Battle Creek, Michigan. —WK Kellogg Co expects to continue to “oppose our financial goals” after completing its first full fiscal year as an independent company.
North American serial companies saw high-end top-adjusted earnings per share in Wall Street forecasts for the fourth quarter and fiscal year 2024, but the cost of the $500,000 supply chain modernization program is I removed a bite from the bottom line.
“We’re implementing our plans and providing value propositions,” Pilnick told analysts during a conference call on February 11th. “Making a stable top line and driving margin growth is what our short-term model works, and we are firmly on that path. We are doing what we do. By prioritizing, focusing on the organization and implementing excellence, we have delivered wide-ranging 2024 to our expectations and built for the future.”
Net income for fiscal year 2024 fell by $72 million, down 35% from 82 cents per share of common stock in 2023, or $1.28 per share. Restructuring costs associated with supply chain modernization plans. Standalone adjusted net income, which excludes the impact of Kellogg Co.’s split on Kellanova and WK Kellogg, fell 9.1%, down from $164 million in the previous year, or $1.91 per share, at $119 million; It fell from $1.70 per share. Analysts’ top-end estimates were $1.67 for adjusted EPS for 2024.
For the fourth quarter, net income was 21 cents per share, up 27% from $15 million a year ago, or 18 cents per share. Standalone adjusted net income rose 42¢ from $25 million or 29 cents per share in the previous year, up 48% from $37 million or 42 cents per share. At the high end, Wall Street was predicting a 29¢ calibrated EPS.
“We are successfully moving our strategic priorities through intensive execution,” Pilnick said. “For example, our dedicated sales force is in stores that sell iconic brands every day and acquire integrated commercial plans. The team’s capabilities are mature, and relationships with store managers and retailers. The overall relationship with the dealer is growing, and we can already see the benefits of the enhanced features through launching new marketing models and increasing return on investment.”
Strategic Initiatives on Targets
Pilnick cited the three-year supply chain modernization plan announced in August as another “critical strategic priorities.” The $450-$500 million project with estimated cash restructuring and non-destructive costs of $110 million is expected to drive growth of a adjusted EBITDA margin of approximately 500 basis points, with margins being 2026 It will rise from 9% in the year to 14%.
“The implementation of this strategic priorities is on track and supply chain performance is already improving,” Pilnick said. “Secondly, we are investing in building a strong foundation for the future by creating our own operating infrastructure throughout the company. As part of our spin, we are committed to almost every aspect of our business. The aspect is separate from Keranova. Our business is highly integrated with Kellogg North America and is currently completing the separation activities related to becoming an independent company.”
WK Kellogg has also completed its migration primarily to its own warehouse network and continues to build its own scalable IT infrastructure.
“We are pleased with the progress we have made so far and hope to end all of our transition services by mid-2025,” Pilnick said.
He added: We provided broad top-line results in line with our expectations, pushed for greater margins, and grew Evitta ahead of the basic guidance. ”
Stabilizing the top line
WK Kellogg’s net sales totaled $2.71 billion in 2024, down 2% from $2.76 billion in 2023. The 2.7% year increase in price/mix was offset by a 3.7% decline. The company cited a “continuous, challenging business environment” as behind lower sales.
According to WK Kellogg, net sales in the fourth quarter fell 1.8% from $651 million the previous year to $651 million, down to the same percentage on a standalone adjustment basis. Price/mix increased by 3.8%, while volume fell by 5.6%. In addition to challenging business conditions, the company noted that the Canadian dollar is weak against the US dollar.
In 2024, WK Kellogg’s US dollar sales fell 2.8% year-on-year, reducing US Category Dollar stocks to 27.4%, down 40 basis points. Canadian dollar sales rose 0.9% in 2024, increasing Kellogg’s category dollar stock by 90 basis points to 38.9%.
“We have a challenging environment in the fourth quarter, with consumers continuing to seek value, and as a result, the level of promotion activities within the category has improved,” Pirnick said of U.S. sales performance. “That being said, our promotional activities were similar to those in the fourth quarter of 2023, which affected our quarter and year’s top line and shared positions.”
Still, WK Kellogg’s strategy is “going well,” he said. “Our plan assumes a challenging operating environment will last in 2025. We apply lessons learned from 2024 to ensure that exciting innovation, brand building and consumers can be used to ensure the right price. We will continue to maintain discipline in our approach to driving demand to deliver packs. With the right channels.”
In terms of innovation, Pilnick said WK Kellogg will roll out its 2025 innovation plan through its “platform” including food, brands, formats, segments and nutrition.
“Let’s start with Glazed, which is what we call the launch of the first food platform,” he said. “This concept allows R&D and growth teams to work together to create great foods and leverage major brands like Frost Flakes, Applejack and Crave. Raisin Bran is a great example of how to activate your brand platform. A few years ago, the Raisin Blanc Ranch was developed, but it is now even bigger than the original Raisin Blanc. Last year we launched Frost Blanc, which has no raisins. It contains delicious raisin blanc flakes, and this year we take that chassis and fire a blueberry blanc lunch.
“We were able to see the flexibility of this food form and how its brand can grow. Based on its success in the Cup this year, we will build new on-the-go offerings and create a formatting platform. We continue to expand. And we are expanding our granola platform, including the launch of bare oats and honey from Bear. Innovation is a key element of our plans and we are very excited about 2025 I’m doing it.”
WK Kellogg forecasts a 1% reduction in organic net sales in 2025 and adjusts EBITDA between 4% and 6% compared to 2024 growth of over 6.6%.
“The 2025 outlook coincides with the fact that financial algorithms remain stable top line, allowing us to deliver great value through expanding margins,” said Chief Financial Officer David McInstray. I spoke to. “We are excited about our 2025 plan, which will continue to focus on more robust and balanced innovation, continuous operational discipline, and maximizing return on investment.”
