Kellogg raises annual profit forecast as pandemic boosts demand, shares gain

Kellogg Co raised its full year sales and profit forecast on Thursday, buoyed by rising demand for its Corn Flakes, Fruit Loops and waffle mixes among consumers stuck at home due to the COVID-19 pandemic.

The Michigan-based company also beat second-quarter sales and profit estimates, sending its shares nearly four per cent higher in premarket trading.

Work from home policies and closure of schools have led to a surge in demand for cereals, oatmeal and snacks in North America, with Kellogg’s organic net sales in the region rising 11 per cent in the second quarter ended June 27.

Net sales stayed roughly flat from a year ago at about $3.47 billion, due to the sale of Kellogg’s Keebler cookie business last year. Analysts had expected net sales of $3.30 billion, according to IBES data from Refinitiv.

Organic net sales rose 9.2 per cent in the quarter.

Excluding items, Kellogg earned $1.24 per share, beating analysts’ average estimate of $0.94.

Net income attributable to the company climbed to $351 million, or $1.02 per share, from $286 million, or $0.84 per share, a year earlier.

The company forecast fullyear organic net sales to rise about five per cent, ahead of a prior forecast of a one per cent to two per cent increase, and its adjusted earnings per share to fall about one per cent, compared with previous outlook of a three per cent to four per cent fall.