Kellogg’s third quarter sales have risen marginally, driven by growth in snacks and frozen foods offsetting a poor performance of the fmcg giant’s cereal division.
Organic net sales for the quarter ended 29 September rose 2.4% to $3.41bn, from $3.34bn a year ago.
On a total basis, however, sales dropped 2.8% to $3.37bn due to the absence of two months of trading from units that were divested in late July – including its cookies, fruit snacks, pie crusts and ice cream cones businesses.
So far this year, revenues are up 1.2% on a total basis, to $10.36bn and 1.6% organically.
Kellogg’s North America organic sales were up 0.2% in the quarter, due to growth momentum in “key brands” such as Pringles, Cheez-It, Rice Krispies Treats, and Pop-Tarts.
Growth in its frozen food division was led by innovation and plant-based alternatives, the company explained. Its core cereal division sales in the US declined on “category softness”.
In Europe, organic sales rose 4.2% while in Latin America they were up 5.9%. The Asia Pacific, Middle East and Africa region saw a 7.6% increase.
Operating profits dropped 33% in the quarter to $263m, largely due to the recognition of withdrawal liabilities related to the company’s exit from certain pension plans, business divestitures and “unfavourable” currency translation.
For the first nine months, operating profits are down 25%, also due to pension withdrawal liabilities, as well as business and portfolio charges.
“We remain squarely on strategy and on plan, and this is reflected in our third quarter results,” said chairman and CEO Steve Cahillane.
“Our reshaped portfolio is doing what it is intended to do: focusing on our higher-growth categories and markets. We have revitalised key brands through improved brand-building and enhanced innovation.
“And, as we move past our heaviest investments and costs, we are on track for delivering gradual improvement in profitability. While fully recognising that we still have work to do, I’m very pleased with our progress.”
Kellogg’s reaffirmed its full-year guidance of net sales growth between 1% and 2% and currency neutral adjusted operating profit down between 4% and 5%, reflecting the impact of the divestiture.
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