Kellogg Company has reported 9.2% growth in organic net sales for its second quarter and raised its full-year sales and profit forecast.
The company says that Q2 sales were boosted by elevated at-home demand, particularly for its cereal and frozen food products, as a result of the coronavirus pandemic.
Reported net sales, which include the impact of divestiture and currency, were up 0.1% year-on-year to $3.47 billion.
The impact of a July 2019 divestiture, as well as adverse foreign currency translation, were offset by organic growth in the company’s remaining businesses resulting in the flat year-on-year result.
Reported operating profit in Q2 increased by approximately 27.3% year-on-year due to higher net sales, operating leverage, and investment delayed to the second half of the year.
On an organic basis, Kellogg Latin America saw the strongest growth in net sales, which were up 14% on the same quarter last year amid buoyant cereal sales. However, reported net sales declined 7% due to negative currency translation, as currencies in the region declined versus the US dollar.
Kellogg Asia Pacific, Middle East and Africa reported a 5% year-on-year increase in organic net sales. Here, sustained growth in cereal and from Multipro, a part-Kellogg-owned distribution business, more than offset lower sales of snacks due to pandemic-related disruptions and slowing economies in some markets.
In North America and Europe, Kellogg recorded organic sales increases of 11% and 4% respectively, boosted by demand for packaged foods for at-home consumption.
“Our organisation has risen to the challenges of keeping each other safe, supplying much-needed food to the marketplace, and giving back to our communities in a time of need,” said Steve Cahillane, Kellogg Company’s chairman and CEO.
“Importantly, we improved our category share performance and delivered financial results that exceeded our expectations.
“Our first half performance puts us in the position to substantially increase our investment in the business during the second half, while still delivering more net sales, operating profit, earnings per share, and cash flow for the full year than we had originally planned.
“This second-half investment is intended to bolster more brands in our portfolio, hone important capabilities, and enhance our competitive position, so that we emerge from this crisis even stronger.”
Kellogg has forecast full-year organic net sales to rise about 5%, revising previous guidance of a 1-2% increase.
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