Kellanova Q4 2022 Earnings Report
Key Takeaways
Kellogg Company announced strong fourth quarter and full year 2022 results, exceeding its twice-raised guidance for currency-neutral growth. The company's net sales increased by 12% year on year, driven by revenue growth management actions, momentum in snacks and emerging markets, and North America cereal's continued recovery. The company issued 2023 financial guidance, projecting continued growth.
Full-year financial results exceeded twice-raised guidance for currency-neutral growth in net sales, operating profit, and earnings per share.
Strong net sales growth in the quarter and the full year was driven by revenue growth management actions, momentum in snacks and emerging markets, and North America cereal's continued recovery.
2023 financial guidance calls for another year of strong currency-neutral growth in net sales and adjusted-basis operating profit.
The company continues to work towards its previously announced spin-off of its North America cereal business by year end.
Kellanova
Kellanova
Kellanova Revenue by Segment
Kellanova Revenue by Geographic Location
Forward Guidance
The Company issued its initial financial guidance for 2023. The Company is projecting: •Organic net sales growth of 5-7%, driven by price/mix growth and led by sustained momentum in snacks and emerging markets. •Adjusted operating profit growth of 7-9% on a currency-neutral basis as margins stabilize amidst persistent cost inflation. •Adjusted earnings per share decline of (2)-(4)% on a currency-neutral basis which includes a an approximate (7)% impact from the remeasurement of pension/post-retirement plans, reflecting last year's sharp decline in financial markets, and it also is impacted by a significant increase in interest expense due to higher interest rates. •Net cash provided by operating activities of approximately $1.7-1.8 billion, with capital expenditure of about $0.7 billion including capital expenditure related to the pending separation. As a result, cash flow is expected to be $1.0-1.1 billion. 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.
Positive Outlook
- Organic net sales growth of 5-7%, driven by price/mix growth
- Sustained momentum in snacks and emerging markets
- Adjusted operating profit growth of 7-9% on a currency-neutral basis
- Margins are expected to stabilize amidst persistent cost inflation.
- Net cash provided by operating activities of approximately $1.7-1.8 billion
Challenges Ahead
- Adjusted earnings per share decline of (2)-(4)% on a currency-neutral basis
- Approximate (7)% impact from the remeasurement of pension/post-retirement plans
- Significant increase in interest expense due to higher interest rates.
- Cash flow is expected to be $1.0-1.1 billion, below 2022 levels
- Approximately $0.3 billion of up-front charges and capital expenditure related to the Company's pending separation
Revenue & Expenses
Visualization of income flow from segment revenue to net income