Q2 2024 Kellanova Earnings Call Transcript
Key Points
- Kellanova Co (K) reported strong quarterly results, demonstrating a more growth-oriented and profitable portfolio post-spinoff.
- Year-on-year organic growth in net sales was on target, with sequential volume improvements outside of Nigeria.
- The company returned to full commercial activity with a robust innovation launch calendar, including notable products like Pringles Mingles and Cheez-It in Europe.
- Kellanova Co (K) raised its full-year guidance due to better-than-expected first-half performance, with organic net sales growth now expected to be above 3.5%.
- The company continues to improve profit margins, with a significant increase in brand-building investments and a target of a 15% operating profit margin by 2026.
- Volume declines were noted in Nigeria due to currency-driven price increases, impacting overall volume performance.
- Despite strong performance, the company faces challenges in Europe with volume declines and category elasticities.
- The impact of last year's divestiture of the Russia business and foreign currency translation, particularly the Nigerian Naira, clipped net sales growth.
- Interest expense increased meaningfully year-on-year, reflecting higher interest rates, partially offsetting operating profit growth.
- The company remains cautious about the second half, particularly in Nigeria, where further pricing actions may lead to continued volume declines.
(Operator instructions) At this time, I would like to turn the call over to John Renwick, Vice President of Investor Relations and Corporate Planning for Kellanova. Mr. Renwick, you may begin your conference call.
Thank you, operator. Good morning, everyone, and thank you for joining us today for review of our second quarter results as well as an update on our outlook for 2024. I am joined this morning by Steve Cahillane, our Chairman, President and Chief Executive Officer; and Amit Banati, our Vice Chairman and Chief Financial Officer.
Slide number 3 shows our forward-looking statements disclaimer. As you are aware, certain statements made today such as projections for Kellanova's future performance are forward looking statements. Actual results could be materially different from those projected. For further information concerning factors that could cause these results to differ, please refer to the third slide of this presentation as well as to our public SEC
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