NEW YORK — Steve Cahillane, chairman, president and chief executive officer of Kellanova, said the global snack company is delivering on long-term growth expectations since last fall’s historic spinoff of Kellogg Co.’s North American cereal business, now called WK Kellogg Co.

“If you think back to our August (2023) investor day, we raised our algorithm very purposefully,” Cahillane told Evercore ISI analyst David Palmer in a question-and-answer session at the Evercore ISI Consumer & Retail Conference in New York City on June 11. “And then we came out of the fourth quarter, which is the first quarter of calendar (2024), and we delivered against that. The first quarter this year, we again delivered against that.”

In mid-March 2023, Battle Creek, Mich.-based Kellogg unveiled a plan to split into two separate public companies, named Kellanova (including the global snacking, international cereal and noodles, plant-based foods and North American frozen food businesses) and WK Kellogg Co (the North American cereal business). The transaction closed in early October 2023, when WK Kellogg was officially spun off from Kellanova.

The larger business, Kellanova projects 2024 net sales of more than $13.5 billion. Its stable of brands includes such names as Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats, MorningStar Farms, Incogmeato, Gardenburger, Nutri-Grain, RXBAR and Eggo in global snacking and frozen foods as well as Kellogg’s, Frosties, Zucaritas, Special K, Krave, Miel Pops, Coco Pops and Crunchy Nut in the international cereal arena. 

Palmer said Kellanova’s growth targets of 3% to 5% in organic sales, 5% to 7% in operating income and 7% to 9% in earnings per share (EPS) would “put the turnover in the premium staple set,” adding, “That’s not something we see from all of the food names.”

“If you think about our portfolio, we’re now essentially 60% snacks,” Cahillane explained. “We feel that ought to grow mid-single digits. We’re about 10% noodles, which has been a double-digit grower and continues to look like a double-digit grower. Our international cereal business, 20% of our (overall) business, that’s a mid-single-digit grower. Our frozen business should be a small portion of our portfolio, but a low-single-digit grower. So we think we’ve got the robustness in the portfolio to really drive that.”

Five Kellanova brands — Pringles, Cheez-It, Rice Krispie Treats, Pop-Tarts and Eggo — account for over half of the company’s net sales and are “highly differentiated brands that define the categories,” Cahillane said. “We said we’re going to be a higher, faster-growing company with higher margins, and we’re doing just that,” he noted.

Marketing execution has “led the way” in driving the North American business, and the ability of Kellanova to focus on snacks and frozen — as a result of Kellogg’s split — “has made a meaningful difference,” said Cahillane. He cited Super Bowl commercials for Pringles, college football promotions for Pop-Tarts and Cheez-It, and display activations in stores tied to the Jerry Seinfeld-directed film “Unfrosted,” about the race to develop the breakfast pastry that ultimately became Kellogg’s Pop-Tarts.

Kellanova, too, is working to expand its total points of distribution (TPD) to boost its retail presence as well as spur innovation to gain more traction with consumers, Cahillane said, pointing to offerings such as Cheez-It Snap’d, Cheez-It Puff’d and Chocolate Peanut Butter Rice Krispies Treats.

“You heard me talk in the last quarter about our confidence in a return to volume growth in North America,” Cahillane said. “And that’s clearly borne of those types of things. So better TPDs, better innovation, hitting the marketplace, more quality displays (in stores). And as I look at the back half of the year, I remain as confident, if not more confident, than when we had our first-quarter earnings release.”

Part of that confidence reflects what Cahillane expects to be a change in US consumer behavior in the second half of 2024. By then, he explained, many shoppers likely will adapt to elevated prices across the consumer packaged goods landscape and ease up on spending restrictions.

“The consumer is just now, I think, starting to come to grips with new retail price points and with the whole inflationary cycle that they’ve been through,” he said. “Some of the consumer metrics are starting to improve. Consumer sentiment is getting better. Wage growth, for a while now, has been better than inflation. Now put all those things together. We look at the US consumer, and we look at the back half of the year. Of course, they have now lapped the lack of federal stimulus payments and the resumption of paying student loans. All those types of things that have been well-understood and talked about are in the rearview mirror. And now as we look at the back half of the year, it gives us every reason for confidence — certainly for our own business, but I think also for the sector overall.”

In its first-quarter report in early May, Kellanova reaffirmed its fiscal 2024 guidance of organic sales growth of 3% or more from revised 2023 net sales of $13.12 billion, adjusted operating profit growth of $1.85 billion to $1.90 billion, and adjusted EPS of $3.55 to $3.65.