Kellanova (0R1R.L) Q1 2025 Earnings Report

Kellanova reported QQ1 2025 results with a modest top-line decline and continued margin pressure. Revenue totaled $3.083 billion, down 3.41% year over year and 1.31% quarter over quarter, while gross profit came in at $1.063 billion for a gross margin of approximately 34.5%. Operating income was $413 million and net income $304 million, translating to an EPS of $0.879. The company delivered positive operating cash flow of $116 million in the quarter, but free cash flow was negative at about $60 million due to a sizable working capital outflow of $333 million and capital expenditures of $176 million. The balance sheet remains heavily levered, with total debt of $6.22 billion and net debt of $5.89 billion, and liquidity measured by current and quick ratios remains tight (current ratio 0.80, quick ratio 0.52, cash ratio 0.08).

The result underscores Kellanova’s exposure to input cost volatility and the need for pricing/tactical productivity actions to support margins amid a high-cost environment. While leverage limits near-term flexibility, the company holds a sizable cash balance and continued operating cash generation, which could enable debt stabilization if cash flow improves or if deleveraging momentum accelerates. Management commentary (when available) would be critical to assess the cadence of price realization, cost-reduction programs, and portfolio optimization going forward.

Quantitatively, key YoY and QoQ deltas in QQ1 2025 point to a challenging but not crisis-level quarter: revenue -3.41% YoY, gross profit -9.84% YoY, operating income -18.86% YoY, net income -11.63% YoY, and EPS -13.01% YoY, with QoQ declines also evident across the primary profitability metrics. Investors should watch for signs of margin stabilization, rate-driven pricing benefits, and any debt reduction or capital allocation moves in upcoming quarters.