WK Kellogg reports 27% rise in Q4 net income as individual company

USA – WK Kellogg Co expects to continue delivering against its financial goals after completing its first full fiscal year as a stand-alone company, according to Gary Pilnick, the firm’s chairman and chief executive officer.

For the fourth quarter, net income rose 27% to US$19M, or 21¢ per share, from US$15M, or 18¢ per share, a year ago. Stand-alone adjusted net earnings rose 48% to US$37M, or 42¢ per share, from US$25M, or 29¢ per share, in the prior-year period. At the high end, Wall Street had projected adjusted EPS of 29¢.

The North American cereal company saw adjusted earnings per share top the high end of Wall Street’s forecast for its 2024 fourth quarter and fiscal year, though costs for its half-billion-dollar supply chain modernization program took a bite out of its bottom line.

Pilnick cited the three-year supply chain modernization plan, unveiled in August, as a key strategic priority. The US$450M – US$500M project, with estimated cash restructuring and non-restructuring costs of US$110M, is expected to drive adjusted EBITDA margin growth of about 500 basis points, with the margin rising from 9% to 14% by 2026.

WK Kellogg Co split from Kellogg’s on October 2, 2023, and is headquartered in Battle Creek, Michigan. It was formed as part of Kellogg’s spin-off of its North American cereal business.

WK Kellogg has also mostly finalized the transition to its own warehouse network and is continuing to build its own scalable IT infrastructure.

WK Kellogg’s fiscal 2024 net sales totaled US$2.71 billion, down 2% from US$2.76 billion in 2023. On a stand-alone adjusted basis, net sales declined 1.1% year over year.

A 2.7% fiscal year gain in price/mix was more than offset by a 3.7% volume decrease. The company cited an ongoing challenging business environment as behind the lower sales.

Pilnick noted that WK Kellogg will continue to engage in innovations and R&D in its platforms and brands such as Glazed, Frosted Flakes, Apple Jacks, Crave, Raisin Bran and Bear Naked Oats & Honey

Looking ahead, WK Kellogg forecasts fiscal 2025 organic net sales to decline 1% and adjusted EBITDA to rise between 4% and 6%, compared with above-estimate 6.6% growth for fiscal 2024.

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