Kellanova Q3 2025 Earnings: Margin Pressure and Regional Divides

Kellanova, the global snacking powerhouse behind iconic brands like Pringles, Cheez-It, and Pop-Tarts, recently released its financial results for the third quarter of 2025. To understand the company's performance, let's take a closer look at the key trends and figures detailed in its latest 10-Q filing with the SEC.

For the quarter ending September 27, 2025, Kellanova reported a slight increase in net sales, which rose 0.9% to $3.26 billion compared to the same period last year. However, this modest top-line growth didn't translate to the bottom line. Net income attributable to Kellanova saw a significant drop to $309 million, down from $367 million in the third quarter of 2024. This resulted in diluted earnings per share of $0.88, compared to $1.05 a year ago.

To visualize how Kellanova's revenue flows through its costs to arrive at its final profit, the following diagram breaks down the quarterly income statement.

Contrasting Regional Fortunes

A deeper dive into the report reveals a stark contrast in performance across different regions. The Asia, Middle East & Africa (AMEA) segment was the standout performer, with net sales surging an impressive 13.7% to $672 million. This growth was driven by strong performance across its product lines, particularly in the "Noodles and other" category.

Unfortunately, this strength was offset by weakness in more established markets.

• North America, Kellanova's largest segment, saw sales decline by 2.7% to $1.627 billion. The company cited "continued softness in snacking and frozen categories" as the primary reason.
• Europe also faced headwinds, with sales dipping 0.9% and its reported operating profit falling sharply by over 27%.
• Latin America experienced a slight sales decline of 0.8%, but its operating profit was nearly halved.

This geographic divergence highlights a key challenge for the company: while it is finding strong growth in emerging markets, its core businesses in North America and Europe are contending with sluggish consumer demand.

Squeezed Margins and Slower Cash Flow

Another critical aspect of Kellanova's performance is its profitability. The company's reported gross margin—the percentage of revenue left after accounting for the cost of goods sold—shrank to 33.3% from 36.4% in the prior year. This compression indicates that costs are rising faster than sales, putting pressure on overall profitability. While a reduction in selling, general, and administrative expenses provided some relief, it wasn't enough to prevent a slight dip in operating profit, which landed at $452 million for the quarter.

From a cash flow perspective, the year-to-date numbers show a significant slowdown. Cash from operating activities was $788 million, a steep drop from the $1,293 million generated during the same nine-month period in 2024. Consequently, net debt has risen from $5,049 million at the end of last year to $5,386 million.

Looking Ahead

Kellanova's third-quarter results paint a complex picture. The strong performance in the AMEA region demonstrates the company's ability to capture growth in new markets. However, the persistent softness and margin pressure in the North American and European sectors are significant concerns. Moving forward, investors will be closely watching whether Kellanova can stabilize these key markets while continuing to leverage the impressive growth from its emerging market operations.