offset by unfavourable mark-to-market impact and adverse currency translation.
"Our second-quarter performance again demonstrated the strength of our portfolio and the skill and grit of our employees, who managed through an unusually challenging supply and cost environment and delivered strong financial results," said Steve Cahillane, Kellogg Company’s chairman and chief executive officer.
"We sustained notably strong growth momentum in snacks and emerging markets, while accelerating the recovery of supply and category share in our North America cereal business, all while leveraging productivity initiatives and revenue growth management to mitigate the impact of decades-high input cost inflation."