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Kellanova suffers Q3 2023 earnings dip on flat sales

Image: Kellanova

November 9, 2023

Kellanova, formerly part of Kellogg Co., reported falling earnings against flat sales for Q3 2023 over the prior year period, according to its first earnings report as a standalone company. Highlights include:

• Net sales were essentially flat, changing from $3.946 million in Q3 2022 to $3.939 million in the quarter ending Oct. 30, 2023. Net sales were held flat by adverse currency translation and the divestiture of its business in Russia, while 4% organic-basis growth remained within the company's long-term target range.
• EPS fell 13.3% from 90 cents to 78 cents on a diluted basis and from $1.01 to $1.03 on an adjusted basis.
• North America's reported net sales decreased slightly year on year, as rising price elasticities and the lapping of prior-year trade inventory replenishment offset price/mix growth related to revenue growth management actions taken over the previous 12 months to cover high input-cost inflation.
• Europe's reported net sales increased 10% as price/mix growth more than offset the impact of price elasticity and the divestiture of its Russia business.
• Latin America's net sales increased 19% due to price/mix growth and favorable currency translation that more than offset the impact of rising price elasticities.
• Asia Pacific, Middle East and Africa's net sales decreased by 14% as significantly adverse foreign currency translation, principally related to the Nigerian naira, more than offset price/mix growth.

Shares traded at $51.99 on Wednesday against a 52-week range of $47.63 to $74.72.

The approximately $3.94 billion in quarterly revenue missed analyst expectations by $70 million and the non-GAAP EPS of $1.03 beat expectations by 11 cents, according to Seeking Alpha.

"We are proud to complete our final quarter as Kellogg Co. with a solid financial performance, even amidst challenging industry conditions and the execution of the spin-off of our North America cereal business," Steve Cahillane, chairman, president and CEO, said in the press release. "Our brands are strong, our profitability is improving, and our free cash flow and balance sheet give us financial flexibility, positioning us well as we launch into the Kellanova era."