Pringles-maker Kellanova beats quarterly sales, profit estimates on steady demand

(Reuters) - Packaged food company Kellanova topped Wall Street estimates for third-quarter sales on Thursday, driven by resilient demand for its ready-to-eat breakfast items and snacks despite rising prices.

WHY IT IS IMPORTANT

The Cheez-It maker has capitalized on its brand strength to steadily raise product prices over the past few years to strengthen its margins.

Higher prices, however, have not dented demand for its products unlike packaged food peers such as Kraft Heinz (NASDAQ:KHC ) and Conagra Brands (NYSE:CAG ), which reported disappointing sales earlier this month as customers traded down to cheaper alternatives.

CONTEXT

Packaged foods giant Kellogg Company (NYSE:K ) spun off its North American cereal business into WK Kellogg and rebranded itself as Kellanova in October last year.

In August, Family-owned candy giant Mars said it would buy Kellanova for nearly $36 billion, bringing together brands such as M&M's, Snickers, Pringles and Pop-Tarts, as they bet on continued consumer indulgence in branded snacks amid stalling growth in the packaged food sector.

Kellanova said on Thursday that due to the pending merger with Mars, it would not be providing forward-looking forecast.

BY THE NUMBERS

A let-up in costs tied to transportation, raw materials and labor has helped the company boost its adjusted gross margin to 35% in the third quarter from 33.2% a year earlier.



Net sales of $3.23 billion in the three months ended Sept. 28 beat analysts' expectation of $3.16 billion, according to data compiled by LSEG.

Kellanova posted an adjusted profit of 91 cents per share in the quarter, also surpassing expectations of 85 cents.

Source: Investing.com