Fitch assigns BBB to Kellogg

Fitch Ratings said it assigned initial BBB long-term issuer default ratings to Kellogg Co., to be renamed Kellanova post the W.K. Kellogg spinoff, Kellogg Europe Co. Ltd. and Kellogg Holding Co. Ltd. with a stable outlook.

“Pro forma for the proposed spinoff of W.K. Kellogg, Kellogg's ratings reflect its leading market share in global snacks, anchored by Pringles and Cheez-It, which accounts for 60% of revenue, as well as its leading presence in international cereal and noodles and North American frozen foods. Fitch projects the company's portfolio post-spinoff to generate low-single-digit organic top line and EBITDA growth over the medium term, with EBITDA leverage in the low 3x.

“Fitch projects FCF (post dividends) to be modest at around $100 million annually given elevated capex over the next 24-36 months to support capacity expansion, particularly around its Pringles business,” the agency said in a statement.

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