Kellogg(US:K)2024-02-19 16:00Customer Concentration - Kellanova reported that its largest customer, Wal-Mart Stores, Inc., accounted for approximately 15% of consolidated net sales during 2023, with the top five customers collectively accounting for about 26% of consolidated net sales[40]. Research and Development - Research and development expenditures for Kellanova were approximately $116 million in 2023, compared to $111 million in 2022 and $117 million in 2020[43]. Social Responsibility and Goals - Kellanova aims to nourish 1.5 billion people with nutrient-rich foods and feed 400 million people facing food insecurity by the end of 2030, based on a 2015 baseline[18]. - The company has been making progress on its Better Days™ Promise since 2009, focusing on sustainable and equitable access to food for 4 billion people by 2030[16]. Product and Market Presence - The company manufactures its principal products in 21 countries and markets them in over 180 countries, focusing on snacks and convenience foods[13]. - Kellanova's products are marketed under well-known brands such as Kellogg's, Cheez-It, and Pringles, with significant distribution through direct sales forces and broker arrangements[14]. Environmental and Risk Management - The company has implemented initiatives to mitigate environmental risks related to climate change and food security, which are assessed as part of its overall enterprise risk management[21]. Equity, Diversity, and Inclusion - Kellanova's commitment to equity, diversity, and inclusion includes aspirations for gender parity at the management level globally and 25% representation of People of Color in the U.S. management by the end of 2025[27]. - The company has received recognition from leading organizations for its commitment to equity, diversity, and inclusion, including Diversity Inc. and the Human Rights Campaign[49]. - Kellanova is committed to equity, diversity, and inclusion, with eight Business Employee Resource Groups aimed at attracting diverse talent and fostering a supportive environment[47]. Employee Development and Wellbeing - Kellanova invests in ongoing leadership development programs for future and experienced managers, as well as executive leadership training[50]. - The company offers a competitive compensation package, including salary, annual incentives, and benefits that promote employee well-being[52]. - Kellanova's global employee wellbeing framework, "My Total Health," addresses physical, financial, social, and emotional wellbeing[53]. - The company has a strong focus on health and wellness, providing resources such as mental health support and gym access[53]. Leadership and Governance - Kellanova's Chairman and CEO, Steven A. Cahillane, has been in his role since October 2017, previously serving in senior positions at The Coca-Cola Company[61]. - The company maintains a Code of Conduct and Global Code of Ethics, with regular training and an ethics hotline for reporting concerns[54]. - The company’s leadership team includes experienced executives with diverse backgrounds in various industries, enhancing the company's strategic direction[56]. Financial Performance and Risks - The consolidated assets of the Nigerian business represented approximately 5% of total consolidated assets as of December 30, 2023, down from 8% as of December 31, 2022[345]. - Net sales from the Nigerian business accounted for 8% of consolidated net sales year-to-date as of December 30, 2023, but this percentage may decrease if exchange rates persist or decline further in 2024[345]. - The company recorded translation losses of approximately $141 million due to the devaluation of the Nigerian Naira, recognized in other comprehensive income[346]. - The total notional amount of foreign currency derivative instruments at year-end 2023 was $4.8 billion, with a net settlement obligation of $21 million[348]. - The total notional amount of interest rate swaps at year-end 2023 was $2.3 billion, representing a net settlement obligation of $93 million[350]. - The total notional amount of commodity derivative instruments at year-end 2023 was $201 million, with a settlement obligation of less than $1 million[353]. - The company expects input cost inflation to be flat during 2024, despite experiencing elevated commodity and supply chain costs in the fiscal year ended December 30, 2023[352]. - The company had posted collateral of $59 million as of December 30, 2023, compared to $9 million as of December 31, 2022[357]. - A one percentage point increase in interest rates would have increased interest expense by approximately $14 million at year-end 2023[350]. - Assuming a 10% decrease in year-end commodity prices, the settlement obligation would have increased by $11 million at year-end 2023[355].