Tallahassee, FL 11/3/11 (StreetBeat) --Kellogg Co. (NYSE: K), the maker of Corn Flakes cereal and Keebler cookies, said third-quarter profit fell 14 percent as it increased spending to upgrade factories and improve monitoring of suppliers. Net income declined to $290 million, or 80 cents a share, from $338 million, or 90 cents, a year earlier. The average estimate of 20 analysts surveyed by Bloomberg was for 89 cents.Chief Executive Officer John Bryant said Kellogg will continue spending to improve its quality controls after closing two Eggo waffle plants in 2009 for flooding and equipment problems and recalling 28 million boxes of cereal last year for unusual odors coming from plastic liners. Kellogg’s cost of goods sold rose 9.7 percent to $1.96 billion because of the investments and reinstated incentive payments.
The company also cut its full year forecast for earnings per share to as much as $3.33, down from a previous projection of a maximum of $3.40. Analysts’ estimated $3.48. For 2012, the company said it expects earnings per share to increase 2 percent to 4 percent, excluding the effect of currency fluctuations. That’s less than previous long-term forecasts, according to Growe.
Kellogg is currently trading at $49.62, down $4.42 per share. The shares had gained 5.8 percent this year before today.
Third-quarter sales rose 4.9 percent to $3.31 billion. The average estimate of 17 analysts was $3.41 billion. North American cereal sales were little changed in the quarter. “Reported revenues were slightly light of our expectations, but it sounds like some of it could be timing of shipments to retailers,” Matt Arnold, an analyst at Edward Jones & Co., said in an e-mail. “Turnarounds are rarely in a straight line, and we view these results as a step back in a long-term upward trend.”
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