Business

Kellogg may raise prices again in 2022 amid ‘double-digit cost inflation’, says CEO

Kellogg plans to raise prices and increase productivity to offset the skyrocketing inflation it’s seeing in manufacturing costs, CEO Steve Cahillane told CNBC Thursday.

“As we enter 2022, we are still seeing double-digit spending inflation,” Cahillein said on Squawk on the Street.

“We’re going to see the overarching pricing benefits we used in 2021 in 2022… but our goal is to cover all of those input costs through pricing and performance, and we think we’re in very good shape for that. .”

The CEO’s comments come after Kellogg reported higher-than-expected earnings for its fiscal fourth quarter, with earnings per share of 83 cents above estimates by 4 cents, according to FactSet.

Kellogg shares rose almost 3% Thursday afternoon as investors also reacted to the company’s release. full-year profit growth forecast that beat Wall Street’s expectations.

The implementation of price hikes last year helped boost the company’s profits and fight the inflationary pressures it was experiencing. Cahillane said customers were willing to pay even higher prices, but Kellogg still plans to be cautious about price hikes this year.

“We don’t want prices to get too high, but we’re in an environment where it’s widespread, it’s about everything, but we were able to cover it. Our pricing performance has been very robust,” he said. .

The grain segment suffered last quarter due to labor strikes. Cahillane said other parts of the company’s portfolio “more than made up” for the gap behind grain last quarter, and he expects the line to bounce back once employees return to work.

“For 2022, we are really looking at the first half of the year, rebuilding our stocks, rebuilding our distribution, rebuilding our commercial plans, leading to the second half of the year seeing growing momentum in our grain business and a real return to normal.” he said.

Cahillane said Kellogg could also close some deals this year, citing the company’s strong financial position.

“We have dry powder to consider portfolio additions if they add shareholder value … but we are very disciplined when it comes to pricing,” he said.


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