Business
Kellogg raises annual forecasts on higher prices as margin pressure looms
Published by Jessica Weisman-Pitts
Posted on November 3, 2022
2 min readLast updated: February 3, 2026
Global Banking & Finance Review®
Company
Published by Jessica Weisman-Pitts
Posted on November 3, 2022
2 min readLast updated: February 3, 2026
(Reuters) -Kellogg Co raised its full-year sales and profit forecasts on Thursday as demand for pricier cereals and snacks stays strong in North America amid relentless cost pressures.
(Reuters) -Kellogg Co raised its full-year sales and profit forecasts on Thursday as demand for pricier cereals and snacks stays strong in North America amid relentless cost pressures.
The cereal maker’s shares were down about 6% at $71.20 as the company warned its profit margins in the fourth quarter would not improve as much as anticipated.
As household budgets, particularly for lower-income consumers, get increasingly pinched due to stubbornly high inflation, analysts have warned that Kellogg could start to lose out to cheaper store-brand cereals.
While the company’s sales volumes rose in North America in the quarter, it fell in overseas regions, with company executives saying that Kellogg was starting to see some consumer pushback against higher prices in Europe.
Surging commodity and transportation costs, supply chain challenges and the impact of a stronger dollar on overseas revenue also led to an 18% fall in the company’s third-quarter operating profit.
“The whole ‘this inflation was going to be transitory’ was always obviously ridiculous,” Kellogg’s Chief Executive Officer Steve Cahillane said.
The company now anticipates more than a 100 basis points decline to its annual gross margin, slightly higher than previously anticipated.
In the reported quarter, however, the Corn Flakes maker was able to pass on price increases to consumers, while seeing little pushback in demand, using its brand power and distribution scale.
Kellogg now expects annual organic net sales to increase by over 10%, compared with its prior outlook of an increase of 7% to 8%.
The company forecast adjusted full-year profit per share to rise more than 3% on a currency-neutral basis, compared with a prior outlook of over 2% growth.
Kellogg’s net sales rose 9% to $3.95 billion in the third quarter ended Oct. 1. Analysts had expected revenue of $3.78 billion, according to Refinitiv IBES data.
(Reporting by Deborah Sophia and Uday Sampath in Bengaluru; Editing by Shounak Dasgupta)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
Profit margins are financial metrics that indicate the percentage of revenue that exceeds the costs of goods sold. They reflect a company's profitability and efficiency.
Consumer perception refers to the way consumers view and interpret a brand or product based on their experiences, beliefs, and feelings.
Corporate profit is the amount of money a company earns after all expenses, taxes, and costs have been deducted from total revenue.
Retail trade involves the sale of goods and services directly to consumers. It encompasses various sectors, including grocery stores, clothing shops, and online retailers.
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