K - Kellogg's beats on earnings as price actions offset volume declines

Kellogg Company ( NYSE: K ) shares rose in premarket trading after posting stronger than expected quarterly results.

For the fourth quarter, the MIchigan-based cereal manufacturer reported $0.94 in earnings per share exceeding expectations by $0.09. Meanwhile, a 12% jump in revenue to $3.83B came in $170M above the analyst consensus. Organic net sales rose 16.2% from the prior year quarter on an adjusted basis, which the company said was “driven by double-digit price/mix in all four regions that more than offset” volume declines and currency impacts.

“Facing significant cost inflation, worldwide bottlenecks and shortages, and a significant inventory rebuild in North America cereal following last year's fire and strike, the team executed with grit and agility to deliver another year of better-than-expected results, while at the same time making progress toward our planned transformation,” CEO Steve Cahillane said. “We enter 2023 in solid financial condition with strong momentum around the world. And we remain as convinced as ever that the pending separation of our company will create value for all stakeholders.”

Moving forward, the company expects organic net sales growth of 5% to 7% for 2023, aided by pricing actions and “sustained momentum in snacks and emerging markets.” Adjusted earnings per share for the full year are expected to decline between 2% and 4% due in large part to “a significant increase in interest expense due to higher interest rates” as well as pension expenses.

Elsewhere, the company announced its decision to retain its plant-based business after exploring a spinoff. The business currently accounts for 2% of total net sales.

Shares of the Battle Creek-based company rose about 1% in premarket trading on Thursday.

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