Pringles pop boosts Kellogg’s sales in 4Q

AAP
February 06, 2013

A BOOST from Pringles and strong international results has helped Kellogg’s fourth-quarter earnings surpass expectations.

Kellogg’s, known for breakfast food such as Cornflakes and Froot Loops, has been seeking to improve its results by investing in its supply chain after several product recalls and by expanding its salty snacks business.

It acquired Pringles from Procter & Gamble in February 2012. The brand provided a boost in the fourth quarter, with Pringles revenue up five per cent in the US and one per cent in Europe.

The company also changed its accounting method for pensions, and related one-time adjustments led to a loss of $US32 million ($A30.83 million), or nine US cents per share, for the period. That compares with a loss of $US195 million ($A187.89 million), or 54 US cents per share, for the prior year’s revised results.

Not including one-time items related to its pension adjustments and the Pringles acquisition, the company said underlying earnings were 67 US cents per share, a penny above what analysts expected, according to FactSet.

Revenue rose 18 per cent to $US3.56 billion ($A3.43 billion), from $US3.02 billion ($A2.91 billion) in the prior year. Analysts expected $US3.44 billion ($A3.31 billion). Excluding foreign currency translation, revenue rose five per cent.

In North America, the company’s net sales rose 12 per cent in the quarter, or 5.5 per cent for existing products, with the breakfast foods and Kashi segment rising by six per cent.

International sales rose 31 per cent in the fourth quarter, boosted by results in Asia and Latin America. Internal sales, which exclude the impact of acquisitions and foreign currency translations, rose five per cent. The European business also showed improvement, with internal sales up 2.7 per cent in the quarter.

For the year, net income rose 11 per cent to $US961 million ($A925.95 million), or $US2.67 per share. That compares with $US866 million ($A834.42 million), or $US2.38, in the prior year. Revenue rose nearly eight per cent to $US14.2 billion ($A13.68 billion) from $US13.2 billion ($A12.72 billion) in 2011.

The company, based in Battle Creek, Michigan, stood by its outlook for 2013, with sales expected to increase by about seven per cent. Full-year earnings per share are expected to grow between five per cent and seven per cent.