Vending

Kellogg’s organic net sales rise 8%, boosted by coronavirus pandemic

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April 30, 2020

While first quarter net sales decreased by approximately 3% year on year on account of a recent divestiture, Kellogg's net sales on an organic basis rose by 8%, more than half of which the company attributes to higher consumer puchases during the COVID-19 outbreak, according to a press release. 

The 3% decline in net sales was due to the absence of results in the quarter from the late July 2019 divestiture of the company's cookies, fruit snacks, pie crusts, and ice cream cones businesses.

On an organic basis, which excludes the impact of divestiture and currency, the company's net sales increased by 8%. It is estimated that slightly more than half of the growth in the first quarter was attributable to elevated consumer purchases during the global COVID-19 pandemic, with the balance of this growth reflecting momentum in the underlying business across regions and categories.

Operating profit in the first quarter increased by approximately 21% versus the year-ago quarter, aided by a favorable swing in mark-to-market adjustments and lower business and portfolio realignment charges. On an adjusted basis, which excludes these mark-to-market adjustments and charges, operating profit decreased by approximately 6%, owing primarily to the absence of the divested businesses' results, as well as unfavorable currency translation.

Excluding currency translation, adjusted operating profit declined by approximately 4%, as the absence of results of the divested businesses, which were seasonally weighted to the first half of the year, more than offset strong growth in the remaining businesses.

Earnings per share increased by approximately 23% from the prior-year quarter, owing primarily to favorable swing in mark-to-market adjustments and lower business and portfolio realignment charges. On an adjusted basis, earnings per share declined by about 2%, due to the absence of results from the divested businesses, as well as adverse currency translation.

On a currency-neutral basis, adjusted earnings per share declined approximately 1%, as the divestiture impact more than offset growth in the remaining businesses.

Net cash from operating activities was $391 million, increasing significantly year on year due to lower charges for business and portfolio realignment and less expansion of working capital. 

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