Kellogg’s Reports Higher Sales Due to RXBAR and Multipro Acquisition

Kellogg Company announced second-quarter 2018 results and updated its financial guidance to reflect higher net sales; the US Morning Foods segment, including cereal consumption, has declined moderately. RXBAR and Multipro, companies recently acquired, led to an increase in total net sales.

“We’re pleased to report another quarter in which we delivered improving top-line performance and strong earnings growth, even after a significant boost in brand investment,” said Steve Cahillane, Kellogg, company’s chairman, and CEO. “We’ve strengthened our portfolio with acquisitions and expanded emerging markets presence, and we’ve reinvigorated our biggest brands. This is starting to show up in our net sales and our in-market performance and puts us in a position to raise our full-year guidance. We’re still in the early days of ‘deploy for growth’, but we like our progress so far in 2018.”  

Kellogg’s second quarter 2018 reported net sales increased by nearly 6% year on year, owing to the acquisition of RXBAR (October 2017) and the consolidation of Nigerian distributor Multipro (May 2018), which collectively contributed 6.7 points of growth on a currency-neutral basis. Second quarter reported operating profit increased substantially versus the year-ago quarter, due principally to lower restructuring charges and favorable mark-to-market impacts year-on-year.

The U.S. Morning Foods segment’s net sales declined year on year. Cereal consumption declines moderated, as the company tried to stabilize key health and wellness brands, by emphasizing their wellness attributes. The segment’s operating profit declined on a reported and adjusted basis, on lower net sales, higher commercial investment, and lapping year-ago growth.

Another segment, which is composed of the U.S. Frozen Foods, Kashi Company, and Canadian businesses, as well as the recently acquired RXBAR, increased net sales strongly on both a reported and currency-neutral basis. RXBAR continued its strong growth, expanding distribution and share; it contributed about 15% to North America Other’s currency-neutral net sales growth in the quarter.

Kellogg Europe recorded growth in net sales, both on a reported and currency-neutral basis. Reported growth was aided by favorable currency translation, and currency-neutral growth was driven by snacks, led by Pringles. Operating profit increased on a reported basis, aided by favorable currency translation and lower net restructuring charges, and it improved on a currency-neutral basis, as higher sales and productivity savings more than offset an increase in brand building investment.  

Kellogg Latin America posted higher reported net sales, despite unfavorable currency translation, as currency-neutral growth continued. This was driven by sustained momentum in Mexico, both in cereal and snacks, and a rebound in Caribbean/Central America.