Kellanova Co (K, Financial) released its 8-K filing on February 6, 2025, reporting robust financial results for the fourth quarter and full year 2024. Following its split from the North American cereal business in October 2023, Kellanova has emerged as a leading global manufacturer and marketer of snacks and packaged foods, with a significant presence in emerging markets.

Performance Overview

In the fourth quarter, Kellanova reported net sales of $3,124 million, slightly below the previous year's $3,174 million, reflecting a 1.6% decline due to adverse currency translation. However, on an organic basis, net sales increased by 7% year-on-year, driven by growth in both volume and price/mix. For the full year, reported net sales were $12,749 million, a 2.8% decrease from 2023, but organic net sales rose by 5.6%.

The company's operating profit showed remarkable growth, with a 62.2% increase in the fourth quarter to $532 million, and a 24.4% rise for the full year to $1,873 million. This growth was attributed to improved profit margins, productivity gains, and moderating supply chain cost inflation.

Financial Achievements and Challenges

Kellanova's reported diluted earnings per share (EPS) from continuing operations surged by 550% in the fourth quarter to $1.04, significantly surpassing the analyst estimate of $0.84. The adjusted EPS was $0.92, reflecting a 17.9% increase. For the full year, reported EPS increased by 72.4% to $3.88, while adjusted EPS rose by 19.5% to $3.86, exceeding the annual estimate of $3.66.

Despite these achievements, Kellanova faced challenges from adverse currency translation, which impacted net sales and operating profit. The company also dealt with the extended impact of elasticity on volume and the divestiture of its Russian business in mid-2023.

Segment Performance

Kellanova North America's fourth-quarter net sales decreased by 2% due to negative price/mix and currency translation, but reported operating profit increased by 28%. In Europe, net sales decreased by 2%, but operating profit rose by 24% due to productivity and reduced overhead. Latin America's net sales fell by 8%, but operating profit increased by 28%, driven by productivity and lower up-front charges. The AMEA region saw a 2% increase in net sales and a 47% rise in operating profit, despite adverse currency translation.

Cash Flow and Future Outlook

For the full year, Kellanova generated $1,760 million in net cash from operating activities, $115 million higher than the previous year. Capital expenditure was $628 million, resulting in a free cash flow of $1,132 million, up from the prior year due to higher net income and a postretirement plan distribution.

A more growth-oriented portfolio and solid execution by our entire organization once again contributed to stand-out quarterly performance, as we concluded our first full year as Kellanova," commented Steve Cahillane, Kellanova’s Chairman, President, and Chief Executive Officer.

As Kellanova prepares for its merger with Mars, Incorporated, the company will not provide forward-looking guidance. The merger, valued at $83.50 per share, is expected to close in the first half of 2025, pending regulatory approvals.

Explore the complete 8-K earnings release (here) from Kellanova Co for further details.