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Kellogg's slips as latest results show breakfast sales still soft

Feb 07 2019 16:53
Deena Shanker, Bloomberg

Kellogg is making headway toward Chief Executive Officer Steven Cahillane’s goal of boosting revenue - but investors appear to be concerned by lingering US weakness in the key category of morning foods.

Sales in the fourth quarter rose 7.2% to $3.4 billion, after stripping out currency effects, while the company sees currency-neutral revenue climbing as much as 4% this year.

Cereal sales and market share, however, were hurt by “category-wide softness”.

Key Insights

Cahillane will wrap up his first year as CEO in March. The results show that his strategic shift away from cutting costs to increasing sales is attainable but challenging as consumers move away from packaged food.

Snack sales declined, as the company adjusted prices and made changes to its product portfolio after a shift in distribution systems. The segment has some momentum, however, with “key brands” reporting growth and market-share expansion, the company said.

Kellogg saw growth in sales of frozen foods and its Kashi brand and also in regions like Asia and Europe. But US snacks and morning foods are still the most important categories for the company, making up more than 40% of revenue.

Market Reaction

Shares fell as much as 4.8% to $56.30 in early trading. The stock has gained 3.8% this year through Wednesday’s close, trailing the S&P 500 Index’s performance.

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