(Bloomberg) -- WK Kellogg Co. posted fourth-quarter profit that topped Wall Street’s expectations, even as the cereal maker called out challenges weighing on sales.
The company also said revenue would decline about 1% this year. Analysts on average had projected a drop of 0.7%. The company said adjusted 2025 profit would be a range of $286 million to $292 million. Wall Street had called for $288.5 million.
Sales in the fourth quarter were down 1.8% in dollars and 5.6% in volume, indicating that higher prices are not compensating for consumers buying less. The company attributed the declines to the “ongoing challenging business environment,” and the weakening Canadian dollar.
The shares rose 6% at 9:37 a.m. in Tuesday trading in New York. Through Monday’s close, the stock was up 31% in the last 12 months, compared to a 21% gain in the S&P 500 index.
WK Kellogg has struggled to increase sales since being spun off in October 2023 with the North American cereal assets of Kellogg Co. WK Kellogg has been revamping its supply chain, including closing and scaling back factories.
Food companies have been facing two big challenges. After several years of high inflation, budget-strapped shoppers are pulling back on brand name items. Meanwhile, health-conscious consumers are opting for more fresh foods and cooking rather than buying packaged options such as cereal.
Last quarter, earnings per share were 21 cents, topping the average analyst estimate of 19 cents. Sales fell to $640 million, trailing Wall Street’s call for $642 million.
(Updates with shares.)
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