Kellogg raises full-year guidance after topping Q2 estimates
Kellogg (NYSE:K) topped second quarter profit expectations and raised sales and earnings guidance when it reported earnings before the open on Thursday.
The food manufacturing firm reported earnings of $1.24, $0.13 better than the analyst estimate of $1.11. However, revenue for the quarter came in at $4.04 billion, below the consensus estimate of $4.07 billion.
The company said its operating profit growth was driven by an earlier-than-expected recovery in its gross profit margin.
Kellogg shares are down 0.4% at the time of writing, trading at $66.41 after initially rising to a high of $67.79 per share at the open.
«Our second quarter featured continued strength of our brands, execution, and results,» said Steve Cahillane, Kellogg Company's Chairman and Chief Executive Officer. «Not only do we continue to grow net sales organically above our long-term targets, we are also seeing the results of our efforts to recover profit margins.»
Looking ahead, the company raised its full-year guidance for organic net sales to +7% from +6-7%, and for an adjusted EPS decline of minus 1-2% from minus 1-3%.
Reacting to the report, Deutsche Bank analysts said the results reported were expected by the market. «We see most of the stock's future direction hinging on messaging to be delivered next week at the company's Investor Day focused on the pending spin/creation of Kellanova and WK Kellogg Co,» they wrote.
Stifel analysts said it was a strong quarter for Kellogg, with a gross margin expansion of 120bps versus the prior year and 240bps sequentially, well ahead of the firm's expectations.
«The strong results in the quarter and raised outlook likely support an outperformance for the shares,» they said.
Goldman Sachs analysts said the firm
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