Kellogg Shows Momentum

April 29, 2005
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BATTLE CREEK — Kellogg Co. announced yesterday that is has bested a breakthrough fiscal 2004 first quarter despite a quarter of significant capital investment.

Surprising growth and momentum led Kellogg to raise its first quarter expectations last month, and those projections held. Profits were up 16 percent to $254.7 million. Earnings were 61 cents per diluted share, up 15 percent. Net sales increased 8 percent to $2.6 billion.

“This was another excellent quarter for the company,” said Jim Jenness, Kellogg’s chairman and chief executive officer. “We delivered growth across our businesses while facing continued cost pressures. Most importantly, though, we increased the level of investment we plan to make in our business. These investments are made to drive sustainable growth in the future.”

Internal net sales growth, which excludes foreign-currency translation, was 6 percent and built on the 7 percent growth of the year-ago quarter.

Driven by growth across all divisions, Kellogg North America achieved internal net sales growth of 7 percent. Its retail cereal sales rose 4 percent in local currencies. The North America Retail Snacks division posted internal sales growth of 7 percent, with underlying growth in each of its product lines — cookies, crackers, wholesome snacks and toaster pastries.

The North America Frozen and Specialty Channels businesses collectively posted local- currency sales growth of 12 percent, driven by strong double-digit gains of the Eggo brand. The Food-Away-From-Home businesses posted high single-digit sales growth.

Kellogg International reported net sales growth of 8 percent in the quarter, building on 10 percent growth in the year-ago quarter. Internal sales growth was 12 percent in Latin America, 3 percent in Europe and 4 percent in the Asia Pacific region.

Quarterly operating profit was $468 million in the quarter, an increase of 11 percent from the first quarter of last year.

Kellogg announced a 10 percent increase in the dividend effective in the third quarter of 2005.

“We posted a very strong start to 2005,” Jenness said. “Our businesses around the world have momentum, and our employees continue to execute our strategy and operating principles. It is this excellent performance that gives us additional confidence in our ability to meet our long-term targets in 2005, even while making significant investment in our future growth. We are doing the right things for the business and remain committed to generating sustainable and dependable growth.”  

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