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Kellogg Company (K - Free Report) delivered impressive fourth-quarter 2022 results, with the top and the bottom line beating the Zacks Consensus Estimate. Net sales and earnings increased year over year. Net sales growth was backed by revenue growth management actions, momentum in snacks and emerging markets and continued recovery in the North America cereal business.
Quarter in Detail
Kellogg reported adjusted earnings of 94 cents per share, which came ahead of the Zacks Consensus Estimate of 84 cents and our estimate of 77 cents. The bottom line increased 13.3% year over year. On a constant currency or cc basis, adjusted earnings per share (EPS) increased 16.9% to 97 cents a share.
The company reported net sales of $3,832 million, which beat the Zacks Consensus Estimate of $3,658 million and our estimate of $3,586.9 million. The top line advanced 12% year over year.
Net sales growth was backed by a favorable price/mix in every region and continued momentum in snacks as well as emerging markets. The lapping of the year-ago period’s fire and strike in North America cereal contributed to the upside. These factors more than offset the impacts of price elasticity and unfavorable currency rates. Organic net sales (excluding currency impact) increased 16%.
Adjusted operating profit increased 16% while the same grew 20% at cc.
Sales in the North American segment amounted to $2,262 million, increasing 14.4% year over year. The upside in sales can be attributed to double-digit price/mix growth and momentum in snacks among other reasons. Net sales grew 15% on an organic basis.
Revenues in the European segment totaled $561 million, down 1.4% year over year due to unfavorable currency movements. This was largely offset by favorable price/mix and sustained momentum in snacks. Organic net sales jumped 8.3%.
Revenues in Latin America totaled $296 million, up 21.7% year over year, backed by a solid price/mix, momentum in snacks and cereal and favorable foreign currency rates. Organic sales ascended 19.1%.
Revenues in the Asia Pacific and the Middle East & Africa segment totaled $717 million, rising 13.4% year over year. The increase was driven by a favorable price/mix. Unfavorable foreign currency rates were a concern. Organic sales increased 26.5%.
Other Financials
Kellogg ended the reported quarter with cash and cash equivalents of $299 million, long-term debt of $5,317 million and total equity of $4,374 million. The company generated cash from operating activities of $1,651 million for the year ended Dec 31, 2022.
Net cash provided by operating activities is likely to be $1.7-$1.8 billion in 2023, while cash flow is estimated to be $1.0-$1.1 billion.
Image Source: Zacks Investment Research
2023 Guidance
Organic net sales growth in 2023 is estimated to be up 5-7%, led by price/mix growth and sustained momentum in snacks and emerging markets.
The adjusted operating profit is expected to rise 7-9% at cc, with margins stabilizing amid persistent cost inflation. Management expects the adjusted EPS to decline 2-4% at cc.
Shares of this Zacks Rank #3 (Hold) company have fallen 5.4% in the past three months compared with the industry’s 1.3% decline.
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests an increase of 19.6% and 90.4%, respectively, from the year-ago reported number.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2 (Buy). MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggests growth of 8.6% and 7.5%, respectively, from the corresponding year-ago reported figures.
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Kellogg (K) Tops Q4 Earnings Estimates, Sales Increase Y/Y
Kellogg Company (K - Free Report) delivered impressive fourth-quarter 2022 results, with the top and the bottom line beating the Zacks Consensus Estimate. Net sales and earnings increased year over year. Net sales growth was backed by revenue growth management actions, momentum in snacks and emerging markets and continued recovery in the North America cereal business.
Quarter in Detail
Kellogg reported adjusted earnings of 94 cents per share, which came ahead of the Zacks Consensus Estimate of 84 cents and our estimate of 77 cents. The bottom line increased 13.3% year over year. On a constant currency or cc basis, adjusted earnings per share (EPS) increased 16.9% to 97 cents a share.
The company reported net sales of $3,832 million, which beat the Zacks Consensus Estimate of $3,658 million and our estimate of $3,586.9 million. The top line advanced 12% year over year.
Net sales growth was backed by a favorable price/mix in every region and continued momentum in snacks as well as emerging markets. The lapping of the year-ago period’s fire and strike in North America cereal contributed to the upside. These factors more than offset the impacts of price elasticity and unfavorable currency rates. Organic net sales (excluding currency impact) increased 16%.
Adjusted operating profit increased 16% while the same grew 20% at cc.
Kellogg Company Price, Consensus and EPS Surprise
Kellogg Company price-consensus-eps-surprise-chart | Kellogg Company Quote
Segment Discussion
Sales in the North American segment amounted to $2,262 million, increasing 14.4% year over year. The upside in sales can be attributed to double-digit price/mix growth and momentum in snacks among other reasons. Net sales grew 15% on an organic basis.
Revenues in the European segment totaled $561 million, down 1.4% year over year due to unfavorable currency movements. This was largely offset by favorable price/mix and sustained momentum in snacks. Organic net sales jumped 8.3%.
Revenues in Latin America totaled $296 million, up 21.7% year over year, backed by a solid price/mix, momentum in snacks and cereal and favorable foreign currency rates. Organic sales ascended 19.1%.
Revenues in the Asia Pacific and the Middle East & Africa segment totaled $717 million, rising 13.4% year over year. The increase was driven by a favorable price/mix. Unfavorable foreign currency rates were a concern. Organic sales increased 26.5%.
Other Financials
Kellogg ended the reported quarter with cash and cash equivalents of $299 million, long-term debt of $5,317 million and total equity of $4,374 million. The company generated cash from operating activities of $1,651 million for the year ended Dec 31, 2022.
Net cash provided by operating activities is likely to be $1.7-$1.8 billion in 2023, while cash flow is estimated to be $1.0-$1.1 billion.
Image Source: Zacks Investment Research
2023 Guidance
Organic net sales growth in 2023 is estimated to be up 5-7%, led by price/mix growth and sustained momentum in snacks and emerging markets.
The adjusted operating profit is expected to rise 7-9% at cc, with margins stabilizing amid persistent cost inflation. Management expects the adjusted EPS to decline 2-4% at cc.
Shares of this Zacks Rank #3 (Hold) company have fallen 5.4% in the past three months compared with the industry’s 1.3% decline.
Solid Food Picks
Some better-ranked stocks are Conagra Brands (CAG - Free Report) , Lamb Weston (LW - Free Report) and Mondelez International, Inc. (MDLZ - Free Report) .
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests an increase of 19.6% and 90.4%, respectively, from the year-ago reported number.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2 (Buy). MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggests growth of 8.6% and 7.5%, respectively, from the corresponding year-ago reported figures.