WK Kellogg forecasts upbeat 2025 profit on cost cut efforts
(Reuters) - WK Kellogg (NYSE: K ) forecast annual profit above expectations on Tuesday and reported better-than-expected earnings as the breakfast cereal maker's efforts to clamp down on costs boosted its margins.
Shares of the company, which makes Froot Loops and Frosted Flakes cereals, rose about 4% in premarket trading.
Battle Creek, Michigan-based WK Kellogg had announced a reorganization plan in August involving plant closures, workforce reduction and plans to streamline its supply chain by investing in modernizing its equipment and infrastructure.
The cost-cutting effort helped the company post an adjusted profit of 42 cents per share for the fourth quarter ended December 28, and beat analysts' estimates of 26 cents per share, according to data compiled by LSEG.
The company expects full-year net adjusted earnings before interest, tax, depreciation and amortization (EBITDA) between $286 million and $292 million, compared with analysts' estimate of $283.2 million.
The company has also had to raise prices to offset higher raw material costs, which have in turn led to budget-strained customers cutting back spending on packaged food such as cereal.
The cereal maker's product pricing rose 3.8% in the quarter, while volume slumped 5.6%. The higher prices helped the company's margins rise to 8.9%.
WK Kellogg's net sales fell 1.8% to $640 million in the quarter, compared with analysts' average expectation of $641.7 million.