Kellogg has become the latest global fmcg giant to reveal better-than-expected results as shoppers continue to buy more of its portfolio of brands while spending more time at home during the ongoing coronavirus crisis.
Organic net sales jumped 4.5% to $3.5bn (£2.7bn) in the third quarter at the cereal and snack maker as demand for packaged foods for at-home consumption remained elevated. However, Kellogg said growth had moderated from the previous quarter when consumers stockpiled as countries locked down.
The US-headquartered group added that higher sales in retail channels and strong growth in emerging markets had offset declines in on-the-go snacking and other away-from-home channels.
Reported net sales in the three months to 26 September increased 1.7% to $3.4bn, held back by the loss of revenues from businesses sold last year, as well as adverse foreign exchange movements.
Kellogg upgraded its outlook for the full-year on the back of another strong quarter, now expecting organic growth in 2020 of 6%, compared with previous guidance of 5%.
Chief executive Steve Cahillane said: “Amidst an uncertain business environment, our strong planning and execution drove better-than-expected financial results and solid in-market performance across all four of our regions in the third quarter. Accordingly, we are raising our full-year outlook for all key financial guidance metrics, even as we increase investment for the future.”
The results follow a strong showing from Nestlé last week, with the world’s largest food group posting third-quarter organic growth of 4.9% on continued demand for petfood, coffee and dairy products. Reckitt Benckiser, Procter & Gamble and Unilever also reported buoyant third quarters last week as new cleaning habits drove consumers to their disinfectant and handwash brands.
Kellogg revenues in Europe jumped 5% in the third quarter thanks to favourable currency swings and organic growth of 1% as gains in cereal and for the Pringles brand were partially offset by a decline in snacking on the go.
The group said its cereals gained shares across key European markets and Pringles made “notable” market share gains in the UK.
However, higher advertising and promotional spend, as well as Covid-related costs, led to operating profits in the region to fall by 9%.
Group adjusted operating profits slumped 10% to $400m in the quarter as a result of the higher spending across the world, currency headwinds, the absence earnings from sold businesses and higher performance based salaries for management.
“I’m proud of the way our organization has come together to manage through these trying times,” Cahillane added.
“We’re taking the extra steps to keep each other safe, supply the market with our foods, and support our communities in a time of need.”
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