The company posted net sales up by 1.4% year-on-year to $13.77bn, driven by elevated at-home demand. This offset the impacts from adverse currency translation and business divestitures in 2019.
Reported operating profit in 2020 increased by 25.7% year-on-year to $1.76bn, primarily due to a significant reduction in one-time charges, compared to the 17.8% drop recorded in Kellogg’s last set of full-year results.
The growth – driven by the pandemic – did catch the breakfast cereal giant off-guard, especially after several ‘flattish to down’ years for cereal.
“We weren’t planning on growing 25% as we entered the year,” said Steve Cahillane, Kellogg Company’s chairman and CEO.
Production snags and supply challenges for some of Kellogg’s marquee brands earlier in the pandemic was evident in the company’s financial reporting on Thursday with a rare profit miss.
Soft results
The Battle Creek, Michigan-headquartered company reported soft results for fourth quarter 2020, as both earnings and sales fell short of analyst estimates.
Net sales in North America, which accounts for about 60% of Kellogg’s revenue, rose by less than 1% on an organic basis to $3.46bn from $3.22bn a year earlier. Analysts were expecting sales of $3.50bn, according to IBES Refinitiv.
Kellogg’s shares fell by 1.9% in New York.
However, since the onset of the COVID-19 pandemic, Kellogg reports to have executed well against its priorities of ensuring employees’ health and safety, supplying food to the marketplace and aiding its communities.
“The year 2020 was a year unlike any other, one in which the world faced unprecedented challenges,” said Cahillane.
“With the priorities of keeping our employees safe, supplying food to the marketplace and aiding our communities, we have managed well through the pandemic, while also delivering exceptional results.
Forecasts a fall in organic net sales
Looking ahead, the company says the pandemic-driven pantry-loading trend is beginning to wane and forecasts its organic net sales to fall by about 1% in 2021.
Cahillane added, “We enter 2021 with solid momentum, and I remain confident that Kellogg will emerge from this pandemic a stronger company.
“We’ve enhanced capabilities, reached incremental households, invested in our supply chain and improved our financial flexibility. We are on sound footing for continued balanced financial delivery.”
