Vending

Kellogg lifts Q1 2022 sales, earnings, raises FY guidance

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May 5, 2022

The Kellogg Co.'s Q1 2022 sales increased by more than 2% year on year, as positive price/mix and growth momentum of snacks brands more than offset adverse currency translation and the impact of insufficient finished-goods inventory in North America cereal related to a fire and labor strike in the second half of 2021, according to an earnings report. Highlights include:

• Sales rose 2.4% from $3.58 billion in Q1 2021 to $3.67 billion in the quarter ending April 2, 2022. Organic sales rose 4.2% from $3.58 billion to $3.73 billion in the comparative quarters.
• Net income rose from $371 million to $424 million in the comparative quarters.
• Diluted earnings per share rose 15% on a reported basis from $1.07 to $1.23 primarily due to favorable mark-to-market gains as well as by a lower effective tax rate and a reduction in shares outstanding due to share repurchases, while falling 0.9% on an adjusted basis from $1.11 to $1.10.
• The company's North America division reported net sales in the first quarter declined by less than 1%, as growth momentum in snacks and positive price/mix from revenue growth management actions were offset by volume declines related to lapping strong 2-year comparisons and to supply disruptions, most notably low cereal inventory stemming from last year's fire and labor strike.
• Europe's first quarter reported net sales increased 2%, as price/mix growth more than offset a modest volume decline related to lapping strong 2-year comparisons, and significantly adverse currency translation.
• Latin America's first quarter reported net sales increased 8%, as price/mix growth more than offset a decline in volume against a strong year-earlier gain, and additionally aided by favorable currency translation.
• Asia Pacific, Middle East and Africa's first quarter reported net sales increased by 12%, as price/mix growth more than offset a decline in volume related to lapping strong 2-year comparisons.

Shares traded at $70.05 today against a 52-week range of $59.54-$71.05.

The $3.67 billion in quarterly revenue beat analyst expectations by $80 million while the non-GAAP EPS of $1.10 beat expectations by 17 cents, according to Seeking Alpha.

"We are pleased to report another quarter of solid results, getting off to a better start to the year than we had expected," Steve Cahillane, Kellogg chairman and CEO, said in the press release. "The strength of our portfolio is evident, as we more than offset the sales and cost impact of supply recovery in North America cereal with sustained momentum in snacks growth around the world."

The company raised its guidance for organic-basis net sales growth to approximately 4% from its prior guidance of approximately 3%.