Kellogg Company (K) recently posted better-than-expected first-quarter 2010 results on the heels of international sales and effective cost management.
The quarterly earnings of $1.09 per share surpassed the Zacks Consensus Estimate of 94 cents, and rose 30% from 84 cents delivered in the prior-year quarter. Excluding foreign currency translation, earnings per share climbed 27%.
Kellogg, one of the world’s largest cereal makers, reiterated its fiscal 2010 earnings per share growth target of 11% to 13%, excluding foreign currency translation.
Total net sales for the quarter jumped 5% to $3,318 million, whereas operating profit soared 20% to $637 million. Excluding foreign currency translation, sales rose by 2% and operating profit surged 17%. Kellogg also confirmed that it expects net sales to increase between 2% and 3%, and operating profit between 8% and 10%, excluding foreign currency translation in fiscal 2010.
Kellogg North America sales rose 3% to $2,275 million, whereas excluding foreign currency translation sales growth decelerated to 2%. North America Retail Cereal and Retail Snacks posted sales growth of 0.5% and 5%, respectively, excluding foreign currency translation. The Frozen and Specialty Channels businesses revenue dropped 3%. Operating profit surged 23% to $495 million during the quarter, and 22% excluding foreign currency translation.
Kellogg International sales jumped 9% to $1,043 million. Excluding foreign currency translation, International sales grew 2% during the quarter, registering sales growth rates of 2% in Europe, 1% in Latin America, and 1% in Asia-Pacific regions. Operating profit climbed 9% to $187 million, whereas excluding foreign currency translation, operating profit grew 3%.
Kellogg, in order to drive profits, has been resorting to cost-cutting measures to ease the sales pressure, given the stiff competition in food categories. Going forward, the company remains optimistic about sustaining its performance.
The company ended the quarter with cash and cash equivalents of $387 million, total long-term debt of $4,846 million and shareholders’ equity of $2,441 million. Kellogg generated free cash flow of $190 million during the quarter. The company also announced a $2.5 billion share repurchase program for a period of three years from 2010 to 2012.
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