By Nathalie Voit
Cereal producer Kellogg may raise prices again in 2022 to offset broad-based inflation, CEO Steve Cahillane told CNBC on Feb. 10.
Cahillane said Kellogg was still experiencing “double-digit inflation” for input costs such as packaging ingredients, labor, and transportation. However, the CEO said Kellogg has largely been able to cover it.
“Our pricing performance has been very solid,” Cahillane said on “Squawk on the Street.”
“We’re going to see the wraparound benefits of the pricing that we took in 2021 into 2022 … but our goal is to cover all of those input costs with pricing and productivity, and we think we’re in very good shape to do that,” he added.
The chairman’s comments come after Kellogg performed above market expectations in its fiscal fourth quarter, despite dealing with skyrocketing inflation, global supply-chain constraints, and a three-month-long labor strike and fire at its North American cereal manufacturing facilities.
“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,” Cahillane said on Thursday in the company’s Q4 earnings call.
Despite the workers’ strike, Cahillane said Kellogg’s performance across the rest of its product portfolio “more than made up” for the losses to its cereal segment in the last quarter.
“As we’ve closed the books on fiscal year 2021, I could not be more proud of our organization’s focus and determination to work through challenges and deliver on our financial commitments,” Cahillane in the financial news release. “Facing significant cost inflation, worldwide bottlenecks and shortages, and even a labor strike at all of our U.S. cereal facilities in the fourth quarter, the team executed with agility to deliver another year of on-guidance results.”
The cereal giant delivered earnings per share of 83 cents, beating the FactSet consensus by 4 cents, according to MarketWatch. Kellogg said its profit per share more than doubled year-over-year in the statement.
The company predicts adjusted full-year earnings per share to increase by 1% to 2% thanks to its booming snack portfolio, which is delivering solid growth for items like Pop-Tarts and Pringles. Analysts surveyed by Refintiv IBES projected a 0.1% rise on average, Reuters reported.
Kellogg shares were up nearly 3.5% on Thursday in response to the news. Shares of the Michigan-based company continued to sustain their upward rally the next day, up by about 2% on Friday morning.
