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Kellogg Boosts Forecast After Cost Cutting Helps Bolster Profit

Published on Aug 4 2016 3:11 PM in A-Brands tagged: Cereal / Kellogs / US business

Kellogg Boosts Forecast After Cost Cutting Helps Bolster Profit

Kellogg Co., the world’s largest cereal company, raised its annual earnings forecast after its cost-cutting program helped make up for a slumping breakfast business.

Profit will be $4.11 to $4.18 a share this year when removing the effects of currency, the Battle Creek, Michigan-based company said in a statement Thursday. It had previously projected $4 to $4.07 a share.

Kellogg’s move to embrace zero-based budgeting -- an increasingly popular form of cost cutting in the food industry -- is boosting its margins. The company also benefited from growth of Pringles potato chips and a less-dire-than-expected business in Venezuela, which has suffered from runaway inflation.

Last quarter, profit was 91 cents a share, excluding some items, which matched analysts’ estimates. But sales fell more than 6 percent to about $3.26 billion in the quarter, worse than the average projection of $3.36 billion.

Kellogg is still trying to turn around its struggling morning-foods division, which has been hurt by a prolonged slump in U.S. cereal sales. The company, known for brands like Special K and Froot Loops, has said the category can return to growth this year as younger consumers embrace the breakfast staple as a snack.

The stock rose 1.1 percent in early trading after the results were posted. It had already gained 12 percent this year through Wednesday.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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