Kellanova Q1 2023 Earnings Report
Key Takeaways
Kellogg Company reported strong first quarter 2023 results, driven by double-digit net sales growth and progress in recovering profit margins. The company raised its full-year guidance for organic net sales growth and currency-neutral adjusted operating profit and earnings per share.
The Company sustained strong top-line momentum, with net sales growth across each of its Regions contributing to another quarter of double-digit growth for the Company.
Growth in gross profit, supported by productivity, revenue growth management, and improving service levels, reflected better-than-expected progress toward recovering profit margins.
Reflecting the strong start to the year, the Company raised its guidance for organic-basis growth in net sales, and for currency-neutral, adjusted-basis operating profit and earnings per share.
The Company continues to work towards its planned separation of its North America cereal business, which is expected to be completed during the fourth quarter.
Kellanova
Kellanova
Kellanova Revenue by Segment
Kellanova Revenue by Geographic Location
Forward Guidance
Kellogg Company has updated its full-year 2023 guidance. Raises its organic-basis net sales growth guidance to a tightened range of +6% to +7%, from its prior guidance of +5 to +7%. Raises its guidance for adjusted-basis operating profit growth to +8% to +10% on a currency-neutral basis, from its prior guidance of +7% to +9%. Raises its guidance for an adjusted-basis earnings per share decline to (1)% to (3)% on a currency-neutral basis, from prior guidance of approximately (2)% to (4)%.
Positive Outlook
- Raises its organic-basis net sales growth guidance to a tightened range of +6% to +7%, from its prior guidance of +5 to +7%.
- This reflects the strength of its first quarter results, and the guidance continues to assume price/mix growth, and sustained momentum in snacks and emerging markets, partially offset by the assumption of a gradual rise in price elasticities.
- Raises its guidance for adjusted-basis operating profit growth to +8% to +10% on a currency-neutral basis, from its prior guidance of +7% to +9%.
- This reflects the higher net sales and earlier progress toward profit margin recovery.
- Affirms its guidance for net cash provided by operating activities to be approximately $1.7 - $1.8 billion, with capital expenditure of approximately $0.7 billion, resulting in affirming its guidance for cash flow of approximately $1.0 - $1.1 billion.
Challenges Ahead
- Raises its guidance for an adjusted-basis earnings per share decline to (1)% to (3)% on a currency-neutral basis, from prior guidance of approximately (2)% to (4)%.
- This improved outlook reflects the higher operating profit outlook, while still incorporating significant year-on-year pressure from the impact on pension income and interest expense of lower financial asset values and higher interest rates.
- This is below 2022 levels due solely to approximately $0.3 billion of up-front charges and capital expenditure related to the Company's pending separation, without which cash flow would be higher year on year.
- Excluded from this guidance are any significant supply chain or other prolonged market disruptions related to the global economy.
- Net sales, margins, operating profit, and earnings per share are provided on a non-GAAP basis only because certain information necessary to calculate such measures on a GAAP basis is unavailable, dependent on future events outside of our control and cannot be predicted without unreasonable efforts by the Company.
Revenue & Expenses
Visualization of income flow from segment revenue to net income