Kellogg boosted its 2023 sales forecast amid a 14.7% year-over-year increase in prices during the last quarter as consumers continue to combat inflation at the grocery store, the company reported in its most recent quarterly earnings report.
The favorable outlook comes as the cereal and snacks maker has seen demand soften following a series of price hikes.
Revenue for the Frosted Flakes and Pringles maker increased 4.6% to $4.04 billion during the quarter, while organic sales rose 7.1%, falling short of Wall Street estimates, Seeking Alpha reported. The Michigan-based company now projects its sales to increase 7% in 2023, at the higher end of its previous range of 6% to 7%.
The earnings report showed a mixed operating situation. While Kellogg touted a 9% increase in gross profits year-over-year, volumes fell 7.6% in the quarter.
In the earnings call, CEO Steve Cahillane said the company intends to boost volumes through brand investment, including advertising spending and replenishing inventories.
“There’s no question this has been an unprecedented time in this industry with the type of pricing that’s been necessary to take because of the input cost inflation,” Cahillane said.
The company said it is making progress on its plans to split into two businesses — Kellanova for snacks and WK Kellogg Co for cereal —that is projected to take place in the fourth quarter. Last week, Kellogg filed a separation form with the SEC, outlining how WK Kellogg Co’s brands will operate following the separation.
Cahillane said Kellogg will elaborate on its financial plans ahead of the spinoff at an investor event next week. The company plans to tackle any logistical issues before the split is completed.
“By running the water through the pipes, so to speak, we can identify and address any process gaps and other opportunities well before the separation takes place,” Cahillane said.