Kellanova raised its annual organic sales and profit forecasts on Thursday as consumers opted for its breakfast cereals and snacks despite higher prices.
Shares of the Pringles-maker were up 4% before the bell, after it also beat Wall Street expectations for second-quarter results.
The company, which previously made up Kellogg’s global snacking business, spun off from the packaged foods giant’s North American cereal unit in a move to sharpen focus on each division.
Kellanova houses the MorningStar Farms label along with Pringles, Pop-Tarts and other snack brands.
It has been one of the few companies to witness steady demand even after several rounds of price hikes.
Companies such as Kraft Heinz and Nestlé have been trying to claw back volumes after inflation-weary customers moved to cheaper alternatives in the wake of a series of price increases.
Results
Kellanova saw volumes return to growth in North America in the reported quarter, with operating profit up 21% in the region.
In Latin America, the company’s operating profit jumped 25%.
Demand in Europe remained tepid, with organic net sales down 1% from last year.
Kellanova’s profit margins improved, however, helped by productivity gains and moderate cost inflation.
The adjusted gross margin was up 36.5% from 33.1% last year.
The company’s results are in sharp contrast to companies such as Kraft Heinz, Hershey and Mondelēz, which posted weaker quarterly results this week.
Slowing consumer demand for ready-to-eat meals and pricier chocolates hurt the companies.
Kellanova also reported net sales of $3.19 billion in the three months ending 29 June, edging past analysts’ expectations of $3.15 billion, according to data from the London Stock Exchange Group (LSEG).
Adjusted profit of $1.01 per share also surpassed expectations of 90 cents.
For the full year, organic net sales is now forecast to grow by 3.5% or more, up from its prior outlook of about a 3% rise or higher.
The forecast range for adjusted earnings per share is now about $3.65 to $3.75, up from a prior range of $3.55 to $3.65.
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