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Kellanova (NYSE:K) tracked higher after issuing its first earnings report since the spinoff of Kellogg that created two separate companies.
The food company disclosed that sales in Q3 were held flat due in part to adverse currency translation and the divestiture of its business in Russia. The 4% organic-basis growth for the quarter was noted to be within the company’s long-term target range. Double-digit operating profit growth was sustained, as Kellanova (K) continued to restore gross profit margin faster than expected around the world.
Kellanova's (K) reported sales for the North America business decreased slightly year on year, as rising price elasticities and the lapping of prior-year trade inventory replenishment offset price/mix growth related to revenue growth management actions taken over the previous twelve months to cover high input-cost inflation. On an organic basis, sales decreased slightly year on year. Operating profit decreased by 3% for the North America business, as incremental up-front costs related to the separation more than offset the benefit of a recovering gross profit margin. On an adjusted and currency-neutral adjusted basis, operating profit increased by 8%.
Meanwhile, Kellanova's (K) Europe sales increased 10% Y/Y in the quarter, as price/mix growth more than offset the impact of price elasticity and the divestiture of its Russia business. On an organic basis, sales increased 8%. Operating profit increased by 29% for the European business, reflecting higher net sales, recovery in gross profit margin, and favorable foreign currency translation. On an adjusted basis, operating profit increased by 28%, and excluding currency it increased by 17%.
Shares of Kellanova (K) rose 2.65% in premarket action on Wednesday.