Kellogg (K) 1 Aug 242024 Q2 Earnings call transcript

Good morning. Welcome to Kellanova's Second Quarter 2024 Earnings Call.

[Operator Instructions]

At this time, I would like to turn the call over to John Renwick, Vice President of Investor Relations and Corporate Planning for Kellanova. Mr. your begin may you conference call. Renwick,

Chief our operator. joining Amit our us you, quarter morning as update by and Good joined our Vice I of Chief morning, for you results Executive on an as President thank Steve and well for today this Banati, Officer. Financial second XXXX. am everyone, our Thank outlook Chairman, for and Cahillane, review a and Officer; Chairman

statements disclaimer. #X Slide our shows forward-looking

such today, be as for you those are statements As statements. could certain performance future results projected. forward-looking materially projections are aware, Kellanova's from Actual different

For recording the further the factors third of supporting documents today's cause public archived well could to this to www.kellanova.com. of our these as webcast at on presentation and results information days concerning be least XX slide as Investor will refer A differ, for of filings. please page to that SEC

And as recast I'll be QX results will applicable off spun treat for Kellogg discontinued now over press them Unless referring operating release when statements outlook, our otherwise per W.K. earnings and profit always, and Steve. and with sales been net an we of XXXX to in noted, year. adjusted operation turn found on X remember have accordance a earnings on accounting to Co. basis this As recast the Those our guidelines. XXXX a can that in February to Also, from currency-neutral it for to referring organic our share. be results basis

following fall's of more results We're strong our spin-off. that evidence once clear and again last John, portfolio pleased quarterly everyone. and Thanks, more profitable growth-oriented report morning, are good to

algorithm trends in outside was again sequentially and year-on-year organic again net sales Our volume growth of Nigeria. improved on

algorithm, continue the reaching full returned and continue our year-on-year neutral is it in improve on now quarter. activity second more profit margins. was plan end-market consumers marketplace, we've our important commercial full second innovation shelves the Delighting operating profit to right improve in than in to half. have And our us we currency with also we Our performance growth now, never is to help our and should the stepped-up which

#X, Slide our and which differentiate, to commitments, to build but execute, deliver, to continue we our of us drive you strategy, helping we shareowner near-term future drive strong for On value. remind deliver also and a

for remind of and diversification global our along On a exposure volume you differentiated with footprint, world, the commercial is we of to around to markets sequential Slide return regions. differentiation our footprint, most improvement continued to activity Kellanova. #X, our true contributed point in faster-growing This of full our in

posted improvement The quarter currency-driven JVs in chart America we growth. EMEA price of ventures volume the the volume. fourth Slide those moderating Latin elasticities Nigeria and that returned volume sequential sequential as have we and joint across declines our rest in of drove see businesses where excludes both North America Africa improvement And and outright Europe our to both regions. recorded outside #X in resulted recent in We our increases expected. consecutive on a

key shown is driver #X, Slide Another on innovation.

launch a As we innovation to discussed are calendar pandemic returning previously, disruptions. supply the era full after

ranging launching you credentials notables. example in a entirely United the public XX States in with the good media In in these leveraging of sometimes QX, to awareness. big a will A new with plethora Taco our across big half, [indiscernible]. Mingles out-of-the-can advertising. relations launch just is Cheez-It North in away-from-home innovated wellness well, the a a America, amplified U.K. supported As Supreme big additions In food I'll few a to as Cheez-It in be Crunchwrap channels launching by we every and on Pringles our We've be to have second from platforms. Cheez-It to and partnering the flavors and we one this sampling, introducing the Europe innovations we over new see of channels first years. will regions can of to arsenal launch year, late slide, highlight Bell limited full launch consumer to social a drive

So the us very innovation they of the back net this about levels and normal generate. good to Indeed, buzz, will should incremental sales innovations from our quality contribution we bring trial feel innovation. of heavy and purchases calendar

of a from from incremental are sales this innovation the of launches Notice Slide year expect supply much net to last #XX sales innovation measures of been a higher back have getting delighting as than back component commercial as year's generate total activity. to is our to key percent full the through what when launches X to disruptions. how years we incremental expressed net couple global we contending sales. we consumers refer Getting innovation with

shown brand, brand. Pringles. is sign obviously and commercial investment performance differentiated this shows on Slide in-market return improving highly net this our prioritized biggest our good activity chart Another The sales our and to we activity, is for #XX. growth how In full

to of results, net starting led differentiated organic of All another it with quarter sales growth.

the we how mentioned our our about strategy to growth growth well continue the outpace peer median group, and snacking orientation directly international including I This is more of peers. portfolio. shows #XX and greater comparable earlier precisely our Slide

increase in pre-spinoff. our profit than operating as top are performing, our is line a our we and continued talk full of Because will from of pace in margin. our year XXXX even guidance. target important quarter unexpected higher how ability how to pre-pandemic withstand now shows operating part we about fuel bottom our moment, Slide this are same profit perspective, periods how margins are in gross the [indiscernible] investment. brands And margin in of XX% discuss both brand our a a margins were in Kellanova a ahead a and improvement and line profit an business Amit the second strategy our as than profitable with substantial invest is And we year-to-date year our #XX toward margin previously. as Improving we clearly, our shocks. they let's of raising company Now more are and

better ] outlook. first than now and will results in feel remain for the underlying markets we on track came [ second fully that and activity emerging We commercial half their in sustain Our our momentum. good marketplace half about our expected,

Finally, just we during program continue quarter. promise action to of progress on day this our another our few element that of is provides and examples second in Slide the better XX strategy, program. a

turn it our to each before businesses So results who will of through walk and our let detail. more outlook Amit, now discuss me come in back and financial you over I

summarizes for results the and Thank first Q [ you, financial Steve, our and half. hello, everyone. ] #XX key Slide

metrics. said, of delivered results results As we exceeded and across of on quarter our Steve algorithm of these another key another all that quarter expectations

net by in spite by operating Our our net organic growth of XX% came in our driven profit quarter building. sales at sales On remaining growth X continued a year-on-year, within adjusted X%, long-term grew brand margins target in the in currency-neutral double-digit basis, a increase and range. organic in in improvement

basis. continue cash to of anticipated, a below-the-line in Our XX% to increase modest a also free headwind, be share than items year-on-year. currency-neutral continued on year-on-year though per growth resulting Meanwhile, earnings in flow less

year-on-year moderated we half. executed X. as mix our Nigeria, quarter Slide net sales #XX first components continued outside increases where Price of growth drive X and as expected of the to major net price growth the in sales it shows in quarter organic growth even

on in the elasticity Volume Nigeria. world, declined around impacts but especially

that Steve mentioned, quarter of in all volume accounted As market virtually our decline for X.

our X even the of improvement to sequential rest of our and delivering is turn growth clearly So portfolio regions. in on planned

Moving us along the graph, at last the from now year's the the behind as transaction anniversaries small our quarter start of of divestiture is impact X. business Russia

Foreign principally the Naira. currency percentage X about clipped in by quarter translation growth net X, Nigerian sales reflecting points

you X% can gross excluding basis starting with gross our XXX slide. This let's #XX. sustains strong we continued with profit points to profitability, continue with up basis year-on-year. profit increase adjusted and Meanwhile, margin X, on Slide also close year-on-year currency. quarter gross up margin currency discuss X%, during trend, a to improve on Now to the quarter our X's profit The see up as

was operations used the those our the discussed W.K. this about Year-on-year, contributed cost of the inflation. to, fact confidence something We're associated experiencing our margin points [indiscernible] profit to continues currency year-on-year input Company. the previously, a to again XXXX XXX devaluations also moderate margin of of lap that expansion pace these contributing a meaningfully our our item run than should basis year's and has discussed first out account of that mix, X services the restoration basis in productivity aided this discontinued expenses approximately agreement expenses full X continued moderating The point ahead to than previously, X and not the a we've in affected operating As year only quarter recast #XX. gross gross XX%. of expansion margin Kellogg country we in items, by we've quarters and transition accounting X devaluation more XXXX our of additional points, during quarter X. a into up little of half less the us pass-through And takes year-on-year, last XXX as and and percentage X of growth benefit as quarter with margin second gives be as level Leaving by around transitory to more Slide Naira. largest outlook still resumed higher margin recovery that at shown line on

discipline by are in XX% good with our quarter profit algorithm. towards offset profit solidly for on growth. impact currency-neutral in Operating ] profitability an increased services margin over remaining sustaining was with profit year trend improving by you our driven excluding currency operating investment, XXXX target guidance building growth XX% of of of of operating on margin basis improving grew ago by the double-digit of an a XX% brand of profit we [ XX%, underlying all than a the absence Even the year-on-year marching increase grew pass-through a on and more our gross transition if than X more XXXX. of in overhead our This expense investment. and X% and which impact Even and this currency, exclude

the we down to walk our Moving on come Slide #XX. share per P&L, earnings

can see, as it in you was just quarter As growth operating to growth was EPS all quarter profit, our our attributable X X. in of

expense interest reflecting again each Interest reflecting income in meaningfully they, at interest our see other investment This increased increase year-on-year, principally largely below-the-line by offset gains. higher an Looking we rates. was income, offset and items, partially that can other. again,

the minority mid-XX% tax in effective immaterial relatively year-on-year. venture remained earnings and Our range. rate Joint were interests

of Our average items on were an of flat. in adjusted a and The XX% X basis in was shares EPS XX% these quarter result basis. outstanding increase currency-neutral

though cash free half later free year. which first of turn as We on distribution X. and our is which mentioned be the to #XX, timing expected flow we debt remain the post-retirement net cash shows through fund, to last Slide ahead is Let's of quarter through a flow this the position now related a some of offset planned previously, from to in year

cash as net debt we have trim aside our remains that, trailing to dividend. remains EBITDA below Even flexibility. of flow our return sizable Xx excellent mostly our share from Meantime, well even us our giving our owners, continued targeted debt through though, to debt And to leverage of we net financial generation cash ratio

of months in the half it Now first we at the ago. at ranges behind time a our is shown strength our are Day because we us, K for the guidance #XX. XX gave this on guidance. to full performance, let's discuss narrow With half And as year of Slide to our raise first position Investor increased XXXX, the event year

growth For half previous net sales, performance. our first from that increase organic we X.X%, about of guidance now reflects expect our better-than-expected an

second X% full assumptions the be course, We are saw of our largely year. based about rates headwind on of translation, currency quarter half during a Organic X, prudently excludes exchange keeping growth, which we unchanged. would for

For adjusted to and primarily our are narrowing first we profit, again, the $X.X raising $X.XX operating half range reflecting to billion, billion basis delivery.

would currency provide an to rate to be but second half, XX% about reaching guidance what operating year-on-year experienced We XX% X% impacts during on though translation, continue negative you We in X and if a it expansion operating above the year, quarter mainly hold about profit. gross for then. because for margin, headwind the margin don't of for margin are our lapping idea, year, for the we moderate expect exchange to give the the

the Guidance higher increases share to to half. and $X.XX other experienced a incorporates in $X.XX, of range for the adjusted basis profit per first that we which earnings and operating income

per its second $XX Specifically, million settling income upside back quarter other of half. million to run $XX retain should to first before the in a rate

the our by in joint to be first communicated. free cash year-on-year X's with the run expense a run we to These minority now profit second expected emerging as billion well a now for cash in elevated $X quarter offset in be to venture higher for expenditure than projects. by half than and rate flow we sales negative range, more is operating little markets above mid-XX% as expanded interest rate outlook only should tax effective and Our and despite given are network X expected are capital raising better growth just to capacity interest of usual previously factors our slightly temporarily percentage Pringles related driven earnings collectively the partially and outlays as optimization bit

in remain position. we financial good So a very

in full for quarter second came confident and better and in enabling results are half. X the Our guidance to expected, than the we quarter us our raise year, X

are have to more that show volume in-market commercial We already this well. our the our is plans plainly starting up data performance improving and around solid as in world,

faster to for enabling Our balance me it strong And Steve of and now profit to businesses around run-through the margins remain continue flow a sheet shape. our improve, world. to in planned, our us turn that, in our let cash reinvest than progressing with back and brands

Thanks, Amit.

America and Let's Kellanova start North #XX. with Slide

a Our began management quarter, down relative as revenue second actions in organic last plus growth the ago. lapping America was activity, that year's lack our continuing year's moderation were North merchandising last price/mix net slightly, of and sales and expected, over in year X%

led pass-through growth This consecutive of by meanwhile, both in and our growth operating in measured impact to reaching volume for absorbing improved continued Industry-wide activity, quarter by U.S. in transition to the quarter but augmented a substantially behind double-digit categories including business full of commercial a across grew our these North our business. innovation was the in elasticities margins outside as channels retail North on and our a turned and service in of positive second growth fourth launches to consumption at year-earlier productivity recast during our shelves of sequentially aided Canada. figures expenses, and incorporating the excluding be increased shipments U.S. away Even the strong U.S. America's quarter. from volume brands. increased continue our second our operating profit headwind not year-on-year performance improve. return retail home investment to business pace, America's profit Our

America split frozen Slide foods. #XX snacks shows North and between

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

our Slide channels. shows out playing measured #XX volume in recovery

through the We expect to and consumption sustain share this performance volume second improvement in half.

taking of as improving activity think hold And performance, to that we is shown right both is year, #XX, in consumption. North remain Slide results So the on the we commercial in volume America while track. strong back and on getting shipments delivering about financial as full form

stepped-up building and We merchandising have in expect to second to brand performance the increased improve And is innovation our investments and the end half. marketplace. we in market now continue these our

and This team in to focused of Meanwhile, we second and portfolio pace. since the spin-off continue our recover margins is delivery continued the a more ahead expect half.

and Europe #XX. Slide Kellanova to turn let's Now

declined Our organic the our quarter less comparison basis quarterly than the in net year. toughest a against of X% sales second in Europe little

continue snacks recover midyear despite X% Russia. rebound moderated grew funding led investment. year's in last basis by profit a boost a the significant divestiture margins year-on-year brand adjusted neutral profit of in to declines Currency Profit in with strong close by in volume U.K. Our margins to operating growth building

continues gained growth represent and portable the On Slide gains continued growth. X despite over our sales well consumption in to in see Pringles biggest organically double-digit X% our Spain share groups expansion share is across in Romania. which Poland in #XX, of strong our in snacks, with U.K. Europe strongest category and and Kellanova you the we last market, perform major lapping can strong markets grew And year's half U.K. wholesome particularly Europe. Snacks, by with year-on-year in which key

quarter cereal, planning reminds a on the elasticities. #XX In which in remain X% And net Cheez-It in X snacking the we've now sales of declined and tough Browne than in late demonstrate deliver camps quarter growth momentum football are for of against U.K., in seventh by underway decline innovations are organic category cereal, our year in launch and ready sales excited innovation Despite net portfolio like been straight to to expand sponsored we in XXXX. you Kellogg Pringles our X promotional like on promotions partnerships. our Europe. what less In Slide in by supported track of Europe. we Europe for in exciting are market will and Tresor quarter the slight continues the comps, U.K.

manage So that headwinds. we're elasticity category-wide can through we confident

Meanwhile, we manufacturing are for our network. optimizing plans making progress portfolio on cereal and our

Now we let's growth on in quarter. look high emerging sales Price regions, mid-single-digit and markets growth organically of Latin lap #XX. Latin as America's actions the quarter inflation. Slide increased top year big is starting to prior a America mix our cost by sustaining the moderating earlier X% in growth year with rate second at as offset expected net

the in of quarter in by Mexico. quarter growth. in and growth second top to snacks both gains led and returned with profit Operating volume Importantly, on increased the cereal year-ago strong

both markets category and volume in in largest growth Group. net snacks Mexico Latin year-on-year markets, has in continued across sales our remain Latin grew and despite by region Brazil. categories Category X key elasticities Pringles the outpace Organic Salty America to the growth price net with mix. in our for and XX in Snacks business sales Slide our shows X% growth American

the remain elasticities, Our growth this in net region by and despite increased X% year markets, Cereal volume cereal we Mexico sales in Brazil. the sustaining outpaced and also categories quarter, category in the in growth. key have

year. business for you what to watch reminds America #XX this of our Slide Latin in

should Here, as year. expect pressures in cereal. expect and too, we from snacks the potential price the year we input pack as a come organic growth straight efforts both reflecting of to well and Margins efficiencies the and growth seventh operating cost sales architecture net moderating for later improve,

is Latin So through first America the half, on right track.

And region, increases again, drove price organic in Nigeria Slide with with influence starting EMEA all growth substantially we'll #XX. sales XX% the the Once net currency finish quarter. our of regions in

that growing and category our there its declined the implications second to execute earlier well opportunity mid-single-digit Nigeria business are organic by and Our rate despite negative these forecast, for and with second in a demand elasticities up again may market the quarter. net in this with have quarter, expected. volume not and assets slightly challenges rates this increased as are our only positive during pricing joint the the second sales outweighed half continues currency provide a East. declines at approach. growth were long-term to we prudent us. Volume but taking year-on-year of ventures Outside of This as our year our severe tensions dramatically short-term advantaged keep the Nevertheless, Tolaram, Middle impact

improve EMEA basis, currency-neutral a X%, substantial Nigeria to operating and continuing a margins the in in grew and On brand-building even rest with investment. of with in increase growth profit EMEA's by and both

and elasticity-driven quarter growth the net Arabia. category noodles which for volume. strong how South Egypt, those partially to see declines only our Slide successfully launching growth major Nigeria, reflects split organic this and offset On distribution Africa gaining Saudi groups. Meanwhile, in growth pricing by XX% share into drive in and was we double-digit we others and in by currency-driven markets continue Kellogg's Noodles sales #XX, in

year-on-year In was growth grew in organic region Snacks, XX% cereal, too sales across the elasticities. organically net by sales this X%, spite broad-based we In with Pringles. net grew region the across about by category of broad-based and led our

to for XXXX, watch Slide For on EMEA, continue we elements the #XX. in listed

sales in and the growth region region. We momentum, cereal, and margins in distribution, expect supported emerging continue. another we should the to us expect led growth organic both its sustain of growth and this business of a growth net improvement of will Meanwhile, Africa. expect within rest Pringles innovation, sustain in markets. Noodles year profit we formats Nigeria yet good by for to record EMEA's remains and pack by

with passing performance growth portfolio quarter, more summarize a With second me including each is and on that challenging let #XX. quarter, focused, it and increasingly before. amidst environment. more more We're delivering clear So has ever the industry today than should profitable Kellanova strategy oriented Slide be algorithm a that

strengthened have already for commercial improvements We plans yield gradual are and volume. in to XXXX, they starting

ahead improving to our this committed of remains are profit and improvement margins We pace.

our yet, to first We in, be strong thanks still. to to refused industry the in are position especially and And raising sit environment. current guidance, we a half enviable

We the world. and future, we'd investment all emerging of markets, to continue take is who increase Pringles are Europe, in to in by thanks And they to some team commitment the the it value driving members our Kellanova Africa capacity for deserve our expanding do. your in be now most that all continuing differentiated to shared happy questions. be brands shareholder This create behind growth the adding of with in Cheez-It portfolio noodles into expanding

[Operator Instructions]

comes question with first Dickerson Jefferies. from Our Rob

the we looks half, be do of volumes, some a from is just which guess, see back proactive investment. volume I have that said great think you Steve, as clearly, improvement you So and you so North innovation could great. expect think improvement half America I sustained price back through curious, in slate. I'm you then to Part

you relative would most innovation? points proactive the simple way, you that focused incremental kind you that improvement right you price coming have just, question very been certain kind from for that of as on have things improvement just say in like Or really go been sustained is volume the distribution in the to driving of the North is back So volume the half of of America, industry?

of distribution you terrific resets activation. is Rob. It's It activation, by we've commercial full and America. as shelf a What some improve second getting led full growth We you third really our other momentum. America. to talked in story It's brands I'd starts into innovation to to and around actually quarter really since catch to tell we back last momentum. activation It with well commercial gaining that's mentioned. second up first volume new includes back pre-pandemic. North to the And a will we really Yes. fourth pricing, Pringles, it's you what of That quarter of levels Cheez-It in Thanks haven't in we've And quarter includes know, returned a done activation. years. with full returned We're and question, X increased had has lot Pringles, that as and the commercial North that, price continue in terms and in seen the which as for the take, the Rob. to the in about

And environment. so that very a price less we're we returning to rational pre-pandemic the promotion saw type more of in or activity

we've in half us So the second for America. bright seen volume the that is year spot North of the and

now We turn to Wells Fargo Carey with Securities. Chris

I wanted volume decelerating, ask about Europe, have to but coming. some is also pricing under you as pressure the innovation

you highlighted I think Cheez-It.

would trends market pricing looking but maybe of growth, volume for forward? your another in just and kind think how know I complexion the So in do year go-forward of of and exit Europe, balancing you characterize about as the you view rate how you going

the in that year. grow have in prepared lot half tough faced say particularly is quarter, to a comps, the Europe in going second been. in confidence we always of going I'd of us the back year. our toughest has you Pringles. the It's we heard Chris, know a that's to Europe, with continue Yes, this to remarks And tough But environment, you with and be we're -- start

So we've great back half got plans.

Our so football continue quarter, into in this late this started has sponsorship quarter. really that will

to lots in of of Europe, Europe confidence continuing in lots grow. confidence So

snacks third You saw And grow excited consumer excited, I just the U.K. the when launch put very and in it's outstanding. say program quarter. the quarter we very second in together in product the Cheez-It it. about fourth about will that a are testing the fourth great quarter in And they The that is activations. the excited did of the that based are on customers accelerate the

And be driver things next so we in us. for years. a for see real of the growth going to Cheez-It It's couple big

So bullish on I now Europe. makes that some but us growth Europe in a years than delivered environment. has of know despite X others, our different a challenging little team

And will continue that this so year.

could, I on the see volumes. to follow-up America. in pricing if as And a comment just great the North It's

fact, I did stay think, activity, in price uplift a make as ago, promotion year you go positive a pricing as constructive -- you expect remarks would with prepared but about negative In seeing volume impacts you timing you or certainly clearly to you're this comment, forward? the as in

rational very We Remember, remaining the a pricing activity see in lapping environment. of we're real dearth last year.

lot. the see talked and back in commercial see between were activation and in about to on for a back shortages. volume we've North very price We've our rational, we perhaps little returning, it's but a it We pulled So you returned, the year of because year-over-year very America. a quite compared mix half good prudent, you growth others all but bottleneck the good when see volume that's of comparisons. balance We what late

Our next Bank question from with of comes Peter Galbo America.

Mexico maybe Steve, quarter stimulus Europe. had Latin of America in continued particularly what then in some tour more in of here, world have peers of through kind some delay North our said also around in payments just gone you a of maybe I to think Brazil. relative having some weakness and America, the the and standout

on then and to just So can macro a there Brazil in maybe and the you you're that quarter seeing relative talk kind bit ground? Kellanova of specifically about Mexico more the the

Yes.

continuing a Pringles good record So the growing. sourcing somewhat Snacks, Latin terrific quarter do because quarter, it and capacity cereal in and despite being all of business Mexico Mexico shares kind having we're to was a well in constrained America. extremely Cereal of Tennessee. in out Jackson,

Next of be out sourcing year, Mexico. we'll

devastating floods, strong, in Brazil to on sourcing. So Pringles. Brazil but business really Pringles remains was impacted pretty the of very, is good. remember, Brazil, Momentum you by in Mexico very local because driven also Brazil underlying really Pringles' future in really some bullish have opportunities by

So pretty strong, by we the floods that Brazilian but the saw all on news. business is obviously devastating impacted

comes Our question from next Robert TD Moskow with Cowen.

wondering sizes like was sensitivity in price of about price the you America points. North I and if terms pack talk could

your when you portfolio? actually like the $X, to affecting Or price to substantial pretty competitors points led and above agree a said get that? changes Would not your level, some that it's really certain with adjust category, consumers of that. they've made above just to One is exiting it

agree would would with extreme because But it's right years. also we've so talking but under is more say that, pressure. much about now, the consumer I that Rob, for Yes, I that been

So we've a number about to in investing We've the price points. price about talked back entry package of have always more years. capability been sizes always pack going architecture talked We've I perhaps more to pressure. hit think you're in But what are than dollars the different time, absolute is long a in points. under price environment very period hearing of this more

So is heightened hit it basket also the people monthly in it $XXX,XXX the pocket. affected, can terms where of is varies so become income consumer where dollars the we're in sure those well. by right you absolute that price is consumers And by you household the in under -- that obviously, their And -- particularly as with seeing in it strained, price the points, that's are kids, with fill it's cycle making sensitivity.

this in environment. is of a more we at -- environment important all than that perhaps normal more So it important, look

in out very the is -- And And competitive launch meaningful compete is think Pringles in your Pringles the you mix half? the introducing How that's what well ask back to a that something follow-up? made launch, was coming marketplace. of that insight can going that the can I

Yes.

So in of balance of the Mingles meaningful a I NSV terms year. our look at for being forecast difference wouldn't Pringles maker the

So we're were only really the more year. brand. first it starting to in the of insight activated that people The love hit is quarter next

We haven't stretched outside the brand that can.

excluded. the is the [indiscernible], meaningful So in [indiscernible]. It that's Pringles Mr. shape a a of in product -- is

ways. well P So Pringles extremely it for believe plays can. it iconic the [indiscernible] more snacking Mr. We product the the tests than in so on and does stands many

it goes. how can, outside a the and giving we're So we'll see launch

to turn Palmer David Evercore with now We ISI.

to couple North just wanted America questions ask Snacks. I a on of

more the going Maybe on can your can't in that are measured And being consumption, that. the the expect plus growth year bit? data there half type that least some in stuff you has was for growth the Would to the just I in Canada the around channels at consumption we that see But the down Treats. XQ. Krispies that said Was -- you that coverage. we Steve, that? I'm just tracking, year are importantly, in areas of of improvement would the if and assume expecting low some you're be the earlier a Rice expecting was and in the would single-digit the good the [indiscernible] the Cheez-It merchandising there improvement consumption return maybe were we in beginning wondering -- beyond you targeting innovation a so, growth in you in on pretty comment that second be see. in comments, to or quarter, You that

seeing Yes, -- in David, in channels. you're measured good growth question. on not you very Canada good our the growth thanks The it. and is the channels, away-from-home What in you're hit and what very for seeing

the of overall channels consumption at growth that well, you Pringles on So rate doing to a also, performed see lots extremely and in led momentum America. North nonmeasured lots Pringles.

but channel. nonmeasured the the measured it's channels, in in the that also same see You

things what's So leading all are to consumption those growth. together

would Pringles, in Going channels gate the of mentioned, -- it as forward was we investments full out I kind and to to in the commercial to question, see of your activation. expect which our seen improvement with as you've return measured with first

that the brands. with big see other You'll

as Pop-Tarts Eggo. You'll Treats, with year and Cheez-It the of half as in Krispies well see Rice back that the

of measured exit we catch start nonmeasured expect the to we get the to So up second some the the channels would and year half of the as into channels year.

question from Sandler. next comes Lavery Michael Piper with Our

wanted on to Just Nigeria.

you starting you the that digestion kind consumers maybe what last the of I could touch adjusting pricing, volumes know currency on that and there lift, volume big executing improve? but offset. out called Have And Just and wanted to of Nigeria. are sequentially, of with the seen obviously, are but got the momentum big mitigate. seeing you that, to are maybe when pricing course, you've are a any the the

a called driver as that to When trying footprint, obviously, that of your growth Just volume turn that's kind of stress. and be out ordinarily growth can you part emerging point market a understand, of drivers really be proper wouldn't again?

the collectively [indiscernible] recorded Thanks volume Yes. than a The JV gain question. teens XX% against more for the decline high the in price of year-on-year. mix

that show the that. and to hugely been fact talking And seeing we're start elasticities we've to obviously would have elasticities up, about that's substantive. So and the

see. that of about forecast But wait We you landed is forecast prudent we in Africa. in a consumer but have headlines. upside be executing in might I actually there just can our don't perhaps that. very on anything? for being has Nigeria as The the see we'll know, It's We're some back to in that add We and is the there tremendous also of to the being want you talked well the upside. strain, it think the do team and half about year. under our may ground, some be to the lands -- price very Amit, in as amount

think I in No, better that only expected. thing I'd came is add than elasticities the

what we expected So definitely the in better volume had were the while it was quarter. teens, declines in the than

some other our think I need in of more take to pricing we continue categories. to some

year. about the the saw second elasticity see And being we in assumed encouraged so rest we would quarter, by but we'll we've I we're think are there what And in prudent half. that the be -- the second of

Palmer We to Thomas now with turn Citi.

on line just to different were the trying second estimates, that the maybe to were limit indicated of more of right, And upside how the in we maybe ask guidance pressure upside upside had. second a the bit your year half of half expectations a of estimates consensus that terms consensus incremental think about operating mean, mainly I than kind I little but call-outs changed. terms than profit, in expectations the as that I step to there's first You on was if understand wanted think would that guidance reflects any quite the you the and increase brand it?

I obviously progression will we at, We of and as in year the So had not moderate really. I margin as start last lapped pass think well, through look some this gross talked of the TSA second if the right, that kind half the previously X. we've moderating. things you mean, in quarter

I little quarter be that We behind firmly I was quarter X, bottlenecks of think saw that's So in was a particularly we'll in -- largely which us. shortages, so in but quarter think margin, driver that of that's lapping big bit a X, improved gross the and it X.

will So that naira And by impact the in start you then that. you'll lapping mix half. the in have won't also driven second -- Nigeria, the country

the was you this biggest Naira last in year, devaluation around of so quarter If the kind recall, X. time, in

to going you're lapping start So that.

with we continue progression, we're So coming expected. the lapping. of making of we to much the half margins. But than see items to in on we we're continue are that saw we as -- some because not but progress that the It's very pleased better first in as the

because the brand going had you moderate increase the building, probably in in last recall we that's first That's we second to if year, of half. biggest half in second ramped building. the driver up a half, say good double-digit I'd So brand saw the

be to versus it very ramp growth look continues half, the pressure But up absolute the moderates. good. the the at second So in when you

second in the think puts I So those terms of profit. half are the takes and some operating of

previously the that is terms then inflation, be the there rate. in would -- XXXX over pretty And thought then cadence the consider in terms year. on expectation? you anything this noted And to for it Okay. of Is think still I neutral you course of the of

change. real No

to I to think continues to be slightly that inflationary. our outlook neutral be

in had come much expected. that, rate. But seeing a higher at coming in are other with we are costs than in think in I inflation are probably line pretty Nigeria, through expectations. coming Obviously, much we pretty costs as

Our next JPMorgan. Goldman with comes question from Ken

from The for at across are impressive, customers to food the ask I volumes margin remain constrained. trend vendors' hearing we're the I growth, if they're your gross general. -- food you domestic their that in gross we're as retailers, can increasingly wanted of about a it's obviously. guess, also increasingly I increases that, aware, time, say margin gross group seeing same margins. But And

saying the understanding sort inherently to your of higher from guess think balance efficiency of question sticky? if try and lately, and efforts being are should industries that cognizant drive between much I the do is So of How that makes increases about margin that be wanting you that margins what sense. coming customers

where business. on doing want really shortages, we investment focus increasing getting doing And our Thanks retail We're brand and all Yes. productivity. by back for Ken. it because question, it the gross were building which put we programs. Obviously, what the health and to margins drives the helps we're of the to the of in together quite ways because we're some bottlenecks winning substantially, through

commercial get the versus customers have we then need we point price into is taking through consumers, of retailers' they grow great are. for who's same-store the to do the with the great So what pie. dialogue activation, what where a right you meet share And more so faster them activation, than constructive sales much

yes, we drive but our customers so backdrop which through helps a were, against our of their outlets. growing are margins, our where we are we increasing And brand-building investments, gross and volume

-- that. how would that's So at that's how look we basically

turn to Howard Bernstein. with We Alexia Sanford now

as are or And up to step-up Obviously, might we you guidance us And Can I back you on about Are ask in new of back follow-up, levels long you another year to number more expect you're expect a super report would just actually from that that graph slightly you sales there innovation perhaps above able be coming to two. when products were the that are up. term? where a you put for year? you this should where give percentage XXXX. Or quick next the expect just is over importantly, up we quarter? to XXXX next

Alexia. Yes. Thanks,

So we'll do always earnings, let's that's and time. release We February work what backwards. again our this at guidance

launch, and innovation, obviously Mingles it where of numbers includes pre-pandemic, don't whole because we Pringles are by were going a slide. there's actually terms by we back to host that's to that, launch, Cheez-It on In a release but get of the better group. innovations really brand against includes the category, that as we And you saw really

launch, the meaningfully was which was the where that. were we last back for than to 'XX 'XX. us, a ] in different we're XXXX couple it's good of So in SNAP and [ and year it was years beating

great 'XX. outlook as innovating, got February, So for launched as will exactly to about but the feel for in when next calendar some innovations year we a to get that the year, only and well would not guidance very good we've be give about we talk we'll

comes Steve question Powers Bank. Our next from with Deutsche

wanted I and Carey's it Chris think to your was Steve, -- response. I question follow on up

that guess, mix expecting each a in price positive volume, the I back I in America. is, expect and be of talked in North back to And question is about good those you half. the balance say the half think of components to you that

terms No, into it breaking a because we it's seek. to aberrant lapping. what And look But bit little and of in in get because when volume. We're a volume to back enormous getting of Yes. declines at I lapping returning we're is think these we don't the that important really these you of prices down that we're the balance most really forecast. type

better looking price. and less at we're now volume So

what when look just at of strange. lapping, you it's kind And so you're

look we're back that like. which might growth, can to volume growth, back think to getting going of is NSV I what drive then So you kind into

if where The expect when half -- and we that to look you we at the because we've expect exclude second only we're because thing volume that elasticity you of right, that taking. the our -- talked, of only pricing is thing continue Nigeria, declines the

in If we Nigeria. -- all you regions our than pretty expect much most volume of exclude our growth of that, other other in

second expect you think for I should So to half. in the continue trend us that

a earliest some back the the some go in today, half. good I I'm step-ups activation of earlier returns you've had makes that to the made investment so all though, as sort that reported promotional competitors, aware, as about them direct, reported we lot of indirect investment follow-up, you've return all of of That in through of and some guess talked them But on your of is incremental Okay. kind sure sense. month, for you're week far. this have

back in bit you've view in those kind on and about rational set your run So same the as amidst talked comments do the environment arguably rational. of leaning rate half, return a the more expect you you Do as the investments. competitive

extraordinary as are to that. Yes. display more input all rational. were it see do that anything We've of We than quality The innovation, things pre types cost reiterate, would drive all returning see where been by these No, building, categories we impacted not things brand things. I to inflation. just they are pandemic, going merchandising, those

that pricing all So conversations, going are. hitting those sizes we've the right that a the But It brands environment had month, to that. right at forecast earlier meeting and to all the we're rational to take and to reacted brands innovation, lot sure consumers discovery price of price some we're these invest more pressure where make under in that, to price. that to right points, getting and a of quite said But the used of we still prices. mean we the to but continue matter, we has of The have lot they're the time the happened. to a things promotions important, are obviously types not doesn't right Consumers in make have are continuing forward. having our pack they really consumers sure

probably operator? we question, think I have one time more for

Paribas. BNP question comes Gumport Our with last from Max

last think more like your I expect in pricing of competitors retailers back. saying not [indiscernible] categories and we're about saying price within want that. the more to one business from need snacking. what like do we're doesn't that or the these your companies should get wanted own -- It why Just your I needs give competitors, sure It follow sense the to a particularly for feels your needs and same. more you better all we investment, up given feels why hearing are the some make just on hearing there business consumer understand

second We point our We've you a just got we great quarter. had raised terrific Yes, guidance. Max, confidence. I'd to

about we're you good we about we getting but feel I we are, outlook. to geographic building. the good but innovations. hope from can't where heard feel that And our our our feel everybody about not through portfolio. is, return results We You that else speak very, We feel only where about in brand very the good come the good

because you that just there We good we're results today seen feel doing point good you anything missing And say, on not and announcing to need anything. we're so and the we feel front right like very already here don't raising results, are haven't we don't that again, to guidance. I'd we -- do like we pricing

that. ended would just I So

one more. Maybe

Yes, from with question we Lazar have Barclays. a Andrew

Great.

activation, levels all lot back more of pricing. super with about all promotional higher peers more up off a of much that, list commercial a Steve, It's we're to one. quick activation normal the normal Just of of obviously as well. levels, from activity hearing

promoted still points are So quite a price higher. bit

So what you around you're trending? That's on where curious if seeing lift better, promotional it. seen or have I'm just it? of activity, kind that's always it's Is it worse how

the question, end Andrew. list of and go I the you still at point as I'd year of last lifts the out, back think price we're was year, say the prices happening, discovery you beginning the higher were to Great great because starting improve. if the not

of confidence year investments level out, the the of investment part next week half will type of in of are week pre-pandemic. our better the into yield in and the year And that right the so to saw that And we we're seeing back making sequentially, return. that a returns start that's

back now Renwick closing I'll John This concludes our for remarks. hand to Q&A.

us. Well, Okay. you great follow-up and a hesitate do please time. your not to have day. And if for you, do Have everyone, questions, interest your thank call

for Ladies to call gentlemen, today's you like and has thank concluded. We'd participation. now your

your may disconnect now You lines.