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Jul 01, 2023
Kellanova Q2 2023 Earnings Report
Kellogg Company reported strong second quarter results and raised its full-year sales and profit guidance.
Key Takeaways
Kellogg Company's second quarter 2023 results showed net sales growth of 4.6% and organic net sales growth of 7.1%. The company raised its full-year guidance for organic net sales growth and currency-neutral adjusted operating profit and earnings per share, driven by strong brand performance and profit margin recovery.
Double-digit operating profit growth was driven by an earlier-than-expected recovery in the Company's gross profit margin and by net sales growth.
The Company delivered net sales growth that was broad-based with all regions in growth except for AMEA where currency translation was substantially adverse. On an organic basis, all regions remained in growth.
Reflecting the strong second quarter and first half results, the Company again raised its guidance for organic basis net sales growth, as well as for currency-neutral, adjusted operating profit and earnings per share.
The Company continues to progress 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
Revenue by Segment
North America Revenue
CapyFin.comEurope Revenue
CapyFin.comLatin America Revenue
CapyFin.comAMEA Revenue
CapyFin.comRevenue by Geographic Location
North America Revenue
CapyFin.comEurope Revenue
CapyFin.comLatin America Revenue
CapyFin.comAMEA Revenue
CapyFin.com Forward Guidance
Kellogg Company has raised its full-year 2023 guidance, reflecting its strong first-half results and confidence in its second-half plans.
Positive Outlook
- Raises its guidance for organic-basis net sales growth to approximately +7%, from its prior guidance of +6% to +7%, reflecting the strength of the Company's first half results. This guidance continues to assume price/mix growth and a gradual rise in price elasticities.
- Raises its guidance for adjusted-basis operating profit growth to +9% to +10% on a currency-neutral basis, from its prior guidance of +8% to +10%. This reflects earlier-than-expected progress toward profit margin recovery.
- Raises its guidance for adjusted-basis earnings per share decline of (1)% to (2)% on a currency-neutral basis, from prior guidance of approximately (1)% to (3)%, despite significant year-on-year pressure from the impact on pension income and interest expense of lower financial asset values and higher interest rates.
- 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 guidance for cash flow of approximately $1.0 - $1.1 billion.
- This is below 2022 levels primarily due 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.
Challenges Ahead
- Significant year-on-year pressure from the impact on pension income.
- Interest expense of lower financial asset values.
- Higher interest rates.
- Approximately $0.3 billion of up-front charges related to the Company's pending separation.
- Capital expenditure related to the Company's pending separation.
Revenue & Expenses
Visualization of income flow from segment revenue to net income