Business
WK Kellogg beats third-quarter estimates on demand, higher prices
Global Banking and Finance Review
Company
(Reuters) – WK Kellogg beat Wall Street estimates for third-quarter revenue and profit on Thursday, driven by robust consumer demand for its ready-to-eat cereals, including Froot Loops and Apple Jacks.
(Reuters) – WK Kellogg beat Wall Street estimates for third-quarter revenue and profit on Thursday, driven by robust consumer demand for its ready-to-eat cereals, including Froot Loops and Apple Jacks.
Shares of the Battle Creek, Michigan-based company rose about 10% in premarket trading as higher product pricing and cost-cutting efforts bolstered results.
Despite raising prices, the company increased sales volume as the brand maintained its strong presence in American households’ breakfast routines, suggesting that brand loyalty and customer retention remain strong.
The Rice Krispies-maker’s results contrasted those of other packaged food companies such as Kraft Heinz and Conagra Brands, which saw disappointing sales as customers opted for cheaper options.
Organic volume for the quarter declined 1.1%, improving compared to a 4.8% decline the previous quarter. The third quarter product pricing rose 1.8%, down from 2.1% in the second quarter.
WK Kellogg, which split from Kellanova last year, retained the North American cereal business of the original Kellogg company.
Its gross margin increased to 29.4% from 28.5% a year ago in the quarter.
In early August, the company announced a reorganization plan involving plant closures, workforce reduction, and supply chain streamlining.
WK Kellogg’s net sales fell to $689 million in the three months ended September 30, compared with analysts’ average expectation of $674 million, according to data compiled by LSEG.
Excluding items, it reported earnings of 31 cents per share, above analysts’ estimates of 26 cents per share.
The company now expects full-year net sales growth to be at the lower end of its previous forecast range between a 1% decline and a 1% rise.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Tasim Zahid)
Revenue is the total amount of money generated by a company's sales of goods or services before any expenses are deducted.
Profit is the financial gain obtained when the revenue from sales exceeds the costs associated with producing and selling those goods or services.
Brand loyalty refers to consumers' commitment to repurchase or continue using a brand, often influenced by positive experiences and satisfaction.
Gross margin is a company's revenue from sales minus its cost of goods sold, expressed as a percentage of revenue, indicating the efficiency of production.
Organic volume refers to the sales volume generated from existing products, excluding any impact from acquisitions or divestitures.
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