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KELLANOVA (K)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $3.203B, up 0.3% YoY and above Wall Street consensus; adjusted diluted EPS was $0.94, down 6.9% YoY and modestly below consensus. Management cited category demand softness, higher costs, and adverse mix as the main headwinds, partially offset by strong AMEA noodles growth . Consensus comparison: revenue $3.203B vs $3.188B consensus (beat), EPS $0.94 vs $0.994 consensus (miss)*.
  • Profitability compressed: reported gross margin fell to 34.0% (from 36.4% YoY) and reported operating margin to 13.7% (from 15.4% YoY); adjusted margins also declined, driven by higher costs, mark-to-market impacts, and mix .
  • No forward guidance due to the pending Mars acquisition; management continued to emphasize execution and emerging markets strength (no Q2 call transcript available) .
  • Dividend was raised to $0.58 per share for Q3 2025, a $0.01 increase, reinforcing capital return discipline amid merger progress .

Estimates marked with * are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Emerging markets strength: AMEA organic net sales rose 19% YoY in Q2, with noodles and broad-based cereal growth; adjusted operating profit rose 5% despite FX headwinds .
  • Revenue resilience vs consensus: consolidated net sales of $3.203B edged past Street expectations amid category softness, supported by Africa noodles volume and pricing *.
  • Management execution: “We delivered earnings above our expectations in Q2, thanks to our innovation, commercial and operational execution, and emerging markets growth, notably noodles in Africa” — Steve Cahillane, Chairman & CEO .

What Went Wrong

  • Margin pressure: reported gross margin fell 240 bps YoY to 34.0% and adjusted gross margin fell 170 bps YoY to 34.8%; operating margins also declined due to higher costs, adverse mix, and mark-to-market impacts .
  • Developed market demand softness: North America organic net sales down 3.8% YoY, Europe organic net sales down 5% YoY; Europe faced disruption from specific large customers .
  • Latin America headwinds: reported net sales -7% YoY and reported operating profit -21% YoY, with significant FX drag and softer cereal in Mexico; adjusted operating profit -11% .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$3.124 $3.083 $3.203
Reported Diluted EPS ($)$1.04 $0.87 $0.85
Adjusted Diluted EPS ($)$0.92 $0.90 $0.94
Reported Gross Margin %37.7% 34.3% 34.0%
Adjusted Gross Margin %34.1% 34.9% 34.8%
Reported Operating Margin %17.0% 13.9% 13.7%
Adjusted Operating Margin %14.4% 14.3% 14.9%

Versus Estimates (S&P Global):

MetricQ1 2025 ActualQ1 2025 Consensus*Q2 2025 ActualQ2 2025 Consensus*
Revenue ($USD Billions)$3.083 $3.160*$3.203 $3.188*
Adjusted Diluted EPS ($)$0.90 $1.009*$0.94 $0.994*

Notes: Estimates marked with * are retrieved from S&P Global.

Segment Net Sales (Reported) and YoY Change

RegionQ2 2024 Net Sales ($MM)Q2 2025 Net Sales ($MM)YoY Reported Growth %
North America$1,658 $1,594 (3.8)%
Europe$639 $651 1.8%
Latin America$333 $309 (7.4)%
AMEA$564 $648 15.0%
Corporate$(2) $1 n/m
Consolidated$3,192 $3,203 0.3%

KPIs

KPIQ1 YTD 2025Q2 YTD 2025
Operating Cash Flow ($MM)$116 $285
Capital Expenditure ($MM)$176 $324
Free Cash Flow ($MM)$(60) $(39)
Net Debt ($MM)$5,287 $5,525
Cash & Equivalents ($MM)$330 $354

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company Guidance (Revenue, EPS, Margins)FY 2025None provided due to pending merger None provided due to pending merger Maintained “no guidance”
Dividend per Share (Quarterly)Q3 2025Prior quarterly rate (undisclosed); increase of $0.01 referenced $0.58 per share Raised by $0.01

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript was not available via our document and internet searches; thematic tracking below is based on press releases.

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Demand softening in developed marketsQ4: Industry-wide demand soft; Q1: further softening in snacking & frozen Demand softness remained worse than hoped across snacks, cereal, frozen Persistent softness
Emerging markets noodles (Africa)Q4: Strong volume/price mix in Africa; organic +36% in AMEA Q4 Led growth again; AMEA organic +19% Q2, noodles volume growth Strengthening
Margin trajectory & costsQ4: Margins improved faster than expected; moderating cost inflation Margins pressured by higher costs/adverse mix; adjusted OP and EPS above internal plan Mixed: pressure vs plan outperformance
FX headwindsQ4: significant FX drag, esp. AMEA FX neutral at consolidated level; regional FX mixed (Europe +, Latin America −, AMEA −) Ongoing but less severe consolidated
Large customer disruptions (Europe)Not highlighted in Q4/Q1Q2: Disruption of orders from specific large customers noted Emerging risk
Strategic/merger contextQ4/Q1: Preparing to combine with Mars; no guidance Continuing toward closing; no guidance Unchanged

Management Commentary

  • “It is a testament to the strength of our people, portfolio, and plans that we continue to manage effectively through challenging business conditions… we delivered earnings above our expectations in Q2, thanks to our innovation, commercial and operational execution, and emerging markets growth, notably noodles in Africa.” — Steve Cahillane, Chairman, President & CEO .
  • “Our organization demonstrated focus and determination in managing through what is undeniably an uncertain macroeconomic and industry environment… we delivered against our budget in the quarter, led by our emerging markets, and we are encouraged by our improvement in category share performance in key markets around the world.” — Steve Cahillane (Q1) .

Q&A Highlights

  • A Q2 2025 earnings call transcript could not be located in our document catalog or via internet search; no Q&A insights available [SearchDocuments, InternetSearch: no results].

Estimates Context

  • Q2 2025: revenue beat consensus ($3.203B vs $3.188B)* while EPS missed ($0.94 vs $0.994)*, reflecting the negative swing in mark-to-market impacts, higher costs, and lower net sales outside Africa noted by management .
  • Q1 2025: revenue missed consensus ($3.083B vs $3.160B)* and EPS missed ($0.90 vs $1.009)*, consistent with FX pressure and adverse mix reported in filings .
  • Implication: Models may need to adjust for continued category softness in developed markets, FX variability by region, and margin pressure from costs/mix despite AMEA strength .

Estimates marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue resilience with emerging markets as a key growth engine: AMEA’s 19% organic growth anchored the consolidated top-line beat, mitigating developed-market softness .
  • Profitability headwinds persist: gross and operating margins compressed YoY; mark-to-market and mix drove EPS below Street, despite outperformance vs internal plans .
  • Europe-specific risk surfaced: disruption of orders from large customers contributed to weaker organic net sales and lower adjusted operating profit .
  • Latin America remains FX-sensitive: significant translation impacts weighed on both net sales and profit; watch currency volatility and category trends (cereal in Mexico) .
  • Cash discipline intact: dividend increased to $0.58/share even as YTD FCF was slightly negative due to pension timing, signaling confidence in cash generation normalization in H2 .
  • No guidance given ahead of Mars transaction: focus near term on execution and closing timeline; narrative catalysts include merger milestones and category demand stabilization .
  • Trading lens: Expect reaction to mixed print (top-line beat, EPS miss) and margin signals; regional mix and FX will be key variables; AMEA noodles performance is the positive outlier .