BATTLE CREEK (dpa-AFX) - Cereal maker Kellogg Co. (K) reported Tuesday a profit for the second quarter that decreased 25 percent from last year, hurt by Venezuela business charges and a drop in sales amid negative currency translation impact.
Comparable earnings per share matched analysts' expectations, while quarterly sales topped their estimates. The company also reaffirmed guidance range for the full-year 2015.
'We were pleased that results in the second quarter were as we expected. We've seen good growth in the Asian and Latin American businesses, growth in the European Snacks business, and improving trends in the North American business,' Chairman and CEO John Bryant said in a statement.
The Battle Creek, Michigan-based maker of Rice Krispies, Pop-Tarts, Eggo waffles and Morningstar Farms brands reported net income attributable to Kellogg of $223 million or $0.63 per share for the second quarter, lower than $295 million or $0.82 per share in the prior-year quarter.
Results for the latest quarter primarily include an impact from Venezuela business remeasurement of $0.37 per share, and costs associated with Project K of $0.18 per share. Project K is the company's longer-term cost-cutting plan. It also includes a benefit of $0.21 per share from the deconsolidation of a variable interest entity.
Excluding items, comparable earnings for the latest quarter was $0.92 per share, which included a negative impact of $0.05 per share from currency translation.
On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.92 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter declined 5.1 percent to $3.50 billion from $3.69 billion in the same quarter last year, largely as the result of currency translation, but topped fourteen Wall Street analysts' consensus estimate of $3.47 billion.
Comparable net sales decreased 5.4 percent, while currency-neutral comparable net sales edged up 0.1 percent.
The company said it saw an improvement in total U.S. Cereal category sales and Kellogg's U.S. Cereal share trends in the second quarter, with good sales growth in Asia Pacific and Latin American regions as well as in the Frozen Foods and Canadian businesses in North America.
It added that the Asian, Latin American, and European Snack businesses posted currency-neutral comparable net sales growth and the North American business benefited from improving trends.
Kellogg North America's second-quarter net sales decreased 2.8 percent year-over-year to $2.28 billion, with currency-neutral comparable net sales also declining 1.8 percent.
U.S. Morning foods net sales declined 2.3 percent and U.S. Snacks net sales decreased 1.8 percent from last year. U.S. Specialty net sales declined 2.4 percent, and North America other net sales decreased 5.5 percent from the year-ago quarter.
Internationally, Latin American net sales grew 2.5 percent, with currency-neutral comparable net sales growing 14.5 percent, while European net sales declined 15.3 percent, with currency-neutral comparable net sales decreasing only 2.5 percent. Asia Pacific net sales decreased 5.2 percent, with with currency-neutral comparable net sales growing 6.8 percent.
Looking ahead to fiscal 2015, the company continues to expect currency-neutral comparable earnings per share to range between a decline of two percent and about unchanged from last year, as well as currency-neutral comparable sales to remain almost unchanged year-over-year.
Further, Kellogg said it expects to achieve its long-term targets for currency-neutral comparable sales and operating profit growth in 2016.
Street is currently looking for full-year 2015 earnings of $3.55 per share on net sales drop of 4.6 percent to $13.72 billion.
'After a difficult 2014, we continue to build momentum in 2015 and are on-track to achieve our long-term-growth targets for currency-neutral comparable sales and operating profit in 2016,' Bryant added.
In Tuesday's regular trading session, K is currently trading at $66.37, up $0.30 or 0.45% on a volume of 0.14 million shares. In the past 52-week period, the stock has been trading in a range of $58.83 to $69.89.
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