Pop-Tarts maker Kellanova tops estimates on steady demand, higher prices

By Annett Mary Manoj

(Reuters) -Pop-Tarts maker Kellanova on Thursday beat Wall Street estimates for first-quarter sales and profit on higher prices and firm demand for its breakfast cereals and ready-to-eat snacks, sending its shares up about 9% in early trading.

Kellanova's diverse portfolio, which includes Grahams Crackers, Nutri-Grain breakfast bars and frozen food like Morningstar Farms, and premium pricing have helped mitigate the impact of some consumers shifting to lower-priced alternatives.

The company said prices rose 8.5% in the quarter, while organic sales volumes fell 3.1%.

"In the near-term, however, it is evident volumes will be critical for the company to see top-line growth as there's likely no more room to push pricing further as consumers remain under pressure," Third Bridge analyst John Oh said.

Kellanova's reported net sales of $3.20 billion in the three months ended March 30, beat analysts' expectations of $3.16 billion, according to LSEG data.

The company, also home to internationally recognized cereal brands such as Frosties and Special K, posted an adjusted profit of $1.01 per share for the quarter, surpassing expectations of 85 cents.

Higher prices also helped drive its adjusted gross margin to 35.7% from 31.0% a year earlier.

Peer Conagra Brands also posted upbeat quarterly results last month, helped by a rebound in demand for its pantry staples and frozen foods.

(Reporting by Annett Mary Manoj in Bengaluru; Editing by Milla Nissi and Sriraj Kalluvila)