Kellogg beat Wall Street expectations for quarterly sales and profit, boosting the food maker’s shares over 9% as investments in marketing and product development drove higher demand for snacks and frozen food in North America.
Michigan-based Kellogg, which also makes Pringles, Pop-Tarts, Eggo Waffles and a wide range of breakfast cereals, has been spending more on advertising and developing new products to suit changing consumer preferences for healthier food and smaller portions. Net sales from North America, which accounts for nearly two-thirds of Kellogg’s revenue, rose 1% in the second quarter ended June 29.
The North America unit has not grown sales by this much since the first quarter of 2013, according to JP Morgan analyst Ken Goldman. Kellogg shares jumped but are still down in the past year.
Kellogg’s 2018 acquisition of a 50% stake in Multipro — a sales and distribution company in Nigeria and Ghana — helped drive a 23% jump in sales from the company’s Asia, Middle East, and Africa unit.
Total net sales increased 3% to $3.46bn (3.1bn), beating the average analyst estimate of $3.41bn, according to Ibes data from Refinitiv.
On an organic basis, excluding acquisitions, divestitures and foreign exchange impact, sales rose 2.3%.
Excluding cost items, the company earned 99c per share, beating expectations of 92c.
Net income attributable to the company tumbled 52% to $286m due to restructuring and divestment costs and a lower tax rate in the prior-year period.
Kellogg sold Keebler biscuits and a handful of other brands for $1.3bn in April and announced plans in May and June to revamp its European and North American operations.
Consumer goods companies have struggled for over two years with a surge in commodities and transportation expenses.
In June, Kellogg said it would cut about 150 jobs and take a $35m hit to trim its North American operations following the sale of Keebler biscuits and a handful of other brands.
The announcement was small in scale for a company that employs around 34,000 globally came after similar steps in Europe aimed at streamlining Kellogg’s operations and focusing on core businesses.