Shares of foodmaker Kellogg are down 7 per cent pre-market.The culprit is a profit warning, which cites both Europe and the U.S.
BATTLE CREEK, Mich., April 23, 2012 (GLOBE NEWSWIRE) — Kellogg Company (NYSE:K) today announced that it is lowering full-year 2012 financial guidance based on weaker-than-expected first quarter performance. The decline was driven by the Company’s European business, initial weak volume growth in certain U.S. categories, and the desire to continue to invest in future growth.
The Company’s first quarter 2012 reported net sales declined by 1.3 per cent; internal net sales, which exclude the impact of foreign exchange translation and the impact of acquisitions and divestitures, were approximately unchanged from the level posted in the first quarter of 2011. Reported operating profit decreased by 6.5 per cent and internal operating profit declined by 6.1 per cent. The company’s first quarter reported earnings were $1.00 per share, also unchanged from the level posted in the first quarter of 2011. Earnings per share in the first quarter of 2012 benefited by $0.05 from hedges related to the pending acquisition of the Pringles business.
The Company now expects that full-year internal net sales will increase at a rate between 2 and 3 per cent. Full-year internal operating profit is expected to decrease at a rate between 2 and 4 per cent as the result of the slower sales growth and continued investment in the business. Consequently, the Company expects that reported earnings, which include the expected impact of the acquisition of Pringles, will be in a range of $3.18 to $3.30 per share; the Company anticipates that the acquisition will lower earnings per share by an amount between $0.06 and $0.11 per share, including the benefit from the hedges detailed previously.
“We are obviously disappointed with the performance of the Company in the first quarter of 2012,” said Kellogg Company’s president and CEO, John Bryant. “We faced more significant challenges in both Europe and in some categories in the U.S. than we expected. We have recognised and are addressing these issues, and have provided revised guidance that allows us to continue to invest in the business. This investment is at the core of our operating principles, it’s the right thing to do for the health of the business, and it will help drive future growth.”