Corporate Profiles - 2023 - 86

COMPANY overview
The Kellogg Co.
P
erhaps no company in the food and beverage
category is set for as much of a transformation
in 2023 as The Kellogg Co.
The Battle Creek, Mich.-based company in June
2022 unveiled plans to split into three companies:
global snacking, North American cereal and plantbased
foods. Then in February of this year Kellogg
decided to limit the spin-offs to two businesses
rather than three. As 2023 progressed Kellogg was
ready to move forward with the two businesses:
Kellanova, comprised of Kellogg's snacks, international
cereal, noodles and frozen foods business
(including MorningStar Farms, originally to have
been spun into the third company), and the W.K.
Kellogg Co., which features US, Canada and Caribbean
breakfast cereal businesses.
The management team of the cereal centric W.K.
Different decisions, different investments
expected in wake of spin-off
very different investments and what you'll hear
about is very different outcomes. "
The uncertainty about just how " different " things
may be has led to a sharp decline in the company's
stock in recent months, sliding from above $70 per
share in mid-May to a 52-week low of $59.21 on
Sept. 6.
The new company is forecast to generate $2.7
billion in annual sales in 2024, operate six manufacturing
plants - four in the United States, one in
Canada and one in Mexico - employ 3,000 and
manage a robust portfolio of well-known brands.
Mr. Pilnick divided W.K. Kellogg's strategy into
two " horizons. " The first will be focused on building
the company's foundation and scaling the cereal
business. The second will leverage the cereal
business to grow beyond cereal and accelerate the
company's top line.
Upgrading the company's manufacturing supply
chain also will be a priority for the new company.
The W.K. Kellogg Co. plans to invest between $450
million and $500 million over the next three years
to align and improve its supply chain.
A core tenet of Kellanova's strategy, the Kellogg
Co.'s spun-off snacks and prepared foods business,
is a belief consumers in emerging markets will
embrace brands with the same enthusiasm as consumers
in developed markets.
The spinoff was completed in early October.
Chief executive officer -
Steven A. Cahillane
Kellogg Co. has two primary goals - upgrade and
grow a business that has been a cog in a much
larger organization featuring a diverse product
portfolio and accelerate future top-line growth by
looking beyond cereal.
" ... The fundamental difference between today
and tomorrow is that absolutely everything we are
going to do will be (in) the service of cereal, " Gary
H. Pilnick, chief executive officer designate of W.K.
Kellogg and current vice chairman of corporate
development for the Kellogg Co., said during Kellogg's
Aug. 9 investor day that took place in New
York. " That will result in very different decisions,
86 \ October 2023
Kellanova will have approximately $13 billion in
annual sales, employ more than 24,000 and have
a manufacturing footprint that spans 20 different
countries. Key product categories in the Kellanova
portfolio will include snacks, international cereal,
frozen foods, noodles and others.
" More than 80% of our sales come from snacks
or emerging markets, " said Steven A. Cahillane
then the chairman, president and CEO of Kellogg
Co., and now the chairman and CEO of Kellanova,
during Kellogg's Aug. 9 investor day.
Net income at Kellogg in the first six months of
fiscal 2023 ended July 2 was $655 million, equal
to $1.91 per share on the common stock, down
12.5% from $748 million, or $2.20 per share,
in the same period of the previous year. First-half
sales rose 7.4% to $8.09 billion. CP
$70
Kellogg Co. net income
in millions
2022
$960
2021
$1,488
2020
$1,251
Source: Kellogg Co.
Kellogg Co. net sales
in millions
2022
$15,315
2021
$14,181
2020
Source: Kellogg Co.
$13,770
Kellogg Co. share price
$76
HIGH =
Oct. 31, 2022 = $74.13
LOW =
Sept. 13, 2023 = $58.92
$64
Sept. 15, 2023 = $59.96
Source: New York Stock Exchange
$58
Sept. Nov.
2022
KELLOGG CO.
Jan.
2023
March M Julyay
Sept.
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Corporate Profiles - 2023

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