Kellogg is planning to lift costs and improve productiveness to offset the skyrocketing inflation it is seeing for enter prices, CEO Steve Cahillane instructed CNBC on Thursday.
“As we enter 2022, we’re nonetheless seeing double-digit price inflation,” Cahillane stated on “Squawk on the Street“
“We’ll see the wraparound advantages of the pricing that we took in 2021 into 2022 … however our objective is to cowl all of these enter prices with pricing and productiveness, and we predict we’re in superb form to try this.”
The chief govt’s feedback come after Kellogg earlier than the bell reported better-than-expected revenue for its fiscal fourth quarter, with earnings per share of 83 cents topping estimates by 4 cents, in line with FactSet.
Kellogg shares have been up practically 3% on Thursday afternoon, as buyers additionally reacted to the corporate issuing a full-year profit growth outlook that exceeded Wall Street’s expectations.
Implementing value hikes final yr helped enhance the corporate’s earnings and fight the inflationary pressures it was experiencing. Cahillane stated prospects have been keen to pay up even with increased value tags, however Kellogg nonetheless plans to be cautious about marking up costs this yr.
“We do not need costs to get too excessive, however we’re in an surroundings the place it is broad-based, it is throughout all the pieces, however we have been in a position to cowl it. Our pricing efficiency has been very stable,” he stated.
The corporate’s cereal section took a success final quarter resulting from worker strikes. Cahillane stated different elements of the corporate’s portfolio “greater than made up for” cereal’s underperformance final quarter, and he expects the road to recuperate now that workers are again at work.
“For 2022, what we’re actually taking a look at is the primary half of the yr, a restoration of our stock, a restoration of our distribution, a restoration of our industrial plans, which is able to result in a again half of the yr that sees rising momentum in our cereal enterprise and an actual return to regular,” he stated.
Cahillane stated Kellogg might also make some offers this yr, citing the corporate’s sturdy monetary place.
“We have dried powder to consider additions to the portfolio in the event that they add shareholder worth … however we’re very disciplined on the subject of value,” he stated.