WK Kellogg beat Wall Street estimates for third-quarter revenue and profit on Thursday, driven by strong demand despite price hikes.
Shares for the Froot Loops-maker rose about 10% in premarket trading as higher product pricing and cost-cutting efforts bolstered results.
Despite rising prices, the company increased sales volumes as the brand maintained its strong presence on American households’ breakfast tables, suggesting that brand loyalty and customer retention remains strong.
The Rice Krispies-maker’s results contrasted those of other packaged food companies such as Kraft Heinz and Conagra Brands, which saw disappointing sales as customers opted for cheaper options.
Organic volume for the quarter declined 1.1% – although this was an improved from a 4.8% decline the previous quarter.
Third quarter product pricing rose 1.8% – down from 2.1% in the second quarter.
WK Kellogg – which split from Kellanova last year, retained the North American cereal business of the original Kellogg company.
Its gross margin increased to 29.4% from 28.5% a year ago in the quarter.
In early August, the company announced a reorganisation plan involving plant closures, workforce reduction and supply chain streamlining.
WK Kellogg’s net sales fell to $689 million in the three months ending 30 September, compared with analysts’ average expectations of $674 million, according to data compiled by the London Stock Exchange Group.
Excluding items, it reported earnings of 31 cents per share, above analysts’ estimates of 26 cents per share.
The company now expects full-year net sales growth to be at the lower end of its previous forecast range between a 1% decline and a 1% rise.
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