How Kellogg's Turns a Profit Even as Fewer People Eat Cornflakes for Breakfast
Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.
Corn Flakes maker Kellogg reported a better-than-expected quarterly profit, helped by cost-cutting and lower cost of goods sold, but sales fell for the seventh straight quarter.
The company, whose products also include Pringles chips and Cheez-It crackers, raised its 2016 adjusted earnings forecast to $4.16-$4.23 per share in constant currency terms, from $4.11-$4.18.
Kellogg, responding to weak demand for its processed foods, launched "Project K" in 2013 to save up to $475 million annually by 2018, by cutting jobs and optimizing production.
The company also rolled out zero-based budgeting, under which managers have to justify expenses for each budget period.
Net income attributable to Kellogg rose to $292 million, or 82 cents per share, in the third quarter ended Oct. 1, from $205 million, or 58 cents per share, a year earlier.
Excluding items, the company earned 96 cents per share, beating the average analyst estimate of 87 cents per share, according to Thomson Reuters I/B/E/S.
Net sales fell 2.3 percent to $3.25 billion, missing analysts' average estimate of $3.28 billion.
Sales fell due to weak demand for breakfast cereal in the United States and the UK.
The company's shares were up 2.2 percent at $76.80 in light premarket trading on Tuesday. Up to Monday's close, the stock had risen 4 percent since the start of the year.