06 May 2016 --- Kellogg has reported a 22.9 percent drop in first quarter net profits, but said it has gained share in the US cereal market in the period.
Net profits were $175 million in Q1, down from $227 million in 2015’s first quarter while sales fell 4.5 percent to $3.39 billion from $3.56 billion.
The Frosties maker was hit by the cost of a cost-cutting drive, the re-evaluation of its Venezuelan business, and the impact of a strong dollar on overseas sales.
However, there were bright spots for Kellogg in the results. The cereal giant has been battling for customers against yogurt makers and other breakfast snack providers in recent times.
In the US, its market share of the breakfast cereal market grew amid a declining market in the period.
But sales in its snacks business fell 2.6 percent, partially because of the cost of an operational change to its work force.
But key snack brands Cheez-It and Pringles performed well in the period.
Outside of the US, sales were down 1.6 percent in Europe and down by 5.8 percent in Asia Pacific.
"We have made good progress on our priorities: We have continued to improve our food; we've continued to expand the Pringles business; we've enhanced our sales capabilities; productivity initiatives continue to provide earnings visibility; and continue to feel momentum building," said John Bryant, Kellogg chairman and chief executive officer.
"The actions we are taking are having an impact and we remain confident that they will drive continued improvement as this year progresses, and into 2017."
Separately, Kellogg announced that Ron Dissinger is retiring as chief financial officer at the end of 2016.
Dissinger will step down as CFO on Dec. 31, but he will remain with Kellogg into 2017 to help ensure an orderly transition to his successor.
An internal and external search for a new company CFO will now start.
"Ron has had an extraordinary, nearly three-decade career with Kellogg, including the past six years as CFO and a highly valued member of our Global Leadership Team," added Bryant.
“Over the years, we have relied on Ron's business acumen, disciplined approach to finance and extensive knowledge of our global organization to provide strategic financial leadership across every aspect of our business.
"Ron has also led or played a central role in a number of other major initiatives that have helped to position Kellogg for the future.”
"These include acquisitions such as Pringles and Bisco Misr, as well as Kellogg Integrated Margin Management, Project K, Zero-Based Budgeting and the development of our 2020 Growth Plan.
"We thank Ron for his many contributions to Kellogg over the years, as well as for continuing to serve our company in 2017 before he transitions into retirement.”
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