Food Business News - May 15, 2018 - 12
Frozen foods, Pringles boost
Kellogg's first-quarter earnings
BATTLE CREEK, MICH. - The ability to stabilize
its cereals business while accelerating
growth in frozen foods and Pringles
proved pivotal in spurring sales and
earnings gains at Kellogg Co. in the first
Net income in the first quarter ended March 31 totaled $444 million, equal
to $1.28 per share on the common stock,
up 67% from $266 million, or 76c per
share, in the same period a year ago. Net
sales increased 4.7% to $3,401 million
from $3,248 million a year ago.
In a May 3 conference call with
analysts, Steven A. Cahillane, chairman,
president and chief executive officer,
identified three areas of emphasis for the
Battle Creek-based company: returning
to top-line growth, achieving full-year
guidance and reshaping the portfolio.
"Returning to top-line growth is
a priority for us, and it's gratifying to
see so much of our portfolio showing
improvement," Mr. Cahillane said. "Our
on-trend frozen foods business has accelerated its strong growth. In U.S. Snacks,
behind the noise of D.S.D. (direct-store
delivery) exit impacts, our core brands
are gaining share again, and our overall
business is increasing its velocities on
shelf. And Pringles is growing strongly
worldwide. We stabilized our core international developed cereal markets and
even showed some improvement. And
we built scale and snacking presence in
emerging markets, and it's paying off,
accelerating growth in those markets."
Mr. Cahillane said Kellogg also is
on track on priority No. 2: achieving
is focused on the basics
to accelerate growth in
its Morning Foods and
"We got off to a strong start in every
metric," he said. "Our net sales grew
ahead of our expected full-year pace.
We also improved our operating profit
margin. Our productivity initiatives are
allowing us both to cover increased cost
pressures and deliver on our promise to
reinvest behind our brands. Brand building was increased at a strong double-digit rate in Q1 and will be again in Q2, and
its investment behind better consumer
ideas. We're truly deploying for growth."
Finally, efforts to reshape the company's portfolio are coming to fruition.
Mr. Cahillane said Parati, which Kellogg
acquired in Brazil at the end of 2016,
sustained strong growth in the first
quarter, enabling the company to pursue
additional revenue and cost synergies in
Brazil and South America. Another acquired company, RXBAR, also sustained
exceptional growth in the quarter, and
plans call for expanding distribution and
the product lineup.
Despite the successes of the past
quarter, Mr. Cahillane cautioned that
more work remains to be done.
"We know we still have work to do,"
he said. "For instance, in U.S. Morning
Foods and in Kashi snacks, we're busy
getting back to basics and investing in
what we know can grow. These softer
businesses were already incorporated
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May 15, 2018