Cereal maker Kellogg Co. (K: Quote) reported Thursday a decline in first-quarter profit, as sales decreased due mainly to weakness in Europe.
John Bryant, president and chief executive officer of the company said, "While results in the first quarter were lower than we had planned due to weakness in Europe and certain other businesses, we are confident that we are taking the right actions and investing in the right places."
Kellogg International net sales declined 7.1 percent and internal net sales were down 3.7 percent. Internal net sales in European business dropped 10.4 percent, hurt by continued weakness in the region and issues specific to the business, the company said. Europe's internal operating profit declined 19.8 percent and accounted for all of the International business' decline in the quarter.
Further, the company said the acquisition of Pringles business will bring significant opportunity, which increases its confidence in the long-term potential of its business.
In the first quarter, net income attributable to company declined to $358 million from $366 million in the year-ago quarter. On a per share basis, earnings remained unchanged at $1.00.
On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.89 per share for the quarter. Analysts' estimates typically exclude special items.
First quarter 2012 reported net earnings included a $26 million pre-tax benefit from hedging activities associated with the pending acquisition of the Pringles business.
Net sales for the quarter slightly decreased to $3.44 billion from $3.49 billion in the same quarter last year. Analysts estimated revenues of $3.41 billion for the quarter.
As announced on Monday, Kellogg sees 2012 earnings per share in the range of $3.18 and $3.30. Internal net sales growth is anticipated in a range between 2 and 3 percent.
Kellogg had lowered its outlook for 2012, citing weaker-than-expected performance in the first quarter. The company said the decline was driven by its European business, initial weak volume growth in certain U.S. categories and the desire to continue to invest in future growth.
Analysts expect the company to report earnings of $3.44 per share, on revenues of $13.90 billion for 2012.
K is currently trading at $50.31, down $0.19 or 0.37 percent, on a volume of 942 thousand shares.
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by RTT Staff Writer
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