Zinger Key Points
- Kellanova's Q3 adjusted EPS rose 18.2% to 91 cents, exceeding estimates, while organic net sales increased by 6%.
- Kellanova will not provide forward-looking guidance as it undergoes a potential acquisition by Mars, Inc. for $83.50 per share.
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Kellanova K reported third-quarter adjusted earnings per share of 91 cents (+18.2%) on Thursday, beating the street view of 85 cents.
Quarterly sales of $3.23 billion (down 0.7%) outpaced the analyst consensus estimate of $3.158 billion.
On an organic basis, excluding currency effects, the company’s net sales rose by 6%.
In the third quarter, Kellanova achieved above-target growth in organic net sales and adjusted operating profit and earnings per share.
The company’s strong performance was driven primarily by volume growth and favorable price/mix changes in emerging markets, along with improving volume in developed markets. Additionally, productivity gains and moderating cost inflation helped improve profit margins.
North America’s reported and organic net sales rose by 1%, while Europe saw a 7% year-on-year increase in reported net sales.
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In contrast, Latin America experienced a 6% year-on-year decline in reported net sales for the third quarter, and Asia Pacific, the Middle East, and Africa (AMEA) reported a 10% decrease year-on-year.
On an adjusted basis, excluding mark-to-market and one-time charges, operating profit increased by 16%. When excluding currency translation, operating profit rose by 19%.
Year-to-date net cash from operating activities totaled $1.293 billion, a decrease from $1.400 billion in the same period last year, which included the spun-off WK Kellogg Co.
On August 14, 2024, Mars, Incorporated announced its agreement to acquire Kellanova for $83.50 per share in cash.
A shareholder vote on the proposed acquisition is scheduled for November 1, and the transaction is subject to approval and regulatory conditions. Due to the pending merger, Kellanova will not provide forward-looking guidance.
Price Action: K shares are trading lower by 0.02% to $80.84 at last check Thursday.
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