USA – American multinational snack and food companies Kellogg and Mondelez have raised their sales outlook for 2022 after experiencing higher-than-expected results in their respective third quarter results.
For Kellogg Company, confidence for a better 2022 came from a 9% increase in reported net revenue for its third quarter, driven by demand for its snacks, noodles and cereal.
The Battle Creek, Michigan-based breakfast cereal giant now expects organic net sales growth of over 10% for the full year, up from its prior forecast of a 7% to 8% increase.
The company posted Q3 reported net sales of US$3.95 billion, while reported operating profit fell by nearly 18% in the quarter to US$368 million.
The rise in sales came from inflation-driven price actions which saw the company increase its average selling prices by 15%.
Although demand remained robust, volumes dropped 2.3%, impacted by the double digit rise in prices that Kellogg had implemented.
The company’s operations in North America remained resilient with the business reporting 14% growth in net sales due in part to an acceleration in cereal, while sales volumes fell in overseas markets.
Meanwhile, Kellogg’s business in Asia Pacific, Middle East, and Africa posted an increase in net sales of 12% for the third quarter.
Kellogg Company’s chairman and CEO, Steve Cahillane, said: “We’re pleased to report another quarter of better-than-expected financial performance and an increase to our outlook for the year”.
Cahillane added: “This required navigating effectively through global supply challenges and working to offset cost pressures with productivity and revenue growth management, all while sustaining momentum in snacks and emerging markets, and continuing to recover inventory and share in North America cereal”.
Mondelez bullish about demand in 2023
Chicago-based snack food company Mondelez was equally as jubilant after reporting a underlying sales rise 12% in the third quarter.
The Cadbury and Oreo maker is now forecasting a “10%-plus” increase in its organic sales in 2022. Its earlier forecast was for growth of at least 8%.
Mondelez is also forecasting its adjusted earnings per share will climb by at least 10%, versus its previous estimate of “mid- to high-single-digit” growth.
Speaking to analysts after Mondelez reported its third-quarter results, chairman and CEO Dirk Van de Put said demand in the company’s core categories of chocolate and biscuits was “strong” despite price increases.
“We see more and more signs that consumers continue to see, or increasingly see, our categories as an affordable indulgence. We see consumers saying that chocolate is really something they cannot live without,” Van de Put said.
“We believe that the spending decrease that we will see from consumers eventually, as inflation keeps hitting them, is going to be probably more in the big-ticket items. Grocery seems to be doing overall pretty well, I would say.”