Snacking and food company Kellanova has posted flat sales for the second quarter amid challenging conditions, including soft demand and rising costs.
The company, which owns the Pringles, Cheez-It and Pop-Tarts brands, reported net sales of US$3.2 billion for the quarter ended June 28, up 0.3 per cent on both a reported and an organic basis.
Management said sales were impacted by widespread category softness, with the exception of volume growth for noodles in Africa.
North America’s reported and organic net sales decreased 4 per cent, as volume declined amidst prolonged softness in snacking and frozen categories. In Europe, sales were 2 per cent on a reported basis and 5 per cent on an organic basis, with improved price and mix more than offsetting a decline in snacks and cereal categories.
Latin America saw a 7 per cent decrease in net sales and a 1 per cent decline in organic sales. Asia Pacific, Middle East and Africa recorded a 15 per cent growth (19 per cent on an organic basis), led by volume growth, broad-based cereal sales growth, and currency-influenced price increases in the Africa noodles businesses.
On the bottom line, operating profit slid 11 per cent, attributed to a negative swing in mark-to-market impacts and higher costs.
“While demand softness in most of our categories did not improve as much as we had hoped, we delivered earnings above our expectations in Q2, thanks to our innovation, commercial and operational execution, and emerging markets growth,” said CEO Steve Cahillane.
For the first half, the company’s net sales fell 1.7 per cent to $6.28 billion and operating profit decreased 2 per cent to $868 million.
Kellanova did not provide any guidance for the remainder of the year as the company expects to be acquired by Snickers and M&M’s owner Mars by year-end. The $36 billion deal was announced last August and was approved by shareholders in November.
