BATTLE CREEK, MICH. — Recent price increases implemented in an effort to offset higher commodity costs were not enough to prevent a slight earnings decline at The Kellogg Co. in the just-ended first quarter.
Net income in the first quarter ended March 29 was $315 million, equal to 82c per share on the common stock, down 2% from $321 million, or 81c per share, in the first quarter of fiscal 2007. Net sales were $3,258 million, up 10% from $2,963 million a year ago.
"Our continued focus on executing our business model paid off during the first quarter," said David Mackay, chief executive officer. "We posted strong results, despite the impact of higher commodity inflation as well as increased advertising and up-front investments. As a sign of our confidence, the board of directors announced its plans for a 10% increase in the quarterly dividend starting in the third quarter."
Operating profit at Kellogg North America rose 12% to $403 million buoyed by a 7% gain in net sales to $2,148 million.
Retail Cereal and Retail Snacks each posted internal sales growth of 4%, while the North America Frozen and Specialty Channels posted internal net sales growth of 10%.
At Kellogg International, net sales grew approximately 16%. The company’s Latin American region posted internal sales growth of 7% during the first quarter, while Europe and the Asia Pacific region each rose 5%.
Operating profit at Kellogg in the first quarter rose 9% to $545 million, up from $499 million in the same period a year ago.
Looking forward, Kellogg said it expects full-year earnings to be in a range of $2.92 to $2.97 per share. The company noted that incremental commodity, energy, fuel and benefits expenses are expected to total 80c per share, up from the previous expectation of 65c per share.
"Although we now expect commodity inflation to be even higher than previously anticipated, we remain committed to achieving another strong year in 2008," Mr. Mackay said. "Our business momentum, recent price increases and focus on productivity give us confidence we will meet our goals."