(Reuters) -Kellanova missed Wall Street estimates for second-quarter profit on Thursday on softening demand for its ready-to-eat breakfast items and snacks including Pringles and Pop-Tarts, as macroeconomic uncertainty pressures consumer spending.
WHY IT IS IMPORTANT
Macroeconomic volatility due to U.S. President Donald Trump’s trade tariffs have impacted consumer spending in the United States, urging budget-conscious consumers to choose cheaper private labels and increasing competition for Kellanova’s name brand products.
Packaged foods peers Conagra Brands and General Mills also flagged weak demand going forward, following recently softening demand, while others including Kraft Heinz and Mondelez posted upbeat quarterly results.
CONTEXT
Family-owned candy giant Mars announced a $36-billion deal to buy Kellanova in August last year and has received approval from U.S. antitrust regulators, while EU counterparts opened a full-scale investigation in June.
The company now expects the deal to close by the end of 2025.
Kellanova is a rebrand of the Kellogg Company’s global snacking business following it spinning off its North American cereal business into WK Kellogg in 2023.
KEY QUOTE
“Demand softness in most of our categories did not improve as much as we had hoped,” CEO Steve Cahillane said about the quarter.
“We plan to continue to lean into focused execution in the second half, even as we continue to work toward closing the Mars transaction,” he said.
BY THE NUMBERS
Kellanova reported adjusted profit of 93 cents per share in the quarter, missing market expectations of 99 cents, according to data compiled by LSEG.
It reported net sales of $3.20 billion in the three months ended June 28, nearly in line with analysts’ expectation of $3.19 billion.
The company said prices fell 2.9% in the reported quarter, while organic sales volumes rose 3.2%, helped by sales in its Africa noodles business.
MARKET REACTION
Shares of the company were flat in premarket trading.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Pooja Desai)
