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Sep 30, 2023
Kellanova Q3 2023 Earnings Report
Kellanova delivered a solid financial performance amidst challenging industry conditions and the execution of the spin-off of its North America cereal business. Profit margins were restored, and advantaged brands and markets delivered top-line growth in line with long-term targets. The company is well-positioned as it launches into the Kellanova era.
Key Takeaways
Kellanova reported flat net sales in Q3 2023, but organic net sales increased by 4%. The company sustained double-digit operating profit growth due to the restoration of gross profit margin. Kellanova provided guidance for Q4 2023, its first reporting period as a stand-alone company, projecting net sales of approximately $3.1 billion and adjusted operating profit between $380-$390 million.
Net sales in the third quarter were held flat by adverse currency translation and the divestiture of its business in Russia, and 4% organic-basis growth remained within the Company’s long-term target range.
Double-digit operating profit growth was sustained, as the Company continued to restore gross profit margin faster than expected around the world.
The Company's year-to-date performance in net sales, operating profit, earnings per share, and free cash flow is ahead of pace for the full-year guidance previously provided for Kellogg Company.
On October 2nd, subsequent to the end of the third quarter, the Company completed the spin-off of WK Kellogg Co, renaming itself Kellanova and embarking on a new era with a more growth-oriented portfolio, a refreshed strategy, and higher long-term financial targets.
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
Kellanova provided guidance for its fourth quarter 2023, which will be the first reporting period as a stand-alone company, after the spin-off of WK Kellogg Co. Specifically, the Company projects net sales of approximately $3.1 billion and operating profit of $380-$390 million on an adjusted basis.
Positive Outlook
- Net sales of approximately $3.1 billion. This implies on-algorithm growth excluding the estimated impact of the WK Kellogg Co spin-off, as well as the Russia divestiture and foreign currency translation.
- We continue to assume rising elasticities and the lapping of last year’s sizeable price increases, partially offset by the return to full commercial activity.
- Operating profit of $380-$390 million on an adjusted basis. This implies on-algorithm growth excluding the estimated impact of the WK Kellogg Co spin-off, as well as the Russia divestiture and foreign currency translation.
- This outlook also includes the shift of some brand investment from earlier in the year, in a return to full commercial activity.
- Earnings per share of $0.73-$0.76 on an adjusted basis, implying a modest decline versus the prior year, as the aforementioned operating profit growth is offset by continued year-on-year headwinds from higher interest rates and lower pension income.
Revenue & Expenses
Visualization of income flow from segment revenue to net income