Packaged food company Kellanova topped Wall Street estimates for third-quarter sales on Thursday, driven by resilient demand for its products, despite rising prices.
The Pringles-maker has capitalised on its brand strength to steadily raise product prices over the past few years, to strengthen its margins.
Higher prices, however, have not dented demand for its products, unlike packaged food peers such as Kraft Heinz and Conagra Brands, which reported disappointing sales earlier this month, as customers swapped to cheaper private-label alternatives.
In October last year, packaged food giant the Kellogg Company spun off its North American cereal business into WK Kellogg and rebranded itself as Kellanova.
In August, family-owned confectionery giant Mars announced that it would buy Kellanova for nearly $36 billion, bringing together brands such as M&M’s, Snickers, Pringles and Pop-Tarts, as it bet on continued consumer indulgence in branded snacks amid stalling growth in the packaged food sector.
Kellanova noted on Thursday that, due to the pending merger with Mars, it would not be providing a forward-looking forecast.
An easing in costs tied to transportation, raw materials and labour has helped the company boost its adjusted gross margin to 35% in the quarter, from 33.2% a year earlier.
Net sales of $3.23 billion in the three months ending 28 September beat analysts’ expectations of $3.16 billion, according to data from the London Stock Exchange Group.
Kellanova posted an adjusted profit of 91 cents per share in the quarter, also surpassing expectations of 85 cents.
