Kellogg reaffirms guidance
For fiscal year 2010, Kellogg Co. continues to expect internal net sales to be down approximately 1 percent, internal operating profit to be approximately flat, and full-year currency-neutral earnings per share growth of 4 to 5 percent. For 2011, the company still expects low single-digit internal net sales growth, flat to down 2 percent internal operating profit, and low single-digit earnings per share growth on a currency-neutral basis.
Last month, Kellogg Co. (NYSE:K) reported soft third-quarter 2010 earnings per share, internal net sales and internal operating profit, consistent with the company's Oct. 21 announcement. Third-quarter softness was due to weaker performance in some of its core cereal markets, continued competitive intensity and the impact of the cereal recall.
According to a news release, third-quarter reported net earnings were $338 million, a 6 percent decrease over the same quarter a year ago. Third-quarter reported earnings per diluted share declined 4 percent to $0.90, and 2 percent on a currency-neutral basis.
Reported net sales declined 4 percent to $3.2 billion in the third quarter. Internal net sales, excluding the effect of foreign currency translation, decreased 2 percent year-over-year. Total reported operating profit in the quarter decreased 5 percent to $541 million driven primarily by lower net sales and increased advertising investment. Internal operating profit decreased 3 percent. Reported gross margin contracted by 50 basis points to 43.4 percent in the quarter because of higher than expected cost pressures and lower volume levels.