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By Dhirendra Tripathi
Investing.com – Kellogg stock (NYSE:K) traded 3% higher Thursday after the cereal-maker rode price hikes and high demand to beat fourth-quarter estimates and followed that up with a robust outlook.
Record-high prices of crude and farm produce like wheat and corn as well as cooking oils has roiled the commodity markets, hurting packaged food companies.
Demand for its Rice Krispies and Corn Flakes has stayed elevated because of their utility for home-stuck and working-from-home consumers. Price hikes have followed while consumers haven’t really complained, boosting sales.
A 12-week-long labor strike, running through much of the quarter and spread across its four cereal plants in the U.S., eroded operating profit by close to 15%. Supply chain disruptions caused their own damage. As a result, net sales fell 1.3% to $3.4 billion in the fourth quarter and the company expects the hurt to linger through June, according to Reuters.
Fourth-quarter sales were also lower because of an extra shipping week in the same period a year ago.
A small fire also occurred at one of the plants in early December.
“After our supply was further disrupted by the fire and strike, we are recovering production, inventory and service levels and commercial programs in that (U.S. cereal) business”, Reuters quoted Chief Executive Officer Steven Cahillane as saying.
Adjusted profit per share in the fourth quarter was lower by 3 cents at 83 cents but beat estimates.
The company expects current-year organic net sales to grow by around 3%, led by higher prices. Both reported and organic net sales in 2021 topped $14 billion.
