Kellanova K delivered third-quarter 2024 results, with both the top and bottom lines coming ahead of the Zacks Consensus Estimate and earnings increasing year over year. While sales declined year over year, the company saw an increase in organic sales. Kellanova’s robust third-quarter results underscore the success of its growth-focused and profitable portfolio strategy.

On Aug. 14, 2024, Kellanova unveiled a deal with Mars, Incorporated (a global leader in pet care, snacking, and food), per which Mars will acquire Kellanova for $83.50 per share in cash. The transaction is anticipated to close in the first half of 2025, subject to various approvals. Kellanova is not issuing any guidance due to its pending deal with Mars, Incorporated.

K’s Quarterly Performance: Key Insights

Kellanova reported adjusted earnings of 91 cents per share, which increased 18.2% year over year, driven by increased operating profit. On a currency-neutral basis, adjusted earnings per share (EPS) rose 19.5% to 92 cents. The bottom line surpassed the Zacks Consensus Estimate of 85 cents.

Kellanova Price, Consensus and EPS Surprise

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The company recorded net sales of $3,233 million, which surpassed the Zacks Consensus Estimate of $3,154 million. However, the top line fell 0.7% year over year. The downside can be attributed to unfavorable currency movements, which offset the favorable price/mix and volume. Organic net sales (excluding currency impacts) grew 6%.

The company's impressive organic net sales growth was largely fueled by volume expansion and currency-driven price/mix gains in emerging markets. Developed markets also witnessed organic growth with volumes improving sequentially despite a slower-than-expected industry demand recovery. This, along with support from productivity gains and easing cost inflation, enabled Kellanova to enhance its profit margins.

Kellanova’s adjusted operating profit increased 16.1% to $441 million while rising 19.4% to $453 million on a currency-neutral basis.

Decoding Kellanova’s Segment-Wise Results

Sales in the North America segment amounted to $1,673 million, up 1.1% year over year and 1.2% on an organic basis due to improved pricing/mix, partly offset by lower volumes.

Revenues in the Europe segment totaled $616 million, up 7.2% year over year. Organic net sales rose 3.6%. Revenue growth initiatives and favorable currency translation contributed positively, though these gains were partially offset by a volume decline, which showed moderation compared to recent quarters.

Revenues in Latin America totaled $329 million, down 5.5% year over year due to currency headwinds, partly made up by favorable price/mix and volumes. Organic sales ascended 4.1%.

Revenues in the Asia Pacific and the Middle East & Africa segment totaled $657 million, down 10.2% year over year. Unfavorable foreign currency rates caused the downside. However, the favorable price/mix and volume growth were upsides. Organic sales jumped 21.6%.