Kellanova Misses Q1 Revenue And Earnings Estimates Due To Weak Global Demand And Currency Pressure

Kellanova K reported a first-quarter FY24 sales decline of 3.6% year-on-year to $3.08 billion, missing the analyst consensus estimate of $3.18 billion.

While net sales were impacted by negative currency translation and widespread category softness, the Company sustained growth on an organic basis, led again by its emerging markets. Adjusted EPS of $0.90 missed the consensus estimate of $1.01.

North America's sales recorded a 4% decline, Europe fell 3%, Latin America's sales plunged 15%, and Asia Pacific, Middle East and Africa's (AMEA) sales increased by 3%.

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Selling, general and administrative expenses fell 1.4% Y/Y at $629 million. Operating margin was 13.9%, and operating income for the quarter increased 9.4% to $430 million.

The company's reported gross margin expanded 210 basis points to 34.3%, while the adjusted gross margin contracted 80 basis points to 34.9%.

The company held $330 million in cash and equivalents as of March 29 and generated an operating cash flow of $116 million year-to-date.

Mars acquisition of Kellanova for $83.50 per share in cash is expected to close in the first half of 2025.

"Our organization demonstrated focus and determination in managing through what is undeniably an uncertain macroeconomic and industry environment,” said Steve Cahillane, chairman, president and CEO.

“We delivered against our budget in the quarter, led by our emerging markets, and we are encouraged by our improvement in category share performance in key markets around the world. Meanwhile, we are planning contingencies and taking action for managing through continued global economic uncertainty, even as we prepare for our next chapter as
part of a global snacking powerhouse with Mars.”

Price Action: K shares traded lower by 0.17% at $82.63 at last check on Thursday.

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