Earnings call transcript Q4 2022

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Operator

Welcome to the Kellogg Company's Fourth Quarter 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks there will be a question-and-answer session with publishing analysts. At this time I will turn the call over to John Renwick, Vice President of Investor Relations and Corporate Planning for Kellogg Company. Mr. your begin may you conference call. Renwick,

John Renwick

Officer. our operator. us our Chairman today you, and by year well Steve Financial Good this Chairman and I'm our Officer; morning joining for full and as as results Chief you Cahillane, thank XXXX for for morning Vice quarter XXXX. joined and fourth Thank outlook and a Executive our of review Banati, Amit Chief

Slide shows forward-looking disclaimer. statements Number X our

projections certain be As Company's made those statements for you as statements. could Kellogg performance, such results projected. aware, materially forward-looking are are future today from Actual different

For is the further factors third a particular cause public well could to this to high so operating inflation, predict. of our macroeconomic conditions, these as amidst environment, cost disruptions, note presentation, other results information concerning slide as length, unusually direction, refer difficult This differ, filings. are please to whose that includes which and uncertain input and current severity to all global supply global the of SEC

recording page documents least the today's on be days XX archived for Investor at A and kelloggcompany.com. will webcast of supporting of

and basis As organic be earnings we for a on referring them now, over and referring an our per for adjusted I'll on operating sales And unless profit will Steve. otherwise share. to net currency-neutral to always, outlook, it to when noted, basis results and turn

Steven Cahillane

and strong by but across sustained growth sales EMEA Latin and portfolio portfolio our and growth evident of morning, truly of fourth in strong terms in completed was snacks snacks across excellent emerging quarter America. financially, were and through cereal demonstrated good competitively, Africa, what our what by end performance. market We led The net The extraordinary exceptional and posting in in everyone. with an John clearly strength grit noodles other in executing and organization our growth Thanks, markets also year, circumstances. the all regions double-digit skill, was underpinned

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We also improve that oriented clearer visibility announced, of not parent made planned, only company into progress of performance separation significant a the Cereal Co., will but our America company. strength and North snacks provide towards the of

on sales momentum and levers The inflation. world soaring while of all in high this is attempt winning growth amidst all leveraging all net going businesses. of in service Number focus of all results towards biggest organic brand restore innovation our which class true and With this brands, and growth with cost keep strategy, disruptions growth orienting Slide to global growth We in levels momentum we on to on working up X. of revenue our kept supply building shown and our on costs, in an to management our focus deploy sustaining clearly and our occasions portfolio, shown for momentum sustaining our shaped our leveraging stay are sustaining

all all our frozen snacks, regions expectations and but in ahead come four was sales noodles cereal, and groups, our four broad major our impressively of sequentially our growth growth of did in other. only every and quarter accelerated in and every Not quarter, this based category of

governance reliable practices. during and financial X And on the illustrating and to committed continued delivery can our tangible show taken remain recognitions examples you of some We alone, also Slide us day’s focus this quarter actions in expect received execution this environmental, XXXX. Number social, fourth maintain better commitment. towards and strategy to

X the same of that shows drivers we delivery you XXXX. financial can expect of in Number Slide many as this saw

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more on March into X% companies, separation processes. sales. Separately, designing spinoff out recall of of our continue which scheduled of separation food Company carving based key we systems the new American company's year. business plant this for the the focused the you'll net has to represents we that organizations, strategic Work options and with of of and were about the exploring financials, the progressed Meanwhile, late North towards still Cereal starting for

this visibility Given as as valuation we global our remain of year short, to global confidence company performance In as for ever with their of and snacking Company be company. outlook. long-term part Cereal and value poised decided in another making American good are by it created business and results. snacking well retain we current of as in better confident as market as North We growth focused have conditions more the into to a vehicle,

for me businesses our our a discussing now over Amit turn review Before in of to financials. detail, let it

Amit Banati

to for year. four or morning, good XX XXXX full in Slide us hit better and our a performance provides of drove our guidance A financial Steve, Number expected summary Thanks, everyone. results. exceed than quarter the

increase line growth the resulting led and than organic This than growth more way the XX% in Our year, to higher offset quarter fourth was operating basis This XX% a in the also XX% investment expectations. four. currency net our top to quarter a year-on-year in neutral exceeding our which on in full resulting growth X%, for adjusted organic profit brought year expected. basis accelerating sales growing in sizable growth

and Our the increased per in in interest being in XX% basis weighed increase share four in adjusted as decline income down a financial basis earnings related despite currency neutral to expense on the pension by quarter reduction anticipated markets.

flow our about increased $X.X our X% EPS line quarter our with prior from This year in billion in of growth on and basis, expectations. neutral currency came the performance at and which about for translation, per full from expectations. Cash Excluded four year year our adjusted four of the full neutral and a ahead resulted earnings the EPS. in of course net points is profit, foreign by operating sales, results same share quarter about and four currency currency reduced in percentage

Difficulty] of price expected, full that soon replenishment year Now reflecting at supply as improved. elasticity moved our up the not well as we inventories modestly both for the each let's had has look as [Technical trade much as during our as year, metric or as

Difficulty] adverse costs offset was profit currency four the those accelerated the inflation all able impacts to Yet overall our we input and across and because efforts of the translation actions year, input dollar three growth particularly Foreign [Technical revenue we year. management in and with cost a productivity headwind quarter this year. were impact of higher world, largely grew dollars and around effective quarter gross

and quarter the four in gross dollars higher both In than full came fact, in expected profit our year.

It's From fire while impacted a though, is and perspective, impact gross year. strike the we year-on-year quarter [Technical [Technical margin the margin in four two quarters percentage of and Difficulty] as first finished mechanical a matching margin profit the the during input improves there stabilizes we slightly in and by our Difficulty] lapped increase of

and fire is isolated nature of one related time XXXX XXXX. quarter being one in Some to largely this quarter strike impact to and four the

to And the improved realization be some of performance in up diminishing. of will by year. half will that margin is expected bottlenecks gradually cost driven moderate and it also input this from back But to price inflation catching come the shortages

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we and related gradually financial to compensation meetings higher As travel returned and we incentive budget as to above accrued performance. our

and four fire Difficulty] to earlier years two year's year's above quarter that ago. profits a decline strike, of last [Technical XXXX this In backing year due was

XXXX, than higher higher was years Difficulty] three it [Technical ago. and two than also Importantly,

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to benefit media in Other gains of quarter U.S. Most by do interest than partially was plans, year. FOREX certain and of though repeat. quarter this income that related to was income offset expect in decreased it and four better we remeasurement the not four the expected full

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to For XX%. XXXX, the tax rate be approximately expect we

to by year collectively minority shares in in quarter by to and an XXXX finishing the performance form our higher led are expected have last shareowners enhanced earnings [Technical be flat XXXX. JV than these of financial flexibility in Our year, Difficulty] cash And four, outstanding this dividend ventures. in good return flattish interests year. average we and increased as to were the flattish Collectively, even were buybacks relatively continued joint increase year-on-year

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Between half, categories above be same a executed North and price importantly, expect Therefore, the sustain most year. said our of algorithm is Co, we be are [Technical bottlenecks the the expect generate [Technical Difficulty] the the to to targeted towards momentum. business shortages. for our and and First realization, we of brand strong plans end still growth can strength Cereal momentum to and for America of we Difficulty]

guidance only full reasons remains in results it our simplicity assumes the year. our For for

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expected is come billion somewhere in billion. $X.X Cash flow and to between $X

of will a of $X.X cash the roughly and outlays is cash to in business. and $X.X cash billion combination the but continue capital related nature year-on-year, be business executing to million there the grow spin-off. onetime This reaching setting will up transaction plus pending to costs $XXX underlying stand-alone expenditure, and all billion, all Our flow to base related

in financial to to how momentum our and our so again continue management in good XX, in sustained levels and on to well XXXX groups, growth have chain, are we and we continue So inflation XXXX. protect we and we will improved were very about Slide regions so continue of we revenue XXXX. feel category Number service and and and In and performing profit up in momentum about the through environment solid in XXXX. inputs expect executed energy, we and condition. Across productivity able disruptions Amidst in we to cost high dollars do summarize to across XXXX, do steadily XXXX, supply down an will that

In currency-neutral, doing on XXXX, and operating net we XXXX. again that sales delivered in profit, growth we in plan above-target and

financial created have remain by confident thrive remaining significantly co. America We our as the our spinning strength off deleveraged And XXXX. excellent and the giving can of into in more Cereal us flexibility cash amidst be visible. will but the only flow global that business increased Not we North value focus, will Co. increased as snacking balance further that sheet, be ever going

to And individual XXXX. So Steve I'll we forward discuss to back with turn that, our are looking it good to businesses. year in another

Steven Cahillane

Thanks, Amit.

on Kellogg start North America Number Let's XX. Slide with

and can through the arising inventory XXXX, impact XXXX well quarter. second net well, a perspective, started from you as year a our both strong profit the operating year performed finishing very and as see, from disruptions. sales a And region We with straight largest in executed we and half chain and growth. the other fourth the supply perspective As very commercial strike lingering quarter-by-quarter, well costs with fire supply

largest America, Snacks in this sales is XXXX, half North year was year-over-year of America quarters, particularly Number representing finished in growth. but some the our XX. Slide the shipments, shown the within There on in our And segment region. North of segment the as double-digit Within timing over led way snacks,

their In well. of Krispies double-digit of as growth consumption Leading Snacks both the and Rice has four sales each net momentum both in America world-class organic Pop-Tarts fact, which Treats, in were growth years. sustained its past brands like North way accelerated and and of XXXX, which the generated Cheez-It, multiyear Pringles

growth. Number on year Our This the finished net North goods America very on depleted Slide enormous overcame as We obstacles delivering depicted strong XX. its sales to Cereal on business, business way inventories. entered

retailer new As ramp by replenish we SKU, we've year commercial than second we programs, rebuild shelves inventories, half, those during able were entered more to we And momentum. with to anticipated. quickly up the and SKU able our the were we real

shows XX progress commercial end we made inventories and Number Slide activity. restoring market have since the

our when poised both on track we can a As you our growth This consumption performance share XXXX is improve in recovery. accelerating see, our has will growth business to continued sustain back of full and have is commercial to sequentially, and year activity.

has In restore addition, margins. with supply back in place, to this begun business its profit

shown was into on North in challenges XXXX. America is business ran This Frozen Slide Number that supply another and Foods XX. capacity

us has it against Eggo's a a years, growth over put since we at time, issues Eggo, demand of simply We in that experienced Farms, matter last capacity of co-manufacturer. for the was midyear consumption in For putting up accelerated. strong production Morningstar And significant couple and capacity.

market. During improvement in supply the saw we almost and back of fourth signs online quarter, immediately, came

Number Slide pieces for another Kellogg good all XXXX. place in year to the XX, has in moving So North America

demonstrating and than of they more momentum, half are America undeniable sales. North our regions brands snacks net represent Our

rising sales speed as been signs are starting And to continue business input to productivity cereal constraints. has been continues to outpace what we Our actions what frozen very category to management up businesses inflation our steadily are growth past has activity. growth our catching getting as commercial just we plans, Company. be some ramp with off revenue all and for are Meanwhile, year. supply focused the up carving see severe strong cost while in We're of North America America will should good out making progress of financial results moving margin marketplace. North and on and And with The remaining delivering spinning bottlenecks this be detailed of Cereal good and executing receding. shortages result course, the improvement implementation ahead full America North

Ukraine. of Number Slide when war other faster outbreak Now others, let's turn the particularly in in this inflation to prices region and accelerated costs Cost after than Europe soared energy XX. and

fourth revenue yet half both another fifth Kellogg couple first profit. featured the the remain meaningful posting of will catch pressures, of down The pulling investment. profit good year, in profits cost Our straight in of also growth XXXX. the into net sales organic up actions to growth its year-on-year on management pressure brand Nevertheless, had in operating to a last and quarters Europe increase and accelerated have quarter likely year a

Europe quarter the is momentum Leading the represent this which Europe sales more generated growth year. net UK, not in the and Russia year-ago key snacks. all of comparisons way growth organic new. in were This Pringles snacks, End And growth sales our for delivered Krispies region's Slide as the And aside drove Rice now was and net than also full of Pop-Tarts markets quarter across straight double-digit fifth from strong sales, half the on rapid for growth in and year This XX. segment Number consumption three, Squares. shown year. our strong impact we net market,

Turning our deliver business can continues to steady this Slide see business European Number to growth. you that XX, and cereal

strength the costs, acceleration On we category growth activities market, growth markets quarter. sequential organic Special net in up End been this management revenue brands Rice of its commercial in and cover showed fourth the like sales growth and rates to K in accelerated pleased for across in have rising share business region in needed in each the gains in Krispies quarter, Tresor markets. UK, with growth particularly several France, and picked and the

into in condition XXXX. can head Europe you So as good remains very see that we Kellogg

brand year innovation in celebrating of strong expect campaign UK. on a we like but our also Rice to the cereal, snacks by plans, program and XXth including and Krispies accompanied our led increasingly Squares. As snacks Pringles, sustain portable XX, Days and by Better Pop-Tarts wholesome we Slide In have social indicated renovation Number in momentum

and deal's in details pressures, sales. are to cost and represents pending. supply half. divest final Europe's to little still of business, we approvals And than Russia manage will a total are through X% particularly which the We the more continue our an first have Kellogg timing, heavy though business This agreement

basis to this impact the not meaningful of adjusted results. So be divestiture should

Now let's turn XX. to Latin Slide America on Number

the and As in grew and fourth Latin sales quarter both chart America the full strongly, shows, year. operating profit net Kellogg

revenue and to this as accelerating net and strong supply growth and commercial managing execution, attributed all management through its route-to-market organic as fact, actions year In region of capabilities expansion growth in sales its its brands, its challenges. posted its agility well

price/mix and impact. double-digit below did and the which Brazil. historical sustained strong And both transactional the cover Central was Pringles growth markets, levels. year markets, shown in category Slide gaining while consistently year quarter currency XX. biggest years. has adverse with double-digit shows Number the the broad-based, more in The gains snacks the business are in Latin both Pacific growth quarter business net Brazil, is it than strong region End snacks Latin America Mexico all decline, fourth soaring was major Caribbean sub data to and America The full market across regions, for was XX% growth of XXXX, our the on cost finishing in net Mexico, America the region. volume the the year its and This In sales growth elasticity Our salty that quarter with for of and of needed with inflation year-on-year grown driven our quarter in over organic and featured the growth and year. fourth by the the full share sales led

key and sales Rico, indicated out our in Our behind once Flakes see, the our Frosted in reaccelerated as market, supply business. across the strongly. Puerto But and in full strike, Flakes Brazil this year, also net growth and as North coming quarter can felt sales and was and led Slide Brazil, full brands fire year, impact in cereal business Corn consumption in America's you Number In our Colombia. by Loops of Early that particularly the organically Caribbean was the in fourth Mexico grew region America like business quarter robust cereal in in and net Froot us, the XX. disruption Latin of year, on the

to on XXXX. Number Latin America, too, is for poised XX, in moving So good year Slide another

We momentum expect Pringles, to grow and expect sustain cereal. by continue to snacks, led in in we to

this under work out margins American Cereal profit and towards into improve Caribbean to North well Company year, our business is expect cereal spin-off. the We carving

this Middle snacks category review organically and the continues line This of was the as across We'll with region regional finish top to regions, Australia, in and all North EMEA, Slide sales our line Zealand growth year deliver XX. all up other. also groups: and Asia, The grew Africa. teens East growth all Africa, with or growth. and broad-based quarter, New on exceptional In full Net shown better bottom the and our year, our for high was long. the fourth noodles cereal, growth strong across of sub Number

And led quarter region as basis Despite consumption enormous markets, full strong Middle posted led the year. Rice international was also markets year. well currency-neutral in in Africa realized the double-digit both full quarter on Asia, growth which Australia, and quarter to all net and XX. in pressures, In growth Number brands. by the organic outstanding delivered cost the of year, a across Treats sales good for both the growth and from profit the growth the emerging adjusted and for EMEA expansion consumption Pop-Tarts ranging both This those This key Pringles, was for full East. by fourth shown growth year. also Krispies on it share the in Slide sustained Snacks bodes further we and

strong Cereal on also sales as shown net Slide year, XX. all Number organic posted growth

Africa the both quarter with East, price Australia. full share Growth this in elasticity in Asia on usual. and growth sub grew region, and consumption Overall, measured it year. led volume markets mix, for growth saw than of the pronounced solid but we and in was the the year. quarter and most we the remained in impact the full Middle fourth across and by also As with fourth was And regions, being all lower snacks, the

market, and including led Australia, year, in brands, our quarter biggest strong corn pops, Sultana Our corn posted by of growth many for double-digit Bran. and consumption flakes the developed gains most

And We recorded quarter growth strength Slide and In business with this is which then net other sales consumption well good EMEA, and Number XX. noodles XX%. largest EMEA come organic the India. particular growth on we to sustained also shown in segment in of markets of noodles year, emerging over our other, every

In it in we distributor double-digit year delivered consolidated fact, has the of portion every West business organic growth our African XXXX. since

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enjoying expected operating growth and Number portfolio above-target is XXXX. right on our now, as strong in is profit to drive of momentum net this the XX, in fact, sales vast very shown and In Slide majority

distract sure to deliver a financial we'll continuing our to pension not accounting, want and our with that for economic talented dedicated will I Kellogg line preparation markets for historical and that, questions. employees not nothing, not the the for unusual thank your from up declining of And making spin-off us stakeholders. conditions, open

Operator

you. [Operator Instructions]. Thank

go from Our Jason, is Please now Sachs. English comes Jason of for question ahead. first line today your open. Goldman

Jason English

housekeeping. all top you folks. good start impact for me of with can in real based We but Lots still table. morning we quick in. have FX bottom questions Amit, restaurants where coming Hey, you, and spot do out on to terms on of maybe the in, current Thanks sliding rates, see here line?

Amit Banati

Yes.

current X% I just rates, say think, we'd at probably looking X% X%. OP, sales around on impact on EPS Jason, the maybe and to

of where the outlook at the are that's look you rates So kind if today.

Jason English

That's the good profitability, it doesn't year, sits bottom on missed off, part marketing. kind market? price and the you Steve, mean bit update on an carrying though. mentioned in little status step Europe on falling pressure year. think from you momentum -- a like it, negotiating I through more you give falling we as going exit of probably where Okay. carry the substantial a that sure in line know also mean helpful. and you that that right say perspective. fast, of what's I the is margins look that finishing I can you Can now, you then Thank mentioned where touch And were down off price unpack you. heard like negotiation us next periods us, in And I strong we are and but to the year. I into is higher for driving

Steven Cahillane

Jason. to up and Sure, The third it right? essentially, Yes. impacted we're catching was fourth and to catch inflation and furious, Europe, ability it's came fast quarter. in up, the In our

We also which doing. to in quarter. line, had, obviously, we're impact our continued committed to the bolster A&P the primarily, Higher third top Russia

through European ability making very, our so It's earned solid. catching get mentioned, our is challenging, business been the dynamics has be our And be solid. price a we but still It's anywhere, can pressure way we're but but half, to also of up. bit been -- And price underlying as in first the to very a easy going never we've it.

business. confidence really in And so -- little the took just we catch a have time It's to underlying up. the of good momentum

Jason English

the Okay. on status And the negotiations? price

Steven Cahillane

our negotiations talk conversations, affordable like be We which about the to those consumer having we well, to individual in don't everything that consumer. reasonable to with as as we're And the maintain possible, protect always we're they constructively. our proceeding customers. and margins. adult We Jason. but right want They're doing too they're as Yes, shape now, much do, is protect need

Jason English

Okay, thank you.

Operator

you. Thank

Alexia for today from of next Our Sanford Howard question Bernstein. comes

now is line Your open. ahead. Please go

Alexia Howard

everyone. Hey, morning you me. hear can Good

Steven Cahillane

Good morning.

Alexia Howard

situation Great, into we out a ask bit a the of U.S., frankly, as that companies XXXX. as can that step though, back. about in looked of I the the yesterday, lot particularly it Nielsen came and was that volume a rolled looking data I'm at

is a at secondly, still then is last one, compares there basis, look And it seeing two down are two-year as on the from or So questions; you're just from consumer like U.S. I the looks Omicron volumes that's the anything mid-teens. tough business shifting cereal year?

does we right year? looking are in know from last and imply that Thanks, it we business strike pass on. lap now, So year-on-year, what it's fire I price that and will as elasticity for the ongoing that but good -- the I

Steven Cahillane

Yes, Alexia.

very, is. basis distribution but XXXX the basis We're not that of us sets. cereal I'm shelf basis, obviously, about at, American But and about On cereal. confident it the we're Volume our been in we've though, We up. And volume is cereal did for is America gain. two-year On fairly with very, of quarter, in North strike. and have NSV a on solid, pleased a well, looking a first also easy revenue two-year is up. the in it. North the business place. you're was confident able fourth And We're down because of we're comparison, category in overall in very all, trajectory we sure particularly about was up one-year the is plans -- we basis, American have nicely. very in slightly two-year NSV very to as our is our fire a what a So that confident up. and North up the

track. said, Our promotions are, consumer back really on as I

You on can a fact, now Tiger matter Jalen of and us is the Super the Tony Bowl. see right that is which in Hurts Jalen television as for lucky

feeling about basis. recovery cereal good North one year a very American So two-year our and on

Amit Banati

standpoint, And have on I to think just we a that then incorporated from build elasticity. guidance rising

for into built our So that's XXXX. guidance

Alexia Howard

very you it pass Thank I much. on. will

Operator

you. Thank

Sandler. Our Piper now from comes Michael, ahead. your open. Michael line Lavery next go question from Please is

Michael Lavery

Thank you, good morning.

is the the Contrasting little cereal just a that over, maybe piece a year it U.S. maybe world? performance U.S. globally in in what volume the bit hit you of you've consumer you is America, relatively the on bit up about differences in throughout that declines inform stronger seeing had volumes differently savings level. little and how excluding North follow can the obviously, sort rolling the of and to seeing wanted stimulus think but with the supported now XQ at you're around from just drawdown what you're unpack versus the higher the Just

Steven Cahillane

Yes.

particularly everywhere categories. in different The the U.S. been inelastic, It's strong. around world. it's our relatively been has So

benefited situation, in still definitely strong. time. that we've The U.S. was that. very consumer still employment balance know, to remains balance erode as continues sheet, from no sheet question pre-pandemic, you U.S. stronger So the There's is over it than although the

the place. U.S. consumer look strong, the a remains And is that overall, very in So good categories in, right. it in at the we when you play

a of lot are they cutting items pressure. all are which, under So out items, know, high-ticket discretionary we

well. very doing are Our categories

been is could if look inside back those consumer has the seeing well strong, for little same in then the emerging you go elasticities ago, see positive a which And be of that And is our you said, we're cereal where results our if emerging the more you very all beginning particularly bit resilient a virtually at surprisingly the of category Europe in we we standpoint. quarters a that. indicate -- business, and from were did of seeing categories. the markets, of couple returning, doing very we're markets,

consumer. would consumer, little obviously, normal back else just world. categories, world. not European that, normal to elasticities as the or in levels a a to see the starting than the describe return of pre-pandemic what And we more levels, in in discretionary is the about is under Still of see and than rest you're to in So I anywhere more the say, you the higher bit but European pressure probably it

Michael Lavery

the the for line Okay. disproportionate understand the that I the Does other have trying company obviously, to meaningful that? a rest year, item cereal pensions, you business one and between any when impact side this That's or the legacy, from helpful there can the and of happens. just on the housekeeping of squeeze that's is color. big below just And follow-up but in a split a

Amit Banati

No.

the it's think size disproportionate. line I It's business. of broadly with the not in

Michael Lavery

you. thank Okay,

Operator

you. Thank

Our Jefferies. Please comes ahead. Dickerson of next now question open. line from is Rob go Rob, your

Robert Dickerson

if we the bit first provide upfront just -- kind on to little guess the of don't of driving And I $XXX little the CAPEX much. the just to is, spin, as But then clarity it. from so thanks question a charges spend? should just know information is simplistically housekeeping get kind of Great, that? expect question when what's CAPEX and in more the a of cash where second I around side. terms and I million heard

Amit Banati

Yes.

are think on execute year. I we end the spend So to track of the towards the

be we'll as the the information Day having expect. you'd as Investor that, well to providing up leading So as all

So end working of the is towards year towards. what the we're

the million, related it's $XXX of costs onetime transaction. think combination I executing a the to

develop closely management, think we ensuring change program consultants, the advisers I of some action. we're program with that comprehensive a a So blue-chip working have to and very on manage comprehensive plan

as it typical up well expenditure to as company. think well, running the systems the cereal includes IT loyal fees for as get chain your and supply I new to some capital banker realign

Robert Dickerson

Okay, follow-up. I Thanks will much. so

Operator

you. Thank

Our comes next Ken of J.P. Goldman from Morgan. question

is line Your open. ahead. go Please now

Kenneth Goldman

-- the Hi, I ask just guidance wanted your year. was for about I margin a gross word stabilizing to think this

imply what were as to mean have your down or of versus I'm SG&A seem XXXX It a basis. maybe come on both on thoughts sales for decline? a stabilizing it curious decelerating percentage a of does curious, Just rather, would dollar just rate curious, little at there? to what down that bit implies either a but And but would just

Amit Banati

on improve be margins, it the a think it'll on full to gross I we year progressively will basis, as flat slightly year. I and go through think up

So I year. lapping then as margin. range bottlenecks to margin, just do strike. we of and fire on moderate and shortages positive, where I a -- gross And the are I We think in we from obviously, we've goals think the and kind that's expect from been and gross the puts the the think go through

starting are as in -- We see to well. that

margin a would positive So think, standpoint. I a that, from be tailwind gross

an think inflation, cost expect our mid-teens and what standpoint, I incorporates. we from guidance input that's

moderated what in in input I saw continue to think from we still in inflation elevated. in elevated. see XXXX, we cost So corn, And it's oils, but It's potatoes. wheat, rice, still

expect of And I improvement in. standpoint, gradual built gross progresses. in a we'd from profit the been margin change year-on-year think that's phasing So as year the

on restore. And with on broadly And of -- normal to through standpoint, expect we from brand as a think inflation, increase then we'd an your expect in an restored is continues building question to SG&A, SG&A increase I then now activity I line brand think as overheads year think building -- think we'd supply on your as question year. in I full the I

Kenneth Goldman

so much. thank you Great,

Operator

you. Thank

from Our your is open. next Lazar ahead. Barclays. line Andrew Please Andrew, question comes go from now

Andrew Lazar

I get acute, much. kind the this Great, particularly ramp so there's I will to you is are respond through of a to the think, I'm constraints heading you'd activity split among to that much. concern, in in-market for irrational for to sense as partly so your more space, curious and whole, guess And just choose what Thanks sort concern of a from year? companies I terms concern drive somehow food Kellogg group as sort promotional And in plans and really Steve, benefit go wanes, of business. obviously pricing thanks a seems cereal because a the the towards how of right, ease that levels volume. think, investors supply maybe spending of

Steven Cahillane

Yes, really Andrew, don't have concern. we that

to anything irrational has that our activity, supply would an has improved, building, on And as been. an complement the we've seen been to is brand horizon. which effective haven't gradually restoring always environment our point We merchandising

drive from activity. a displays, it's excess drive standpoint, and for not not a And competitors. as as so certainly, thing. in obviously a categories thing it's there's a supply not for our us, bad lot think And to some of our if know, It's capacity bad I even merchandising you well of

creation, look out there, when the environment that, horizon. the you look rational you and see So at you a availability, very supply on when demand the at at when available, is I look which

Andrew Lazar

Thanks much. so

Operator

you. Thank

your today comes Our Moskow Credit now next open. Robert from line question ahead. Robert, go Please from for is Suisse.

Robert Moskow

more for color quarter, hoping a was comparison easy you're investment. little your for I think then Amit, on to have operating phasing on going quarter. the example, SG&A but for Like profit gross thanks. an first you increase dollars, growth profit Hi, by I

not profit growth is think than higher you really it first is or much your do So quarter different? annual average

Amit Banati

Yes.

we be lapping and building brand from in recall, particular, back strike as on and emerging year as two, the gross one think think I I last strike. fire you a quarter the certainly, had one. the from margin right, in standpoint, we'd I quarter if pulled were right, mentioned, quarter But in we

negative well. quarter So you're that quarter one as and lap going to in have into two

from So kind an and of phasing are it's -- puts standpoint. profit those operating the goals

Robert Moskow

off and buyer little A this on more Okay. like can will process, the it was results can think improve quick follow-up, seek for be process did pursuing year? Morningstar, of do you weak XXXX, a what you of you a your give in XXXX what in also expect color a spin-off the or

Steven Cahillane

this We were XXXX. beginning, for recall, was the valuation And began look a you definitely spin that. would going companies the when they They've our but say to said plan. compared are from thorough. process, will at to would I And Rob, process if stratospheric were very come we That other in strategic where today. improve Yes, is We alternatives. substantially. we did down peer quite pursue

we is thesis that. we at the what's strong freezer couple see peers. and the space to happening there'll already. Farms look market, still clearly migrating changed. some to, It's this the started we The was pursue an same back players consumer fantastic the of of coming. the we for household shareholder highest unlock and shakeout recognition, should of on the Morningstar when when imminent has highest of foods, name category, unlike this And we process in left So horizon in profitable, if standing, the be a the could And where penetration, value types environment many attract multiples truly public has

business, the we keeping we as was Farms. morning this when back are there elation. look it, people best And for were that we So the at we shared Morningstar our with and step parent

of wellness, optimistic And their in few in so we're the plans, when of more around continues, XXXX. cleanest And there's the standing. And there'll that around has optimistic environmental shakeout Morningstar be health labels the still people, concerns, animal away around and there. one beyond underlying from because for our we're Farms a moving And left lot consumer underlying and momentum proteins, a out importantly, all drivers remain.

to And it. lot a keep going there's so Morningstar Farms, and excited we're from

Robert Moskow

you. Thank

Operator

Thank you.

open. Our go Spillane of America. comes is from Bryan now next ahead. line question your Please from Bryan, Bank

Bryan Spillane

of to it's might opportunistic through snacking, forward? going the back getting or be operator. a just be be Thanks it's lot Good maybe how these sense years, of through everything category to to obviously, the we've or trying in the business. strategy for of lot last a separated. able definitely so And do very you resilient what snacking part will a get businesses not couple really opportunities in the how morning we there's to quickly look think can begin proven to been on portfolio step you But adding you like just as of -- on how acquisitions a of everyone. forward, you how a focus Steve, there's take aggressive be M&A,

Steven Cahillane

Yes. Thanks, Bryan.

and will balance sheet, we'll going snacking spin, the part the priority a think Obviously, a the very And have we're strategy. of strong one. to company with as execute cereal company be well. I execute global spin. it That's number we'll

And look we and Krispies with overseas Canada, United as really geographies so can well. opportunities. the Pringles Rice is in organic you and as only remain organic Brazil, we'll exceptional. for Cheez-It remain as and look inorganic other with leaving for opportunities, our expanding And soon States exceptional, opportunities, Cheez-It, Treats, now see,

bolt-ons those be part definitely our snacking, can balance, we we'll look growth, of continued additions, do have will organic with because to forward. and in or that supplement our for where we on considerations look opportunities capabilities portfolio bigger but we'll great going So route-to-market, great at

Bryan Spillane

to you really it And if just the or or any like change Okay. pull scenario it risk conditions a the -- just you decide forward, valuations that pull what's is thinking it? the melt we're as about delay down as -- then what markets there create or there how or just dependent risk would follow-up, where that split a like going is

Steven Cahillane

of Well, never, end shareholders there's which right. a Bryan, very a year. that by condition tax-free we really. confident spin-off, are by you It's we say won't this our very, no the the spin dividend never But to execute obviously,

high of don't to have markets, we but by the rely the very have on degree a executing dividend risk, have the markets. to of IPO a without so shareowners we on is this plan rely absolutely And to markets. nothing debt equity confidence, It's We end don't our year. and on and we

Bryan Spillane

Great, a thanks. We look forward guys to CAGNY. on see you

Steven Cahillane

Bryan. Thanks

Operator

Thank you.

of from next Eric comes ahead. line open. Eric, Partners. Seaport Larson now question Our is Research Please your go

Eric Larson

for squeezing a thanks in Yeah, everybody. Congratulations on good year.

more my half pretty total? contribution kind in or Europe? like a either for little you -- had where forward a So positive maybe Is promotional events, special strong any us good year, Europe probably area onetime that kind are there first difficult seems the might to tailwind, question is expect things forward year half. events to this of a an on Do for events Pringles you very for as one been second of make has that of etcetera? bit kind this, can U.S. outlook there as last such the soccer a the a headwind back the onion a XX-month Europe uncertainty the comparison, you be look, have little And to better really peel

Steven Cahillane

consumer of thanks execution so when is year again get on underlying brand We've strong really we're first engagement very that confident I'd And pricing the Russian number it's up the of just to a catching fifth strength plan -- for comparisons their got do catch-up going Pringles. that. different question. to Europe very by is nothing that an and comp underlying strong. the to the strong one. Pringles. has say we're great with long Pringles completed remains on driven engagement, of momentum great easier we Eric, half aside growth from unusual we're there's The activities, story for a costs, and based customer Yes, lapping a been

the well. our portable remain of returned has to growth strong. real doing brands has surprises And snacks is cereal Our and one quite been really wholesome

so And in we're year half, first up, that we a which more terms be it's forecast a and And see our it's growth confidence see that great of it. gives of there'll of of catching in in can deal us it's it doing. can but a second it in Europe. sixth half, process We really happening,

You add want anything? to

Amit Banati

the catch the think the No, rate half, phasing to comment, I pricing the think then the just easier think, the the lead as first combination profit growth, of half. growth half. having increasing -- expecting moderating the would on I think comp as building pricing be up inflation, I and, at hopefully, And higher I in OP a second in been operating through up growth an in caught on we'd well second to

Eric Larson

One quick follow-up.

at is kind ever noncash pension you it and as opposed a report on Given EPS cash it really EPS that to you have event, event, reporting income your as of basis but considered priced a I a way think now? gets cash the looked your

Amit Banati

No, but we that. certainly we'll haven't, study

Eric Larson

you. Thank

Operator

you. Thank

Powers comes Deutsche Our line from of Steve Steve, for now next go your is open. Bank. ahead. today Please question

Stephen Powers

just to start, earlier. morning. Thanks a Maybe topics guys. came some great. Hey, follow-up couple on Good that of up

on that as associated the come magnitude It U.S. that, and pretty I'm little does of sense element of My markets. is a there's to is the we that Europe. there's the cash the material of pricing on does million, the $XXX closer any in like the there? there in year, the pricing us And pricing question get magnitude on -- timing is is, sounds has -- kind if anticipated event? emerging to first equally the XXXX in you kind give pricing, come incremental in it any actual throughout sure Just could to cost, there so, build one CAPEX -- that of

Steven Cahillane

but customer I'll start the productivity. we take forward-looking that first terms nature, talk always with costs rising with and get negotiations things start the we're the about pricing we going what into of with of in is I'll and let start not CAPEX. against Amit to defense line always pricing and of

because is that -- productivity to this the plans bottlenecks have recede. and is shortages receding historic more so And the given of noise starting to put opportunity together us all really

about, Amit to is plan. grow And But so productivity stabilize them. aggressive we slightly as have margins our intention will to an talked

revenue it management our look depending year, the throughout But that's going is. require throughout different So what to that and that'll growth year, is on geography intention. the

Amit Banati

through and And I onetime the think of the the costs terms the year, the mean, phasing we're middle in I in right of program.

so And to the could you it be through I think year. spent expect

in out call to particular nothing that. there's So

Stephen Powers

Yes. Okay.

of XXXX Okay, the question great, the of and forthcoming its just thank and the in you. cereal the business anticipated of about to terms this. the I and a course the today? growth relative to over thinking this will appreciate total lot portion morning. is gave there Is be prospects American that for growth more relative Cereal that way on North organic other company expectations a profit I North And gave operating But the and frame Company American guidance total guess enterprise guidance you to the of you

Steven Cahillane

point, that fire plan obviously, we TDPs Yes. level, have a you I on that were can that made lost but gross continuing at We We and continue of getting don't that's successful earlier. point the the We been this to low that strike. go grow the to and comments because category into back momentum came our and margin. look to very to momentum, up

the coming that continue very of the we feel But underlying we're the trajectory. good and that. momentum, about, So trajectory off business, we aim to

Stephen Powers

you Thank much. Okay. very

John Renwick

everybody, for XX:XX, call questions. are a time. at interest so But give any have we us please out And you Operator, thank we of if in follow-up Kellogg. you your are

Operator

Thank joining call. you today's for

line. You may now your disconnect

Kellogg (K) 9 Feb 232022 Q4 Earnings call transcript