Kellanova (NYSE:K) reported third-quarter 2025 results on Thursday that topped Wall Street estimates, posting adjusted earnings per share of 94 cents, which beat the 87-cent estimate, and revenue of $3.26 billion, exceeding the $3.245 billion estimate.
Kellanova's portfolio spans iconic brands such as Pringles, Cheez-It, Pop-Tarts, Eggo, and RXBAR, along with a diverse range of international cereal and noodle brands and plant-based offerings under MorningStar Farms.
Regional Demand Trends Offset Category Softness
Growth in noodles in Africa, along with favorable currency translation, offset category-wide softness in snacks, cereal, and frozen foods.
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The Chicago-based company reported GAAP diluted earnings per share of 88 cents, down from $1.05 a year ago, reflecting a lower mark-to-market benefit and a higher effective tax rate. Adjusted diluted EPS rose 3% to 94 cents from 91 cents.
Net sales increased 0.9% year over year to $3.26 billion, while organic net sales declined 0.5% to $3.22 billion.
Reported operating profit fell 0.6% to $452 million, primarily due to reduced mark-to-market gains, while adjusted operating profit rose 7.3% to $473 million, or 6.6% on a currency-neutral basis.
Year to date, net sales decreased 0.8% to $9.55 billion, and adjusted operating profit fell 4.1% to $1.39 billion. Free cash flow was $320 million, reflecting $788 million in cash from operations and $468 million in capital expenditures.
Segment Performance Overview
By segment, North America's reported and organic net sales each fell 3%, while reported operating profit rose 15% and adjusted profit grew 10%.
In Europe, reported sales declined 1% and organic sales fell 5%, driven by weaker demand and order disruptions. Reported operating profit dropped 27%, and adjusted profit fell 22%.
Latin America's reported sales declined 1% and organic sales 2%, mainly due to softened cereal demand in Mexico. Reported operating profit dropped 47%, while adjusted profit decreased 37%.
The Asia Pacific, Middle East, and Africa region grew 14% in reported sales and 12% organically, led by strong demand for noodles in Africa. Reported operating profit rose 5%, and adjusted profit increased 4%.
CEO Highlights Focus on Innovation and Emerging Markets
"Once again our organization demonstrated resilience as we managed through prolonged category softness and higher costs," said Steve Cahillane, Kellanova's chairman, president, and chief executive officer. "We have pivoted toward innovation, productivity, and emerging market expansion, notably noodles in Africa, which helped us deliver earnings above expectations in the third quarter."
As announced on Aug. 14, 2024, Mars Inc. agreed to acquire Kellanova for $83.50 per share in cash. Shareholders approved the transaction on Nov. 1, 2024. The deal is pending regulatory approvals and is expected to close toward the end of 2025.
Due to the pending merger, Kellanova will not provide forward-looking guidance.
Price Action: K shares were trading higher by 0.08% to $83.09 at last check Thursday.
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Photo by T. Schneider via Shutterstock
