CHICAGO — Signs of a continued transition to becoming a more focused, more growth-oriented and more profitable company emerged at Kellanova during the second quarter of fiscal 2024.

Net income in the quarter ended June 29 totaled $344 million, equal to $1.01 per share on the common stock, down 3.7% from $357 million, or $1.04 per share, in the same period a year ago. Income from continuing operations, meanwhile, totaled $347 million, up 16% from $298 million a year ago. Last year’s results included a $64 million gain from discontinued operations.  

“We’ve returned to full commercial activity, with our stepped-up innovation reaching shelves in the second quarter,” Steven Cahillane, chairman, president and chief executive officer, told analysts in an Aug. 1 conference call. “Delighting consumers is never more important than it is right now, and we now have our full plan in the marketplace, which should help us continue to improve our end market performance in the second half.”

Net sales for the second quarter totaled $3.19 billion, down 4.7% from $3.35 billion in the same period a year ago. Kellanova attributed the decline to “significantly adverse” foreign exchange rates and Kellogg’s sale of its Russia business in 2023, partly offset by an increase in price/mix. Yet organic net sales, excluding foreign exchange and the Russia divestiture, grew 4% to $3.46 billion from $3.33 billion a year ago, the company said.

For the first half of fiscal 2024, net income totaled $611 million, or $1.79 per share, down from $655 million, or $1.91, in the first half of fiscal 2023. Income from continuing operations was up 16% in the first half to $618 million. First-half net sales declined 4.5% to $6.39 billion yet grew 4.7% to $6.96 billion organically.

“We have a plethora of innovations launching across every one of the regions this year, ranging from limited editions to new flavors to amplified wellness credentials to entirely new food platforms,” Cahillane said. “In the second half, we will be launching Pringles Mingles in North America, our first out-of-the-can launch in the United States in over 15 years. In late Q3, we will be introducing Cheez-It to Europe with a big launch in the UK, supported by a full arsenal of sampling, social media, public relations and advertising.

“We’ve innovated in away-from-home channels as well, sometimes leveraging these channels to drive consumer awareness. A good example is our partnering with Taco Bell to launch a Big Cheez-It Crunchwrap Supreme and a Big Cheez-It Tostada. So we feel very good about the quality of our innovations and the buzz trial and incremental purchases they will generate.”

In North America, operating profit totaled $339 million in the second quarter, up 21% from $280 million in the second quarter of fiscal 2023. Kellanova said the uptick reflected improved gross profit margin and reimbursement for costs related to transition services provided to WK Kellogg, partly offset by increased investment in brand building. Kellanova saw second-quarter net sales inch up 0.8% to $1.66 billion from nearly $1.65 billion a year earlier.

“During the second quarter, our snacks business increased both in volume and price/mix year on year, generating organic net sales growth of more than 1%, even as it faced a relatively strong prior-year quarter,” Cahillane said. “In our much smaller frozen foods business, net sales were off slightly in the second quarter as we faced our toughest quarterly comparison of the year, but we did increase volume, led by Eggo.”

Volume also is recovering, he noted.

“We expect to sustain this improvement in consumption volume and share performance through the second half,” he said. “So North America is delivering strong financial results while getting back to full commercial activity that is taking hold in the form of improving volume performance, both in shipments and consumption.”

Kellanova lifted its full-year guidance. Adjusted EPS for fiscal 2024 is now projected at $3.65 to $3.75, up from the prior forecast of $3.55 to $3.65. The company boosted its outlook for organic net-sales growth to 3.5% or better, up from 3% or better previously.