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Kellanova (K) Q2 Revenue Edges Up 0.3%
The Motley Fool· 2025-08-02 05:16
Core Insights - Kellanova reported Q2 2025 organic net sales of $3,202 million, slightly exceeding analyst expectations of $3,188 million, reflecting a year-over-year increase of 0.3% [1][2] - Adjusted earnings per share (EPS) were $0.94, falling short of the expected $0.99 and representing a 6.9% decline from the previous year [1][2] - The company is focusing on growth in emerging markets and maintaining cost discipline, although it faces challenges in North America and Europe [1][4] Financial Performance - Revenue (GAAP) for Q2 2025 was $3.20 billion, a 0.3% increase from $3.19 billion in Q2 2024 [2] - Adjusted operating profit (Non-GAAP) decreased by 5.0% to $477 million from $502 million in the prior year [2][5] - Free cash flow for the year-to-date period turned negative at ($39 million), compared to $443 million generated in the same period last year [2][8] Regional Performance - North America saw organic net sales and sales volumes decline by 3.8% year over year, with adjusted operating profit down 5.6% [6] - Europe experienced a 5.1% drop in organic net sales and a 9.3% decrease in adjusted operating profit, attributed to order disruptions [6] - The AMEA region reported a significant 18.7% increase in organic net sales, driven by strong demand for noodles, particularly in Africa [7] Strategic Focus - Kellanova has completed the separation of its North America cereal business, allowing a shift in focus to global snacks and convenience foods [4] - The company is planning a merger with Mars, Inc., which is expected to influence its strategic direction [4][9] - Management emphasizes the importance of brand strength, international expansion, and efficient supply chain operations to navigate ongoing industry pressures [4][9]