USA- Snacks giant Kellanova Company has increased its 2024 organic net sales forecast following better-than-expected results in Q2 2024.
In Q2 2024, the company recorded consolidated net sales of US$3.19 billion, which exceeded analyst expectations of US$3.15 billion despite declining 4.7% year on year (YoY) basis. The snacking company attributes this performance to demand resilience of key brands despite high input costs and prices.
Kellanova also reported an 18% YoY increase in operating profit to US$493 million for the reported quarter, which is attributed to continued improvement in the company’s gross profit margin.
The snacking giant’s adjusted gross profit margin also increased to 36.5% in the reported quarter compared to 33.1% in the same quarter last year.
Q2 2024 also saw a return to volume growth in the US and Canada, with operating profits increasing by 21% YoY, although demand in Europe declined. European organic net sales decreased by 1% in the reported quarter compared to Q2 2023.
Following what the company described as ‘encouraging performance,’ Kellanova forecasts organic net sales to increase by 3.5% in 2024, compared to previous estimates of 3% or higher.
The company also increased estimates for adjusted earnings per share to a range of US$3.65 to US$3.75 compared to the previous range of US$3.55 to US$3.65.
Steve Callahane, Kellanova’s CEO, said, “Our top-line growth featured a return to volume growth in two of our regions and improvements in other markets, led by our biggest brand Pringles.”
The CEO revealed the revised guidance was inspired by gully supported commercial activity, which included double digit increments in brand-enhancing investments.
Callahane attributed the 4.7% YoY consolidated net sales decline to an adverse foreign-currency environment induced by Russia’s divesture in 2023. The CEO alludes excluding this currency impact which affected net sales on an organic basis, the net sales actually increased by 4%.
The results are considered an important inflection point for the company, especially after Kellanova revealed plans to shut down facilities in the US and UK by the end of 2024 as it sought to enhance operational efficiencies and optimize productivity.
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