Kellanova reports US$304M net income, 10% decline in adjusted EPS for Q1 2025

USA – For the quarter ended March 29, Kellanova’s net income increased by 14% to US$304M, equating to US$0.87 per share of common stock, compared to US$267M, or US$0.78 per share, a year earlier.

The company attributed the 11.5% growth in earnings per share to the cycling of prior-year restructuring charges and a lower effective tax rate.

However, excluding merger and separation costs and other items, adjusted diluted net earnings per share (EPS) declined by 10.9% to US$0.90 (down 7.9% to US$0.93 on a currency-neutral basis) from US$1.01 per share a year ago. This result fell short of Wall Street’s consensus estimate of US$1.01.

Kellanova did not provide an update on the US$35.9B acquisition deal with Mars, other than to reaffirm that the transaction is still expected to close within the first half of 2025, pending customary closing conditions and regulatory approvals.

Under the agreement announced in mid-August, Mars is slated to buy Kellanova for $83.50 per share in cash. Kellanova shareholders approved the deal at a special meeting on November 1.

Plans call for Kellanova to be integrated into Mars Snacking, led by global president Andrew Clarke, while remaining headquartered in Chicago.

Since the announcement of the Mars acquisition, Kellanova has not provided forward-looking guidance or held its quarterly analyst call.

Additionally, since Kellanova’s previous quarterly report, the Trump administration has rolled out and subsequently paused or postponed a range of tariffs, impacting major trading partners including Canada, Mexico, and China, as well as introducing universal and reciprocal tariffs on a number of nations.

Economists argue that these tariffs could increase costs for businesses and consumers, disrupt global supply chains, and hinder both U.S. and global economic growth.

In the first quarter, Kellanova’s operating income grew by 9.3% year-over-year to US$430M, up from US$393M.

However, on an adjusted basis, operating profit fell by 13.1% to US$441M from US$508M and decreased by 10.5% to US$454M in constant currency.

Net sales for the first quarter decreased by 3.6% to US$3.08B, down from US$3.2B a year earlier.

Kellanova indicated that negative foreign currency translation more than offset the net impact of increased prices/mix and lower volume.

Organic net sales, excluding the impact of foreign exchange, increased by 0.7% due to a 3.2% gain in price/mix, despite a 2.5% decline in volume.

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