Kellanova beats fourth-quarter expectations amid inert market
USA-Kellanova, global snacking, international cereal and noodles, plant-based foods and North American frozen breakfast has smashed Q4 expectations, proving it can thrive even in a sluggish market.
The company pulled in US$3.12 billion in Q4 sales from their press release, edging past the US$3.10 billion forecast. Earnings per share hit 92 cents, topping analyst predictions of 83 cents.
Despite currency fluctuations dragging down revenues, organic sales climbed 7%, showing how well its strategy is paying off.
The snacking powerhouse increased operating profits by 62% to US$532 million in the quarter ending 28 December 2024, thanks to productivity gains and cost-cutting measures. While net sales dipped 1.6% to US$3.1 billion, this decline was primarily due to unfavourable currency rates.
Excluding currency impacts, organic sales growth exceeded the company’s long-term target, rising 7% on strong volume gains. The company generated US$1.76 billion in operating cash flow for the quarter, reflecting a US$115 million year-over-year increase.
Capital expenditures fell to US$628 million. Free cash flow rose to US$1.13 billion, supported by higher net income. By the end of the quarter, it held US$694million in cash and equivalents, with inventories valued at US$1.165 billion
Kellanova’s regional performance was mixed. Asia-Pacific, the Middle East, and Africa led the charge, with organic sales surging over 30%, partly driven by a US$420 million joint venture.
However, not all markets fared as well. Europe and North America saw slight declines, hit by weaker demand and unfavourable exchange rates. Latin America faced the steepest drop, with sales falling 8% due to broader economic pressures.
Despite these regional swings, CEO Steve Cahillane remains optimistic. “Led by our strong emerging markets presence, we sustained better-than-expected top-line growth amidst challenging industry conditions and improved our profit margins faster than anticipated.”
The company recently announced a R$360 million (US$61 million) investment in its São Lourenço factory to enhance production for brands like Pringles, Cheez-It, and Choco Krispis in Brazil.
This follows a R$250 million (US$42.8m) investment in 2023 to expand Pringles production, bringing the company’s total investment in Brazil to over R$600 million (US$102.71m) in three years.
The funds will be directed toward process improvements, increased production capacity, advanced technology, and infrastructure upgrades.
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