Kellogg promises to spend big as it fully separates from Kellanova

WK Kellogg has bested forecasts and delivered good financials for FY 2024

(Image: Getty Images/Connect Images)

WK Kellogg Co is set to stand on its own two feet later this year after its 2024 Kellanova splitBranded cereal major Kellogg has bested forecasts in its full year 2024 financial update, its first since Mars acquired its snacking arm Kellanova.

Net sales growth declined 1.1% in the final quarter, though EBITDA rose admirably by 6.6% to $275m.

Its share price rose in the US this morning following the good performance.

Kellogg’s sales decline bested the wider category, which fought against strong headwinds and increased levels of promotion, CFO Dave McKinstray said during the company’s earnings call today.

Kellogg split from KellanovaThe business was now “highly integrated” as it continues to steer away from Kellanova’s infrastructure, said CEO Gary Pilnick.

Kellogg would become fully separate from Kellanova by the middle of 2025, he said, adding it had already “transitioned to our own independent warehouse” that was “largely complete”. New IT systems were also coming on line.

Sales in the US were down 2.8% and by 40 basis points, due to a “challenging operating environment” that would persist in 2025, Pilnick explained.

Sales in Canada were up 0.9% and by 90 basis points.

However, he was ambitious and said the business would continue to brand build and invest in new product development. It would also push hard on marketing and driving the most relevant pack sizes and prices in stores.

WK Kellogg will continue to innovateThe CEO was optimistic the business would see stronger results as it continues to roll out its commercial plan, “driven by innovation” and as the “sales team continues to mature”.

WK Kellogg would this year focus on pumping significant sums into modernising its supply chain to further support its growth and independence from Kellanova.

Kellogg’s and Kellanova confirmed a portfolio split last summer when a $36bn megadeal was reached for Mars to acquire the snacking arm, which contains brands including Pringles and Pop-Tarts.

Kellanova was formed in 2023 after spinning off from Kellogg’s. The deal with Mars shook global FMCG markets and signalled the possibility of further M&A in the snacking market.

Industry analysts believed Mars’ buyout of Kellanova had left Mondelēz International vulnerable, leading it to make another bid for Hershey.