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Kellogg's adjusted profit beats estimates as costs fall
February 9, 2017 / 1:20 PM / 9 months ago

Kellogg's adjusted profit beats estimates as costs fall

(Reuters) - Corn Flakes maker Kellogg Co’s (K.N) adjusted quarterly profit topped Wall Street estimates, helped by cost cuts and improving demand for its snack products in the United States, its largest market.

The world’s biggest cereal maker is in the middle of a multi-year restructuring program, called “Project K”, which involves jobcuts and production optimization among other things.

To cut costs further, the company said on Wednesday it would switch to a warehouse delivery model for its U.S. snacks business and stop distributing products directly to stores.

Net loss attributable to Kellogg widened to $53 million, or 15 cents per share, in the fourth quarter ended Dec. 31, from $41 million, or 12 cents per share, a year earlier.

The latest quarter included charges related to its Venezuelan business and the Project K restructuring program.

Excluding the charges, the company earned 92 cents per share, beating analysts’ average estimate of 85 cents.

Kellogg’s selling, general and administrative expenses fell more than 12 percent to $878 million in the quarter.

The company said North America sales were helped by its snack unit, home to brands such as Cheez-It and Pringles.

Net sales from Kellogg’s U.S. snacks unit rose about 2.3 percent to $767 million in the fourth quarter ended Dec. 31.

In response to a shift in consumer preferences toward healthier products, Kellogg launched the Special K breakfast cereal range that uses less sugar and artificial ingredients and includes healthy protein and fruit-based ingredients.

The company has also launched corn-based Pringles chips, Special K multi-grain protein bars and added breakfast options in its meat alternatives brand MorningStar Farms.

The company’s overall net sales fell slightly to $3.1 billion, edging past the average analyst estimate of $3.08 billion, according to Thomson Reuters I/B/E/S.

The Battle Creek, Michigan-based company’s shares rose 1.4 percent to $74.50 in premarket trading on Thursday.

Reporting by Gayathree Ganesan in Bengaluru; Editing by Shounak Dasgupta and Saumyadeb Chakrabarty

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