Input costs pull Kellogg earnings down
May 4, 2011
by Keith Nunes
BATTLE CREEK, MICH. — Rising input costs hindered earnings at the Kellogg Co. during the first quarter of fiscal 2011. Net income for the quarter ended April 2 was $365 million, equal to $1 per share on the common stock, down 8% from the first quarter of fiscal 2010 when the company recorded net income of $417 million, or $1.10 per share.
Sales during the quarter increased 5% to $3,485 million.
Operating profit for Kellogg’s North American business unit declined 12% to $440 million. The company said the decline was attributable to a difficult year-over-year comparison of 22% on an internal basis for the first quarter of 2010, higher cost of goods sold and increased brand building investment. Sales for the North American business unit increased 4% to $2.4 billion.
Operating profit for the company’s International businesses declined 3% to during the quarter. Much like its North American businesses, Kellogg said rising input costs took a toll on the International segment. Sales increased 8% to $1.1 billion.
Despite the input cost headwinds, Kellogg reaffirmed its full-year 2011 earnings per share guidance to be in the range of $3.33 to $3.40, assuming no foreign exchange impact.
“We are raising our full-year 2011 internal net sales guidance to approximately 4% to offset higher input costs, and we are on track to meet our operating profit and currency-neutral 2011 e.p.s. guidance,” said John Bryant, president and chief executive officer. “We will continue to leverage the power of our brands to achieve our goals for 2011 and remain focused on delivering sustainable growth over the long term.”