- Posted April 25, 2012
- Tweet This | Share on Facebook
Kellogg's bleak outlook raises stakes on Pringles
By Candice Choi
and Michelle Chapman
AP Business Writers
NEW YORK (AP) -- Kellogg's lowered forecast for 2012 is raising the stakes on the breakfast food giant's purchase of Pringles earlier this year.
The Battle Creek, Mich.-based company on Monday cited a weaker-than-expected first quarter in slashing its forecast for the full year. The move sent the company's shares down $2.98, or about 5 percent, to $51.01.
Kellogg Co. currently gets most of its revenue from North America, where growth in the packaged food industry has been relatively weak. But in February, the company announced that it would pay $2.7 billion to buy Pringles potato snacks from Procter & Gamble.
The acquisition is intended to have a dual benefit for Kellogg. The deal will strengthen the company's footprint overseas; Pringles are sold in more than 140 countries and the brand gets two-thirds of its revenue from abroad.
Kellogg is also hoping the addition helps it move beyond the breakfast table, as the appetite for on-the-go snacks grows rapidly in emerging markets like China and India. Kellogg's cupboard of savory snacks currently include Cheez-It, Keebler's Club crackers and its new Special K crackers.
The Pringles purchase, expected to close this summer, would catapult Kellogg to the No. 2 ranking among savory snack makers after PepsiCo Inc.'s Frito-Lay.
For 2012, Kellogg said that it now expects a profit of $3.18 and $3.30 per share. That includes a charge of 6 cents to 11 cents per share from its Pringles deal. The company blamed results in its European business and weak volume growth in select U.S. categories for the lowered forecast.
Analysts surveyed by Fact Set were predicting 2012 earnings of $3.48 per share.
The news sent Kellogg stock down closer to its 52-week low of $48.10 set in late November. Its shares traded as high as $57.70 last May.
In early February, Kellogg had predicted 2012 net income would rise 2 to 4 percent, excluding changes in currency values, with another performance measure -- operating profit -- unchanged for the year. The company now says it expects operating profit to decrease 2 to 4 percent in 2012.
In 2011, Kellogg earned $1.23 billion, or $3.38 per share. Operating profit was $2 billion.
Kellogg also now anticipates that internal revenue -- which excludes the effect of changing currency values as well as acquisitions and sales of company divisions -- will grow 2 percent to 3 percent, down from the 4 percent to 5 percent range it predicted earlier this year.
For the January-March quarter, the maker of Frosted Flakes, Eggo waffles and Pop Tarts said it earned $1 per share, unchanged from a year ago. Wall Street expected earnings of 99 cents per share. The company said revenue fell 1.3 percent during the quarter, suggesting revenue of $3.44 billion. Analysts were expecting $3.6 billion.
"We are obviously disappointed with the performance of the company in the first quarter of 2012. We faced more significant challenges in both Europe and in some categories in the U.S. than we expected," President and CEO John Bryant said in a statement.
The company will release full first-quarter results April 26.
Published: Wed, Apr 25, 2012
headlines Oakland County
- Associations gather for Spring Fling
- Supreme Court denies rehearing request by attorneys sanctioned for meritless election lawsuit
- Law school conducts ‘Know Your Rights Day’ for high school students
- Oakland County household hazardous waste dropoff events promote environmental stewardship and safeguard communities
- Nessel testifies in support of BRITE Act
headlines National
- Incarceration series includes female inmates but doesn’t tell full story
- ACLU and BigLaw firm use ‘Orange is the New Black’ in hashtag effort to promote NY jail reform
- Former DOJ official who alleged election fraud violated at least one ethics rule, ethics committee says
- Winston & Strawn will provide reduced-cost legal services for routine tasks under Winston Legal Solutions umbrella
- Should Justice Sotomayor retire? Chemerinsky, White House haven’t joined calls for her to step down
- Which BigLaw firms are increasing lateral associate hiring the most? One made legal headlines last year